Will the End of the Petrodollar End the United States Empire? By Ron Paul
(2023-04-18 at 03:19:43 )

Will the End of the Petrodollar End the United States Empire? By Ron Paul

Future historians may say that the most significant event of 2023 had nothing to do with Donald Trump, other 2024 presidential candidates, or even the war in Ukraine. Instead, the event with the most long-term significance may be one that received little attention in the mainstream media - Saudi Arabias movement toward accepting currencies other than the United States dollar for oil payments.

After President Nixon severed the last link between the dollar and gold, his administration negotiated a deal with the Saudi government. The United States would support the Saudi regime, including by providing weapons. In exchange, the Saudis would conduct all oil transactions in dollars. The Saudis also agreed to use surplus dollars they accumulated to purchase United States Treasury bonds. The resulting "petrodollar" is a major reason why the dollar has maintained its world reserve currency status.

Also this year, China and Brazil made an agreement to conduct future trade between the countries using the countries own currencies rather than dollars. Brazilian President Lula da Silva has called on more nations to abandon the dollar.

This de-dolarization movement is driven in part by resentment of the United States of Americas foreign policy, including, in particular, the United States governments increasing use of economic sanctions. Dethroning the dollar from its world reserve currency status makes it easier for countries to ignore these sanctions.

De-dolarization will negatively impact the United States governments ability to manage its over 30 trillion dollars debt. With a few exceptions, there is still no real support in Congress for spending cuts. Republican leadership members may say they will not support a debt ceiling increase unless it is tied to spending cuts. However, after the Biden administration accused the Republicans of wanting to cut Social Security and Medicare, House Speaker Kevin McCarthy declared a reduction in spending on Social Security and Medicare - big drivers of the federal deficit - "off the table." Similarly, despite the growing skepticism of foreign interventionism among Republicans, the military-industrial complex maintains a viselike grip on congressional leadership and the White House. Therefore, do not expect any reduction in military spending. Instead, the Pentagons budget will likely increase.

The Federal Reserve will face continuing pressure to monetize ever-increasing federal debt and keep interest rates (and thus the federal governments borrowing costs) low. The resulting inflation will lead to more support for ending the dollars world reserve currency status. As more countries abandon the dollar, the Fed will become less able to monetize the federal governments debt without creating hyperinflation. This will result in a dollar crisis and an economic meltdown worse than the Great Depression.

This crisis will lead to the end of the welfare-warfare-fiat currency system.

While history suggests this will lead to the rise of even more authoritarian political movements, the growing popularity of libertarian ideas suggests the collapse will also fuel the further growth of the liberty movement.

This could mean that the crisis leads to a restoration of limited government and an advancement of liberty. The key to taking full advantage of the opportunity presented by the crisis is to keep spreading our ideas. Fortunately, we do not need a majority; we just need a tireless, irate minority committed to the cause to regain our liberty.

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