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Catchfalaya
Member since Feb 2018
90 posts

Iran/Saudis/Death Of Dollar
Im not exactly a global finance wiz by any means, but was hoping some finance baws have concerns as I do. As many know the United States Dollar has been the worlds reserve currency for 40+ years. What would happen if the Saudis dumped the Dollar if we break our agreement made with them 40 years ago? You may ask what agreement. The agreement Nixon made to provide defense for the Saudis in exchange they only trade oil in US Dollars.

The US has maintained its global influence because of the Dollar being the world reserve currency. What happens if this is changed? Should we defend the Saudis to prevent them from going to this extreme?


tide06
Alabama Fan
Raleigh, NC
Member since Oct 2011
2616 posts
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re: Iran/Saudis/Death Of Dollar
The US would go to war to protect reserve status IMO.


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baldona
Auburn Fan
Florida
Member since Feb 2016
10438 posts

re: Iran/Saudis/Death Of Dollar
quote:

The agreement Nixon made to provide defense for the Saudis in exchange they only trade oil in US Dollars.


What are they going to move to? This is like firing a football coach without having a better replacement. We have all the bargaining chips as they have very few options. People can shite on the dollar all they want, but the fact of the matter is its been the most stable and most accepted currency in the world for that time span.

So sure, the Saudi's can switch. But that's a hell of a risk they are taking.


Catchfalaya
Member since Feb 2018
90 posts

re: Iran/Saudis/Death Of Dollar
I guess that’s another part of my question. What would they move to? I know China is trying to establish the Yuan as the new world reserve currency. It seems the globe undergoes new world reserve currency’s every 40 years or so (Breton Woods 44’, Petrodollar 74’) and it appears our enemies know that’s how they can bring down global US influence.


UpstairsComputer
LSU Fan
Prairieville
Member since Jan 2017
681 posts

re: Iran/Saudis/Death Of Dollar
quote:

I know China is trying to establish the Yuan as the new world reserve currency.


Tin Foil Hat Guy says China and Russia (with a few other players) team up to do a crypto currency backed by gold. Another fiat currency isn't going to do it without a lot of pain (read: war) for everyone involved - and then the problem isn't solved. You just get a new currency that can inflate away all its problems.

I think the saudi's are stuck for a bit.


Catchfalaya
Member since Feb 2018
90 posts

re: Iran/Saudis/Death Of Dollar
True but maybe these new players are only a few years away from ripping the dollar up. Then we can’t just print money anymore and rack up trillions in national debt. I would say a communist society is more prepared for short term financial pain as they control their people. Our society is not prepared for such a situation. The move to kill the dollar as the world reserve currency is already in motion. Once that happens the US is officially a paper tiger.


UpstairsComputer
LSU Fan
Prairieville
Member since Jan 2017
681 posts

re: Iran/Saudis/Death Of Dollar
But we're not talking about China's citizens enduring short term pain, which I agree with you on - which is why I think the trade war drags on until the election - but getting the world to use it as the reserve currency (hell, China can't even decide to use the yuan or renminbi). Not happening soon anyway... They are just beginning to open their markets up and the trade war illustrates how difficult it has been to work with them regarding tech and intellectual property. Certainly, while not in a position to stand up to them, other countries (our allies) experience the same things in dealing with China/communism.

We won't be a paper tiger as long as our military is defending everyone who plays by our rules...

To add, every country that hasn't played by our rules gets overthrown so there's not a good track record for people trying to buck the system.


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notiger1997
Metairie
Member since May 2009
42956 posts

re: Iran/Saudis/Death Of Dollar
quote:

I know China is trying to establish the Yuan as the new world reserve currency.


Good luck with that.


CamdenTiger
Member since Aug 2009
43873 posts
 Online 

re: Iran/Saudis/Death Of Dollar
China getting a double tap right now, cause Saudi supplied them with oil. China can’t like not getting their shipments, this going to be interesting Politics


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Tpayne99
LSU Fan
Da Bayou
Member since Jan 2019
588 posts

re: Iran/Saudis/Death Of Dollar
There are rumors that they are considering switching to Bitcoin...


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cave canem
Mississippi St. Fan
pullarius dominus
Member since Oct 2012
9848 posts

re: Iran/Saudis/Death Of Dollar
quote:

There are rumors that they are considering switching to Bitcoin...




lol, only in the crypto thread


yatesdog38
Mississippi St. Fan
in your head rent free
Member since Sep 2013
8228 posts

re: Iran/Saudis/Death Of Dollar
I'll gladly go convert some dollars to yuan if they want to dump all their dollars on the cheap to buy yuan.

more dollars for me


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Tpayne99
LSU Fan
Da Bayou
Member since Jan 2019
588 posts

re: Iran/Saudis/Death Of Dollar
It was a joke, just like Starkvegas.


