A petrodollar system, means that most of the major oil producing countries are essentially required to price their oil reserves in USD. Major oil producing nations, such as those of the Organisation of Petroleum Exporting Countries (OPEC), Canada or Russia are paid for their resources via the USD. Proceeds are subsequently transferred into the domestic currency and “recycled” back into the energy industry or local economy.
A large implication of this system for the US, is that all countries have to maintain a substantial reserve of US dollars for oil purchases, and hence demand for the dollar globally would never diminish. But the primary question is who benefits from this. To explain this better, let me quickly get into the details of how the American monetary system actually works.
At the helm of it all is the Federal Reserve. It is the central bank of the country and also the most important financial institution in the world. The U.S. Dollar is issued and loaned to the United States government by the Federal Reserve in exchange for US treasury bonds. So basically, the fed buys the US treasury bonds, and creates money out of thin air, to loan the US government for these bonds, which are then required to pay interest on. So in effect, the US citizens are in perpetual debt because of this system and tax collection is primarily an important mechanism for paying back the interest owed by the US government to the Federal Reserve.
And who sets the interest rate targets on the loaned dollars? It’s the Federal Reserve, of course.To put it simply, the Federal Reserve has a clear vested interest in maintaining a stable and growing global demand for U.S. Dollars because they create them and then earn profit from them with interest rates which they set themselves.
Most of the major oil producing nations, lead by Saudi Arabia, price and sell their oil reserves in USD, thus maintaining a global demand for the dollar. Historically a few world leaders and governments have opposed this petrodollar system, which gives an undue advantage to the US on world economy and world politics.
Take the example of Saddam Hussein, sometime in September 2000, Saddam proclaimed that his country would sell oil in Euros instead of USD. This was a direct threat to the petrodollar system. And world events that follow the invasion and capture of Iraq seem hardly a coincidence. And shortly after the war in Iraq was won, the currency for sale of oil was immediately changed from Euro to the USD back again.
Another example is Libya, in 1996 and 2000 the leader of the oil rich Libya, Muhammar Gaddafi, had initially indicated the idea of a gold backed African currency. He found there to be many African and Muslim nations interested in the idea. The US also felt threatened to loose the petrodollar in this oil rich region. The prospect of sovereign control by a growing number of African and Muslim oil states would have been disastrous for Wall Street and London bankers.
Fearing a diminished influence by the western central banks, the French, UK and US then attacked Libya and utterly destroyed their infrastructure leaving them to be ravaged by years of terror from Al-Qaeda and other factions, with the guise of defending the helpless rebels who were opposed to such a brutal dictator.
Why is the US so against Bashar Al Assad in Syria, shortly when he announced the move to switch the country's entire foreign transactions to Euros from USD, the US imposed heavy sanctions and an attack, followed by planned invasion was imminent. The same is with Iran, who vehemently opposes sale of their oil reserves in USD, wherein most of their global oil trade is in exchange of goods for oil, which they have done with countries like Russia and India.
Isn't it safe to assume, that our world politics and global economy is controlled by a select few elite from the world banking system, which then control world events like wars, electing new governments and bailing out nations from their ever encompassing debt. The central banks in almost all the countries of the world are in ever increasing debt, who are continuously persuaded by World banks and the Federal reserve to increase borrowing by taking huge loans, thus piling the nations debt. Which means a country with high debt would also be vulnerable to policy dictat and global interference in their own monetary and national policy by the world banking elite.
I Would highlight how the world bankers are controlling world affairs in more depth in my next article...
