Why A Petrodollar Collapse Brings Down Everybody With It

In every thread about the collapse of the petrodollar, I see people cheering on this collapse and then speaking about the BRICS countries taking over. I, however, think that this is extremely foolish and that a petrodollar collapse will cause a global meltdown. Now that it seems as though there are real, concrete actions towards doing just that by many countries, I thought I'd look at some numbers on just how scary it really is.

The GDPs of the EU and the United States are approximately 16.5 billion and 16.25 respective U.S. dollars. Together, they make approximately half the GDP for the entire planet. I know that this is about the petrodollar, but you'll see why I include the EU in this in a minute.

The amount at which the United States depends upon the petrodollar is pretty much incalculable from what I've seen. So, what happens when the petrodollar goes out? The value of the dollar drops precipitously. A collapse of the dollar sends traders scrambling for safe havens from the dollar, which will have a negative feedback effect for the dollar, but many of those will conceivably also panic to the Euro, which will spike the Euro's value.This is a very bad thing for Germany, which means that it's a bad thing for the EU as a whole. The EU has been on the brink for years as many can attest to in the news from past years. For those that need help remembering this or need proof, here you go. Add to this the fact that the U.S. and the EU are huge trading partners and the picture becomes a very bleak one for the EU very quickly as well.

Now that's we've gotten that out of the way, let's take a look at the numbers for other countries. The EU and United states purchase about 650 billion dollars worth of goods from China. While this obviously isn't the end all be all of their trade, these numbers are nothing to sneeze at. This isn't even counting the huge amount of American debt that China owns that the U.S. may default on, the huge amount of both these currencies China has in reserves, the huge amount of direct foreign investment that the EU and the U.S. have in China, or the fact that a collapse of the petrodollar may very well cause huge amounts of American manufacturers to go back to the U.S. as the value of the dollar drops like a rock.

Well, now that we're here, let's take a look at two other Chinese trading partners, Hong Kong and Japan. Well, look at that, the United States is Japan's second largest trading partner. As for Hong Kong? Well, while the trade doesn't appear to be too severely effected, the United States, along with China, Japan, and the Netherlands, is one of their largest investors.

Let's go on to Russia. The EU is Russia's largest trading partner. The United States imports billions of dollars of Russian goods a year.

India? North America and Europe together account for about 40% of India's exports. While Europe and North America can mean other countries, even if the EU and the U.S. account for only a quarter of those exports, that's 10% of Indian exports.

Some people say that China has a housing bubble. Others aren't so sure. What we do know is that China is already starting to see defaults in its bond market. China's not in the worst of positions, but it's not in the best, either. What happens when one, probably two, major trading partners take huge hits to their economies?

The point of all of this is simple: there's a reason that the Lehman collapse caused havoc to spread through the entire planet. The United States is a major player on the global scene. Period. The end. Any collapse of the petrodollar is a threat to the entire global economy in a very real, major way because of a massive contagious effect.

The petrodollar collapse is not something to cheer; it's something to fear. That scenario is a true, real, precipitous global meltdown, the likes of which the world has never seen.

AnIntellectualRedneck

a collapse of the petrodollar may very well cause huge amounts of American manufacturers to go back to the U.S.

That bit sounds pretty good actually.

I say bring it on. I can live off of the land if need be, and so can you.

It's time for things to change, and if that's what it takes, then so be it.

In 1979, because of the Carter Oil Crisis, I asked a question.
What would we rather do with a finite resource like oil.
Remake the entire world into a garden paradise, so when the oil runs out, everything is better.
Or burn up all the oil as fast as you can. I mean, up ahead the road runs out, and Carter is recommending that we drop to 55 mph. Why is everyone screaming step on the gas!

Everyone thought I was cute, and that was enough for them.

What happens when the petro dollar runs out? If the elusive forces of this world have planned it right, we will have used up most of the worlds oil and the U.S. will be a net exporter. At least that's what the elite expect for themselves. The rest of us will probably have to take up mule breeding again. I mean seriously. Carter had put solar panels on the White House. A long, long, time ago.


