Meraglim Blog

Pricing Oil in Yuan Is Not the Future — It’s Already Here

Facebook
Twitter
LinkedIn

We’ve all heard for a long time about a coming collapse of confidence in the dollar and its displacement as the world’s leading reserve currency. I even wrote a book about that in 2014 called The Death of Money. Events are definitely moving in that direction, but I also make the point that the process does not happen overnight; it can take years.

A good example is the process by which the dollar displaced pounds sterling as the leading reserve currency in the first half of the 20th century. That process began in November 1914, not long after the start of the First World War, when gold flows, which had moved from the U.S. to Europe at the start of the war, reversed and began moving from Europe to the U.S. The process culminated in the Bretton Woods agreement of July 1944, which enshrined the U.S. dollar as the only currency pegged to gold (all others were pegged to the U.S. dollar and only indirectly to gold). That process of the dollar displacing sterling took 30 years, from 1914–1944.

Displacement of the dollar, probably by the IMF’s special drawing right (SDR), has started, but it will not take 30 years; it will happen much more quickly. Still, it’s a matter of small steps, or straws in the wind. This article highlights an important step in the process.

In 1974, President Richard Nixon engineered the petrodollar deal with help from Henry Kissinger and Treasury Secretary William Simon. Under that arrangement, the U.S. agreed to defend Saudi Arabia militarily and to support higher oil prices. In exchange, Saudi Arabia agreed to price oil in U.S. dollars and to deposit those dollars in U.S. banks, where the dollars could be “recycled” as loans to developing economies that would purchase U.S. manufactured goods and crops. Since everyone needed oil, everyone needed dollars to pay for the oil.

That demand for dollars sustained the dollar’s role as the leading reserve currency after the collapse of the original Bretton Woods arrangement in 1971. As this article reports, the petrodollar deal is now coming undone. China is the largest oil buyer in the world and is Saudi Arabia’s biggest customer. China is now seeking to pay for its oil in yuan. So far, Russia is the only major oil exporter that has agreed to accept the yuan for oil. They will not be the last.

For now, the market for oil priced in yuan is small but growing. This is the beginning of the end of the petrodollar deal. The irony is that the U.S. does not seem to care because we are now an oil exporter ourselves. The U.S. is asleep at the switch as China does to us what we did to the British a century ago.

QCI and Meraglim Join Forces to Deliver Capital Markets Risk Analysis Powered by QCI’s Mukai Quantum Computing Software Platform

LEESBURG, VA, December 1, 2020 – Quantum Computing Inc.(OTCQB: QUBT) (QCI), the technology leader in quantum-readysoftware development and execution, and the only public pure play in quantum computing, has partnered with Meraglim Holdings Corporation to deliver advanced capital market risk analysis powered by QCI’s performance-leading Mukai™ quantum software development and execution platform. As an industry leader in predictive analytics, Meraglim was the first

Read More »

IF THE SCIENCE IS NOT ON YOUR SIDE, JUST TRY THREATS

It’s clear that good science does not support the extreme claims of the climate alarmists. Yes, there is such a thing as climate change, but it’s slow, difficult to predict and almost impossible to model because of the complexity of the process. The climate alarmists have grabbed most of the headlines for the past ten

Read More »

WHY TRUMP WILL WIN REELECTION: NOT POLLS OR PUNDITS; JUST COMMON SENSE

Political analysts use polls, betting odds, historic trends and other inputs to make their (usually wrong) political predictions. We all remember that “experts” said Hillary Clinton would win the presidency in 2016 (they gave her a 92% chance on the morning of the election), and that the UK would vote to “remain” in the EU

Read More »

HERE’S ANOTHER ELITE WITH ANOTHER PLAN TO TAX AWAY YOUR WEALTH

The elites never rest when it comes to devising new ways to take your money through taxes, inflation or outright confiscation. The latest Trojan horse the elites are riding to take your money is climate change. The climate does change over long periods of time for reasons that are not well understood except that they

Read More »
Scroll to Top