Critical Information To Understand Correctly The Reason The Dollar Rules The World

The premise of the 1974 petrodollar agreement was that Saudi Arabia would only sell oil in dollars, which would stimulate demand for greenbacks as a reserve currency.

Here’s Jim explaining the basics to Steve Bannon’s audience:

“We had a carrot and stick approach. Bill Simon, who was Secretary of the Treasury, went to the Saudis and said ‘everybody in the world needs oil, and if you price oil in dollars, then everybody needs dollars.’

And that basically underpins the role of the dollar today as the world’s reserve currency.

The stick was, if you don’t do it we’re going to invade Saudi Arabia and take over oil production.

The carrot was, if you price oil in dollars, we’ll give you a security umbrella.

It’s rare to hear such candor coming from someone who was directly involved in the formation of the petrodollar system.

Needless to say, the petrodollar system was successful and led to a resurgence in the American dollar as the world’s key reserve currency (despite Nixon ditching the gold standard just 3 years earlier).

At this point, Steve Bannon interrupted with an insightful question (paraphrased):

“Wait, you say the petrodollar system is still in place, but the Saudis are now selling oil to China for yuan. Aren’t cracks showing in the petrodollar system?”

Jim responded that yes, cracks are starting to show in the system, and that’s why Trump was in Saudi Arabia, to seal a “Petrodollar 2.0” agreement. Jim also points out that, at least for now, the amount of oil Saudi Arabia is selling for yuan and other currencies is miniscule compared to dollar-based sales.

Jim proceeds to lay out the purpose of Petrodollar 2.0:

“The U.S., by strengthening its relationship with Saudi Arabia, and creating Petrodollar 2.0, puts the pressure on China to reduce their tariffs and meet Trump’s requirements. Otherwise they don’t have a source of dollars.”

This time around, Trump is using a strictly carrot-based approach. He’s on a charm offensive and looking to build strong, lasting ties with Saudi Arabia and the broader Middle East. This is a smart approach and we expect it will bear fruit in the near future.

Had President Trump taken a threatening approach to Saudi Arabia, it almost certainly would have driven the country into China’s waiting arms. And America can’t afford to let that happen.

It’s an excellent interview, and you can watch the entire thing here (free) on Rumble

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