Mike Grouchy

Consider this: It's all magical money anyway. Numbers on spreadsheets. Nobody can really even comprehend one billion dollars, much less trillions.
A gold or silver coin---you can hold it in your hand. It's real. Even a copper penny has worth.
The US dollar became magical when Tricky Dicky took us off the gold standard.
If the whole world's economy collapses, we'll all be in the same boat, right? So what's to fear?
Stock your pantry with supplies if you fear this global economic collapse.
Scratch up a spot in your yard and plant some food.
Get the Foxfire book series and learn some skills.
Brew yourself a proper cuppa tea and relax.
It's all magical money. They make it appear and they can make it disappear.

I don't know how to imbed videos but I agreed with John on this one: www.youtube.com...

reply to post by AnIntellectualRedneck

The petrodollar collapse is not something to cheer; it's something to fear. That scenario is a true, real, precipitous global meltdown, the likes of which the world has never seen.

Will the collapse be bad? Yes.

Is it a bad thing? No.

Why? Because it will finally cause a global reset and crush the central banks. Those holding gold will prosper, those holding fiat mony will crumble. At this point in time I would accept anything that will break the hold of the Fed, IMF, etc. If we don't free ourselves from those vampires we are doomed to eternal slavery.

Bassago
Because it will finally cause a global reset and crush the central banks.

I agree on the reset, but I'm afraid it's those we want down that will drive the collapse to stay in power after the reset.

they'll do that through a war while/after they have re-appropriated everything that has real value, like they did in 29 : taking the gold from everyone then ww2, bretton woods & the imf.

like they are doing since the bailout that has sent so many (not bailed out) people & small businesses to bankrupt -> failure to pay back mortgage = house and anything of real value goes to the (bailed out) bank.

it's well designed & it's not a collapse that can crush them but a (real) revolution only

reply to post by Bassago

At this point in time I would accept anything that will break the hold of the Fed, IMF, etc. If we don't free ourselves from those vampires we are doomed to eternal slavery.

Q: Why does the master rid himself of his slave?
A: Because the slave doesn't bring a profit into the master's household.

I wonder what will become of all the masterless slaves when they are given their freedom. Not a day I'm looking forward to.

It's going to hurt the 1 % the most .We poor workers may end up being poorer , so same old same old .True those fat politicians and lawyers are going to find it very hard but some how that almost sounds just .A person works for the better part of their life now and we are finding our pensions being stolen and screwed with ...It will give the environment a break as well .Instead of pumping billions of dollars into AGW and the war machine I think the earth can uses a big break and us along with it .....peace

You stopped me at saying GDP was 16 Billion, well then national debt is at 17 Trillion. www.usdebtclock.org...

The US has bigger problems than the petrodollar. Obama does have the same option as Lincoln with the Greenback. Getting tagged as a global reserve does hold some favor, but it is getting pretty thin these days. Even if the US military did get the balls to blast the FED the current US domination will still be in effect for a few hundred years.

The Russia / Petrodollar issue is just a tipping point. China is set to be the next master, the media still has some push for a SDR, not sure how the G20 is really dealing with it.

the us just became able to be a net exporter of oil and has its thumb on many of the competitions' jugulars
alCIAduh! ( or take your pick of your local brit/US funded revolutionaries ) is ready to effe up everybody elses' production on demand

a stock market crash would vaporize the inflationary bail out bucks...
and destroy dollar debt holdings across the globe, leaving the petro dollar in demand and backed by oil
while going into a mini ice age...sunspots hey for you carbonazis
derivatives would would be the coup de grace amongst governments and foreign monetary powers

because of course derivatives, like the markets, and exchanges, and wrestling...
are rigged

[start metaphor speak]



Do we slowly peel off the BandAid ?
Or do we quickly rip it off ?

Either way, the process is going to be painful in the interim.

But make no mistake, the BandAid needs to be removed.

