Comments by "David Himmelsbach" (@davidhimmelsbach557) on "Russian missiles strike 'safe haven' in Lviv | Breaking" video.
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@daveh322 There is no such thing as the petro-dollar.
Decades ago the US made a deal with KSA to allow that kingdom to deposit their winnings/ sales proceeds in vast amounts into the US Treasury market -- WITHOUT having their assets exposed to the world.
The fact that international oil sales have been long priced in International Money is still true and will remain true.
The ONLY change that KSA might make is if the kingdom decides to accumulate Red China's debt instruments instead of those of America, Britain, Germany (Euro) and Japan.
It is totally unnecessary to use US dollars to buy Saudia Oil. The trading desk will merely use the current value of this or that currency versus the US dollar to come up with such an exchange. Then, in an instant, the other currency is swapped -- electronically -- into US dollars and the deal is done. KSA wants its cash to be held in US dollars -- and not much else. These can always be exchanged into any other currency without paying much of a haircut. As weak as the US dollar is, it's still stronger than most of the world's fiat currencies. Further, for the volumes involved, the US dollar barely moves even with huge transactions. That's simply not the case with other currencies. Such is the real nature of markets, of financial reality.
For Red China to emit yuan it must accept massive commodities imports. Oil would certainly qualify. But, on the whole, Beijing is NOT interested in issuing a reserve currency. To do so, Red China must be willing to see a strong rise in unemployment. Spit those words out. A rise in unemployment is taboo in Red China. It imperils the CCP's mandate of governance.
KSA would have to accept a currency that is managed in the market by the CCP. It would have to accept Communist court judgments. The CCP could zero-out KSA's assets at a stroke -- to suit the Party. You might note that no nation is willing to accept Red Chinese debt as 'good money.' All trade with Red China has to be collaterallized by real money. That's why Red China has accumulated so much US Treasury debt. It's become pledge money to sustain Red Chinese exports -- and IMPORTS.
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@Matthew_85k It, the conversion, happens every second of every trading day.
I didn't emphasize the Big Deal in Nixon's day. All ordinary holders of US Treasury debt are subject to exposure, per US regs.
Nixon -- with his authority -- cut the Kingdom's holdings out of this regulation. No Congressman or Big Media mouth can obtain the Kingdom's US Treasury position. Period. THAT'S the provision that has talking idiots babbling on about the petro-dollar. The King, in his day, decided that the USA, and its debt, were the only suitable place to park his kingdom's wealth. Early in, his US Treasury purchases were epic. Gradually, the Kingdom obtained top flight financial counsel... and started spending and investing with considerable sophistication.
When oil prices dropped, the Kingdom's immense stash of US Treasuries certainly came in handy.
Red China simply does not manufacture the kind of high tech// leading edge stuff that the West does. Now imagine the hair-cut that the Kingdom would have to pay when they move to liquidate yuan to buy industrial anythings from the West. Red China doesn't produce ANYTHING for oil production. America really has a quasi-monopoly across the entire field. Still. (America invented the oil industry.)
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