The end HAS to be very near for the US inspired petrodollar hedge.

April 27, 2020

Oil is trading at a historical low never seen before since the invention of the internal combustion engine. This presages new economic challenges for the US. Because it’s economic well being is heavily weighted on petrol dollars. You don’t need a PhD in economics to understand the price mechanism of petrol dollars and how it plays such a preponderant role in the propping up the US economy. Generally the rule of thumb goes like this – for every US dollar in circulation in the US. There’s actually $999 that at any given time is locked into oil. And this allows the US treasury (FED) to leverage on petrol dollars as a sort of de facto reserve like gold or sovereign wealth fund. Now when the price of oil goes into negative territory. Then what happens is the petrol dollar economy suddenly runs the risk of collapsing and this means the FED can no longer pursue a strategy of printing money without running the real risk of hyperinflation or having to raise interest rates. That’s bc there’s nothing to act as a hedge or counter weight. This means the US will have to buy ALL the surplus crude including EU Brent Sweet just to stay in the game. China knows this only too well. Infact China needs cheap oil like a starving man needs bread…..but she’s still not buying. So this should prompt anyone who is genuinely interested in making serious money to ask WHY?

This is very interesting from a geo economic analysis. Bc if China can successfully destroy the petrol dollar economy…it would literally spell the economic demise of the US as a superpower.

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