The can has been kicked down the road for far too long, it will only get worse the further down the road it gets kicked.



[end metaphor speak]

reply to post by CranialSponge


don't know about much about band aids or ( community chest heirs )...
but you certainly are spot on about the "RIPPED OFF" part

reply to post by Danbones


Not sure about chests heirs (lol), but if the bandaid is anywhere near my unshaven winter legs, it's gonna hurt like hell.

Exporting oil from the USA, I have always thought a law was enacted forbidding the export of oil from the continental USA?

Id rather it all go to hell in my lifetime than any other time.

Something has to give eventually....regardless of the petrodollar.

The world should be knocked on its ass for a bit....then maybe we will be the wiser for it.

reply to post by cosmicexplorer

Id rather it all go to hell in my lifetime than any other time.

Know what? Me too!! This is a ride I wouldn't miss for anything. I love being challenged.

Don't wanna be the party-pooper ... but the doom porn of fiat currency collapse is years down the road. The smart guys have already figured out the future and the transition plan. Spade.

pikestaff
Exporting oil from the USA, I have always thought a law was enacted forbidding the export of oil from the continental USA?

excellent point
gotcha covered

Council on Foreign Relations Press
Policy Innovation Memorandum No. 34
Release Date
July 2013

Federal lawmakers should overturn the ban on exporting crude oil produced in the United States. As recently as half a decade ago, oil companies had no interest in exporting U.S. crude oil, but that has changed. Oil production has grown more in the United States over the past five years than anywhere else in the world, even as domestic oil consumption has declined. With these changes has come a widening gap among the types of oil that U.S. fields produce, the types that U.S. refiners need, the products that U.S. consumers want, and the infrastructure in place to transport the oil. Allowing companies to export U.S. crude oil as the market dictates would help solve this mismatch. Under federal law, however, it is illegal for companies to export crude oil in all but a few circumstances. Over the past year, the Department of Commerce granted licenses to several oil companies to export a small amount of U.S. crude oil. But these opaque, ad hoc exceptions are insufficient. Removing all proscriptions on crude oil exports, except in extraordinary circumstances, will strengthen the U.S. economy and promote the efficient development of the country's energy sector.

www.cfr.org...

reply to post by AnIntellectualRedneck


Let me put it this way.

If you are comfortable right now, you don't want things to change,

IF HOWEVER, you are suffering and dying right now, because of the petro dollar, then you do want things to change.

Likewise, if you are a moral person, regardless of comfortable or not, you want this change too.

the2ofusr1
It's going to hurt the 1 % the most .We poor workers may end up being poorer , so same old same old .True those fat politicians and lawyers are going to find it very hard but some how that almost sounds just .A person works for the better part of their life now and we are finding our pensions being stolen and screwed with ...It will give the environment a break as well .Instead of pumping billions of dollars into AGW and the war machine I think the earth can uses a big break and us along with it .....peace

I don't think so. The 1%, as you call them, will be set up with private security, food, shelter, clean water and more. Could the rest of the world storm their gates? Yes. But there will be a portion of those 1% that will gladly protect them for the promise of food, shelter, water and a chance to raise their families.

The "1%" didn't get to where they are without being prepared, and they are not stupid. Why do you think private security companies like Blackbird Technologies and Blackwater (I forget it's new name) are firmly entrenched into the political dialogue? Why do you think that local police departments are increasingly becoming militarized? It's not for the 99%, I can assure you.

The poor workers, like me, won't stand a chance against 20, 40, or 200 man private armies that are "policing" areas and ransacking for any valuables. A well armed individual stands no chance against a better armed, well trained, and coordinated force.

andr3w68

AnIntellectualRedneck

a collapse of the petrodollar may very well cause huge amounts of American manufacturers to go back to the U.S.

That bit sounds pretty good actually.

I say bring it on. I can live off of the land if need be, and so can you.

It's time for things to change, and if that's what it takes, then so be it.

I think you are minority ("can live off of the land")