By New Silk Strategies staff
So what would happen to the dollar if the long-standing deal with the Saudis should fail?
The most likely first step in this scenario is that China would strong-arm the Saudis into accepting payment in RMB only for oil sold to China. In that scenario, considering that KSA’s oil sales to China amounted to only $26.7 billion in 2015, the amount is negligible, particularly in comparison to a US debt of $20 trillion, much of which came from printing (QE) dollars out of thin air. In fact, considering that, according to WTEx, total Saudi oil sales amounted to only $136.2 billion in 2016, and that only part of this went into their dollar denominated reserve fund, their contribution to the dollar’s value has really been only minimal. According to money.cnn.com Saudi disclosed last year that they had stockpiled a measly $116.8 billion of U.S. Treasuries as of March 2016. Obviously, to a country with a $20 trillion debt, this contribution to the value of the dollar is negligible, suggesting that the US-Saudi petrodollar deal has a mostly psychological effect, if any at all, on the dollar's value against other currencies.
We had previously pointed out that the amount of RMB used in non-dollar international trade settlements was practically negligible compared to the amount of euros used. Indeed the amount of euros used in international trade in 2016 was 23.8% vs 43.0% for the US dollar, while the amount of yuan used was so small that no figure was entered in the sliver representing it in the bar graph (Chart 3 shown here). Further, tellingly, this very substantial percentage of euros in international trade settlements did not cause any palpable rise in the oil price as against the dollar. So what real monetary effect did the petrodollar agreement have?
Foreign Policy Journal reported last April that “although the RMB was the fifth most used currency globally, it only accounted for 2.5% of all international payments tracked by SWIFT, as opposed to 43.3% for the dollar or 28.7% for the euro. [It] also reported that 70% of the international transactions involving the RMB were between Hong Kong and the mainland. If Hong Kong is excluded, then the RMB only accounts for 0.8% of global SWIFT payments.”
Is anyone really afraid the Chinese yuan will push aside the USD within the foreseeable future?
Thus, even if China persuaded trading partner KSA to demand only RMB for their oil exports to all countries, the amount in question would not be much more than $182 billion. And if that euro amount of non-dollar settlement was not sufficient to break the buck, a few more billion would hardly suffice. Further, this is only a small fraction of the amount held by Japan ($1.1 trillion) or China ($1.3 trillion) and by all others combined ($$3.8 trillion). All foreign nations put together hold only 32.35% of US sovereign debt. Further, even this amount is absolutely dwarfed by the share of the debt held by various US agencies.
The rest of the countries and US agencies holding US debt account for many times the amount held by the Saudis. As another example, this site shows that the Saudis hold a very minute share of US debt.
From all of the above we can conclude that, even if the dollar should collapse, it will not be a result of China-Saudi skulduggery because, while NIxon and Kissinger had supposed that the impact of the Saudis settling exports only in US dollars would bolster the dollar, we have just demonstrated beyond a shadow of a doubt that the Saudi-US petrodollar agreement makes only a negligible contribution to international dollar settlements and is therefore of no use to the US.
This supports our theory that the effect of the Nixon-Faisal petrodollar deal is really mostly psychological. Indeed, it is possible that even the Bretton Woods dollar, backed by gold, was propped up mostly by crowd psychology.
So if the petrodollar agreement had little or no real effect on the dollar’s value, what could have driven the US elites, including notably Henry Kissinger, the putative author of the idea, to propose the plan to the Saudis back in the 70s? And why would economists still believe this agreement is of any value whatsoever to the dollar's standing as the world reserve currency?
In view of the minute fraction of US debt held by Saudi Arabia, one must wonder if in fact the deal was not motivated in large part by a radical-Enlightenment-inspired desire to undermine Christianity in the Middle East/North Africa and the West by going along with a Saudi (and/or Israeli) de-Christianisation policy under the guise of protecting the dollar. This would have sold well to the financial and political elites, who were aware from the outset of the Nixon-Faisal deal. Certainly, nothing is more of a hindrance to policies designed to take from the poor and give to the rich than Christianity and its attendant old-fashioned common sense.
Certainly no feature of American culture has been under more systemic attack in recent decades than traditional Christianity. And certainly, the Western intervention in Iraq, Syria, Kosovo and Libya had the effect – intentional or not – of undermining traditional Christianity in those regions thanks in large part to Wahhabist-terrorist intolerance of Christians indigenous to the region and also to the mass migration of Muslims to Europe, which have undeniably diluted what was left of the Christian culture there. All of this seemed to be the quid pro quo for the Saudis, whose contribution to propping up the dollar was obviously way overrated and, in the current status quo, is clearly superfluous.
Judging by Donald Trump’s behaviour at the Saudi court, he too had fallen for the myth that the Saudis were the mainstay of the USD. Thus the US continued, and continues, to pretend that there is no alternative to holding our noses and supporting the Saudis and their genocidal war on the Houthis, their clandestine support of ISIS and Al-Qaeda and their insistence on attacking Iran, even if such could lead to WW III.
Yet, assuming the figures quoted above from reputable sources are accurate, the whole petrodollar agreement has been nothing but a gigantic, tragic hoax intended to support useless and patently immoral slaughter. And the biggest victims to it are the Christians of the Middle East/North Africa and Europe. Coincidence? Or exactly what was on the agenda?
Regardless of motive, we conclude the petrodollar agreement was never key to keeping the US dollar afloat but was indeed key to destroying Christianity in the Middle East, Kosovo and Europe.
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To give you an idea of the extent to which Christianity is being sabotaged in the West, please read this article by the creator of Russian Faith, whose site has been blocked by the “Enlightened Ones” of the West.