Forget Russia Dumping U.S. Treasuries … Here’s the REAL Economic ThreatSubmitted by GBAmerica on Fri, 03/21/2014 - 17:33
Forget Russia Dumping U.S. Treasuries … Here’s the REAL Economic Threat
Russia Could Crush the Petrodollar
Russia threatened to dump its U.S. treasuries if America imposed sanctions regarding Russia’s action in the Crimea.
Zero Hedge argues that Russia has already done so.
But veteran investor Jim Sinclair argues that Russia has a much scarier financial attack which Russia can use against the U.S.
Specifically, Sinclair says that if Russia accepts payment for oil and gas in any currency other than the dollar – whether it’s gold, the Euro, the Ruble, the Rupee, or anything else – then the U.S. petrodollar system will collapse:
Indeed, one of the main pillars for U.S. power is the petrodollar, and the U.S. is desperate for the dollar to maintain reserve status. Some wise commentators have argued that recent U.S. wars have really been about keeping the rest of the world on the petrodollar standard.
The theory is that – after Nixon took the U.S. off the gold standard, which had made the dollar the world’s reserve currency – America salvaged that role by adopting the petrodollar. Specifically, the U.S. and Saudi Arabia agreed that all oil and gas would be priced in dollars, so the rest of the world had to use dollars for most transactions.