So this is why things are going south so fast...

The petrodollar, which has been in place since 1974, officially expired on June, 9, 2024.

This was a deal that was put in place to bring Arab nations and the U.S. closer together. It was designed to circulate dollars between the two regions in exchange for oil sales. As a result, oil has been a commodity that has been priced and traded in dollars. Now, as this deal has not been renewed, Saudi Arabia can trade or deal in currencies outside of the U.S. dollar; they can now trade in yen, euros, Chinese yuan and even the highly-contentious Russian ruble.

Truth be told, this has been happening in the background since the invasion of Ukraine by Russia and the Western world subsequently placing sanctions on Russia to limit its exports. The sanctions never worked, as all they did was form new trading alliances and change the partnership agreements for good. As a result, the world has forever changed.

https://pro.thestreet.com/market-commentary/end-of-petrodollar-shows-changing-geopolitics

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whowasthatmaskedman · 70-79, M

The $US was originally backed by gold.. Then it was backed by oil. Now its backed by........?😷

Tastyfrzz · 61-69, M

@whowasthatmaskedman That's the question. I think it's just floating. Probably don't want to have a variable rate mortgage. Domestic stocks are probably iffy. Gold is going through the roof. Crypto is probably not the answer as it has nothing to base itself on either.

whowasthatmaskedman · 70-79, M

@Tastyfrzz I thoink its floating very much in the manner of those roadrunner and coyote cartoons, where for a couple of seconds the coyote is standing on nothing before he realises it and plummets. Yes. Plummets is the right word. 😷

Captain · 61-69, M

@whowasthatmaskedman Hello guys. are you suggesting you see a dollar crash or a US stock market crash ? I Can't see a dollar crash because its doing better against other currenices (except the pound which makes no sense ot me as we're going bust), The US is the country best equipped to do well in a low trade high tariff situation because it is self sufficient in so much. I can see a massive stock market adjustment because the p/es are daft compared with anyone else and the dollar is rising. This would come with a wave of lay offs and economic recession due to decreased exports, but I dont see a dollar collapse until after this happens, a dollar collapse before that scenario played out would prevent that scenario playing out ? What did I miss here ?

whowasthatmaskedman · 70-79, M

@Captain Sorry. You did miss the biggest factor. America imports way more than it exports and has done for decades. So your statement that America is well placed to do well in a low trade high tariff environmanr is just plain wrong. Thats how America gotr into this horrendous foreign debt situation. They sell less than they buy..😷