It has been the global use of the dollar to settle all OPEC oil trades using the U.S. dollar that has kept the dollar from losing its reserve status ever since Nixon closed the gold window in 1971. Essentially this factor has kept the dollar propped up for a lot longer than it should have been.
Many of us believe that defense of the petro-dollar has been one of the primary motivating factors behind the imperialistic aggression of the U.S. in both the Middle East (including Libya) and in non-NATO eastern Europe. For instance, it is well-known that Saddam Hussein was threatening to only accept euros for oil several months before the U.S. Government lied its way into invading Iraq and exterminating Hussein. Ditto for Libya.
As many of you are aware, China has been quietly and slowly advancing the use of the yuan to settle counter-party trades with many of its largest trading partners. Recently the yuan surpassed the euro as the second most widely used currency globally. China is also negotiating a massive ruble/yuan trade deal with Russia and is said to be discussing an oil deal with Saudi Arabia that would settle using yuan.
I bring this up because Reuters reported today that Russia is close to signing a $15-20 billion oil-for-goods deal with Iran – LINK. The two parties were forced into this deal because of U.S.-imposed economic sanctions on both countries. The irony in this is that in imposing its imperialistic will on the rest of the world, the U.S. is undermining its sole source of power – the reserve status of the U.S. dollar.
My personal belief is that the U.S. will find some excuse to trigger a global military conflict before allowing the final sequence of events unfold that would lead to a rapid collapse of the U.S. dollar. Let’s hope I’m wrong, but I always like to rest my views on historical precedence when it comes to judging and forecasting human activity, especially the behavior of those in control of empires. One thing we’ve learned for sure from history is that we never learn from history…