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21
Decisions
LSU Fan
Member since Mar 2015
1015 posts
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re: Iran/Saudis/Death Of Dollar
quote:

The US has maintained its global influence because of the Dollar being the world reserve currency.


The U.S. has maintained its global influence by having the preeminent navy, economy, and capital reserves. We still have all three of those today and can add complete energy independence to the list as well.

The fact is that since the shale boom occurred we don’t need the Saudis’ (or any ME) oil anymore. It’s why we won’t give a damn if they and the Iranians decide to fight it out. Let them. It hurts everyone (especially the Chinese) waaaay more than it hurts us.

And screw the Chinese, too. We don’t need their cheap labor and products as long as we continue to build and develop Mexico as our “new China”.

No currency is supplanting the dollar anytime soon because no one else is going to be half as stable as us in the near future. The E.U. and Euro are collapsing in slow motion as we speak. The pound sterling doesn’t stand a chance post Brexit. The yuan can’t be it because every time China tries to loosen capital restrictions money floods out of the country.

Just my take.


Cdawg
Houston Astros Fan
TigerFred's Living Room
Member since Sep 2003
52387 posts

re: Iran/Saudis/Death Of Dollar
quote:

I know China is trying to establish the Yuan as the new world reserve currency.

Is this the same currency that's pegged to the US dollar?


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TigerDog83
LSU Fan
Member since Oct 2005
6834 posts

re: Iran/Saudis/Death Of Dollar
quote:

The fact is that since the shale boom occurred we don’t need the Saudis’ (or any ME) oil anymore. It’s why we won’t give a damn if they and the Iranians decide to fight it out. Let them. It hurts everyone (especially the Chinese) waaaay more than it hurts us.


That’s completel incorrect. With shale drilling going past what’s truly economic we still have to import oil to meet our usage. We may export light oil but the really good 30-38 degree gravity oil our refineries are mainly geared to run still has to come in and in larger quantities than we send overseas. Should Saudi production go offline the world price would increase and that still affects the us.


Decisions
LSU Fan
Member since Mar 2015
1015 posts
 Online 

re: Iran/Saudis/Death Of Dollar
quote:

the really good 30-38 degree gravity oil our refineries are mainly geared to run


Boy, I never thought I’d read someone call heavy, sour oil “good”. Just because that’s what the refineries are currently optimized for doesn’t mean we’re even more dependent on imports. And if we have to go get the stuff we can import all we’ll ever need from Canada. They currently supply more to us than the entirety of OPEC.

Observe:



And



If a net drop of ~80% of net oil and petroleum product importation doesn’t scream energy independence what does?

Here, this one makes it even more clear:

This post was edited on 9/21 at 6:45 am


TigerTatorTots
New Orleans Pelicans Fan
The Safeshore
Member since Jul 2009
75021 posts
 Online 

re: Iran/Saudis/Death Of Dollar
If the dollar is in trouble, I feel Bitcoin price would skyrocket. I also don’t think the dollar will lose its reserve status before all the power of the US military gets involved.


TigerDog83
LSU Fan
Member since Oct 2005
6834 posts

re: Iran/Saudis/Death Of Dollar
That’s great but it doesn’t change the fact that a lot of the shale drilling is uneconomic. Look at the financial conditions of all the shale drillers currently. There’s about to be more bankruptcies and pain. Should the market force some sanity back into the patch a lot of this production may be at risk. The bakken and Eagle Ford are probably done with growth and rigs are fleeing the Oklahoma plays quickly. This leaves the Permian as the last growth engine in us shale and there’s a lot of economic disappointments in the space with parent/child issues and spacing errors. The Middle East unfortunately will remain a critical area for the us in regards to oil supplies.


Decisions
LSU Fan
Member since Mar 2015
1015 posts
 Online 

re: Iran/Saudis/Death Of Dollar
quote:

That’s great but it doesn’t change the fact that a lot of the shale drilling is uneconomic.


What price do you think they need to be economic? Because I’ve read/heard mid-40’s but certainly sub-60’s, which we’re currently well within reach of (and any ME instability would finish driving it into range).

quote:

The bakken and Eagle Ford are probably done with growth


Perhaps, but that does not mean they are done with production. U.S. oil/petroleum consumption peaked in 2005 and plateaued/shrunk afterwards. We just need to sustain. Not to mention the fact that with continued natural gas usage growth we’re becoming even less dependent.


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