Precious metal investments: news, consultancy, trends, reports & more!
HomeMarket WatchHard AssetsInvestor's GuideDownloads

The Petrodollar Demise
Would Bring a Dollar Collapse

The US dollar has no solid backing, as we well know, but in fact there is a strong force keeping it alive - petrodollar system (read to understand, if you're not familiar).

Until most of the World's oil will be sold for US dollars, the currency will stay afloat. When the petrodollar system starts collapsing, the US dollar will start collapsing.

Simply put: the Federal Reserve has been creating US dollars "on request" whenever a country wanted to buy oil (for dollars, of course). The respective buyer country will pay the US with goods or currency for the dollars, which will then be used to pay the oil.

More and more countries have started avoiding the petrodollar system, among the first were Iran and Venezuela. More about the dollar avoidance can be found here.

Petrol will eventually deplete. Therefore, the petrodollar system's sustainability on the long term is impossible.

But it's highly likely that the petrodollar will end before the World runs out of oil.

Otherwise put: it's just a matter of time before the strongest force sustaining the dollar disappears. The dollar will either crash together with this system that's holding it in place or, a new currency will take its place or, a 3rd scenario would be if the dollar would find an alternative backing force.

comments powered by Disqus

Prime Values on FacebookPrime Values on Twitter

about us    terms of use    privacy policy    disclaimer    partners    advertising    contact us