PetroDolllar and the USD

What is the petrodollar : Countries purchase vast amounts of USD to buy oil from Saudi Arabia which has been nicknamed the petrodollar because it provides the US with a never ending credit card by controlling the currency in which middle eastern oil is sold.

Collapsing Oil Price : Goldman have projected that the "new lower oil price equilibrium will reduce the supply of petrodollars by up to US$24 billion per month in the coming years, corresponding to around US$860 billion over the next three years". A 20% drop of the $1.39 trillion of USD in circulation doesn't sound too bad but if the current levels of USD in circulation are already large enough for the world to buy oil at $100 a barrel then printing USD has already ceased to provide a positive effect to the US economy. With Saudia Arabia selling investments in US to try make ends meet at home the US has gone from a positive petrodollar, to a negative pull out of investments, in a very short time frame.

Already the fed is trying to sweep bad debts under the carpet in the hope that none will see the rot. But as the problem worsens, all attempts to hide the rot will fail, resulting in a huge losses and possibly QE4.

Going forward:

Bankruptcies from energy investments (including fracking);
US government will require higher taxation from shrinking revenues (aka higher debt);
Higher US unemployment from collapsing wealth base.
Higher US inflation;

Its speculative if the USD will collapse completely or just fall to a new time low but the emergence of Iran as a world oil provider selling oil in multiple currencies might be the final nail in the once mighty USD.

Ron Paul Warns: "Watch The Petrodollar

Commenting because I'd like to keep up with the thread.

a reply to: glend

unlikely, as the price of oil drops, the dollar becomes strong they have a inverse relationship.

a reply to: onequestion
There's an app for that.
Actually, there's that little subscribe button for that.

a reply to: Phage

Thanks Phage! I'm so glad your here!

a reply to: onequestion

I know you are.

a reply to: TechniXcality

It might seem inverse but its not. When wealth realizes the USD has no means of support (petrodollar) it will stampede out of the USD just as fast as it entered.

a reply to: glend

Iran will put downward pressure on oil. That increases the value of dollars regardless of what currency they are accepting for payment. Also per day barrels, Texas right now is producing 3,991,000 barrels per day. Iran is at 2,850,000 per day roughly. It is almost like Texas coming on line as far as the effect on oil prices. The metric is close enough at least to gauge the impact.

a reply to: machineintelligence

Who's gonna blink and cut production?

a reply to: glend

sounds more like a desire than a reality.

a reply to: TechniXcality

Wealth will always park itself in fiat when it perceives danger from failing markets and the USD is regarded as one of the best ports in a storm. Before the 2008 crash we saw wealth moving into the USD and the price of oil increasing. No inverse then, why now?

Hey there....they have to shut down and re-vamp some refineries and the heating oil season is rolling over to highway gas....I suppose a reversal about Feb. 4 this year....I don't know

a reply to: Phage

I don't know but the glut in the market is so high the Gulf out near Galveston Island has a huge number of tankers full of crude just sitting there. The crews are inland talking about it so I know we have a crude overage in the market that is bigger than I can remember. With Iran coming back online, world markets will have so much extra I wonder if this market has been engineered to punish the Mullahs. Making them sell barrels cheap after such a dry spell is diabolical.

a reply to: machineintelligence

Didn't realize Texas output was so high. With break even between $30-35 guess they have to continue pumping from existing rigs to pull some of the investments back.

All I know is, it is getting a little bit easier to breathe as a consumer with low oil prices (gas prices), and its enabling more inroads into saving as well.

originally posted by: TechniXcality
a reply to: glend

unlikely, as the price of oil drops, the dollar becomes strong they have a inverse relationship.

Yup

originally posted by: glend
a reply to: TechniXcality

It might seem inverse but its not. When wealth realizes the USD has no means of support (petrodollar) it will stampede out of the USD just as fast as it entered.

The wealth controls the petrodollar, if the interests lose it, it will mean they are out of power, so you can rest assured they will not ditch the dollar.

originally posted by: glend
a reply to: TechniXcality

Wealth will always park itself in fiat when it perceives danger from failing markets and the USD is regarded as one of the best ports in a storm. Before the 2008 crash we saw wealth moving into the USD and the price of oil increasing. No inverse then, why now?

The point is not parking yourself here or there, it is timing the market. American bankers played both side of WWII,
they played both sides of 2008 too.

originally posted by: yesyesyes

originally posted by: glend
a reply to: TechniXcality

It might seem inverse but its not. When wealth realizes the USD has no means of support (petrodollar) it will stampede out of the USD just as fast as it entered.

The wealth controls the petrodollar, if the interests lose it, it will mean they are out of power, so you can rest assured they will not ditch the dollar.

You presume that the internationals rely on US and USD for power. It is perhaps them that are pushing the US and the USD into bankruptcy so they can save the world with a new global currency. That would explain why internationals facilitated the move of the US industrial might to China and allowed China to import all the worlds gold.

Reserve currencies come and go. International currencies in the past have included the Greek drachma, coined in the fifth century B.C., the Roman denari, the Byzantine solidus and Islamic dinar of the middle-ages, the Venetian ducato of the Renaissance, the seventeenth century Dutch guilder and, more recently, the British pound and U.S. dollar.
link

originally posted by: glend

originally posted by: yesyesyes

originally posted by: glend
a reply to: TechniXcality

It might seem inverse but its not. When wealth realizes the USD has no means of support (petrodollar) it will stampede out of the USD just as fast as it entered.

The wealth controls the petrodollar, if the interests lose it, it will mean they are out of power, so you can rest assured they will not ditch the dollar.

You presume that the internationals rely on US and USD for power. It is perhaps them that are pushing the US and the USD into bankruptcy so they can save the world with a new global currency. That would explain why internationals facilitated the move of the US industrial might to China and allowed China to import all the worlds gold.

Reserve currencies come and go. International currencies in the past have included the Greek drachma, coined in the fifth century B.C., the Roman denari, the Byzantine solidus and Islamic dinar of the middle-ages, the Venetian ducato of the Renaissance, the seventeenth century Dutch guilder and, more recently, the British pound and U.S. dollar.
link

Well, I know that they ACTUALLY CONTROL the USD. Unlike other currencies, their operatives/partners/cronies control the USD and the policies surrounding it. It is clear they intentionally screw the dollar at times, but if they completely tank the dollar, then it is not a promise they will regain the control of the new currency that dominates the world after America dies off. They risk losing everything, and I don't think they would destroy the machine they have set up here, they control it all, they do not control Chinese monetary policy... Get my point?