Changes

In August 1971, [[President Richard Nixon]] ended the convertibility of U.S. dollars into [[gold]], in the face of mounting [[inflation]] and foreign [[debt]] caused by out-of-control [[Big Government|government spending]] simultaneously on social programs and the [[Vietnam war]]. This caused a run on U.S. gold reserves and the value of the dollar to free fall. On June 9, 1974, Nixon addressed this issue by signing a series of bilateral agreements with [[Saudi Arabia]], in which the latter country would use its political influence to coerce [[OPEC]] into standardizing the sale of [[oil]] in [[dollar]]s, therefore preserving the dollar's status as the global reserve currency in the post-[[Bretton Woods]] era.<ref>[https://www.investopedia.com/articles/forex/072915/how-petrodollars-affect-us-dollar.asp][https://www.fxcm.com/uk/insights/what-is-the-petrodollar/ investopedia]</ref>  

In August 1971, [[President Richard Nixon]] ended the convertibility of U.S. dollars into [[gold]], in the face of mounting [[inflation]] and foreign [[debt]] caused by out-of-control [[Big Government|government spending]] simultaneously on social programs and the [[Vietnam war]]. This caused a run on U.S. gold reserves and the value of the dollar to free fall. On June 9, 1974, Nixon addressed this issue by signing a series of bilateral agreements with [[Saudi Arabia]], in which the latter country would use its political influence to coerce [[OPEC]] into standardizing the sale of [[oil]] in [[dollar]]s, therefore preserving the dollar's status as the global reserve currency in the post-[[Bretton Woods]] era.<ref>[https://www.investopedia.com/articles/forex/072915/how-petrodollars-affect-us-dollar.asp][https://www.fxcm.com/uk/insights/what-is-the-petrodollar/ investopedia]</ref>  

The U.S. sold dollars needed for international transactions by issuing [[US Treasury]] debt, which is a universally fungible international medium of exchange. Until late 2022<ref>[[Essay: April 2022 was a pivotal moment in world politics for decades to come]]</<ref> virtually all transactions for oil globally had been conducted in dollars until Saudi Arabia began accepting [[Chinese]] yuan.  This gave the U.S. an “exorbitant privilege” in that it could issue an unlimited, inflated stream of Treasury debt to the world.  One of the consequences of this arrangement is that it has allowed the U.S. to spend far beyond its means, running up $32 trillion of debt since 1980, when its [[national debt]] stood at a mere $1 trillion.

The U.S. sold dollars needed for international transactions by issuing [[US Treasury]] debt, which is a universally fungible international medium of exchange. Until late 2022<ref>[[Essay: April 2022 was a pivotal moment in world politics for decades to come]]</ref> virtually all transactions for oil globally had been conducted in dollars until Saudi Arabia began accepting [[Chinese]] yuan.  This gave the U.S. an “exorbitant privilege” in that it could issue an unlimited, inflated stream of Treasury debt to the world.  One of the consequences of this arrangement is that it has allowed the U.S. to spend far beyond its means, running up $32 trillion of debt since 1980, when its [[national debt]] stood at a mere $1 trillion.

When the [[Federal Reserve]] raised [[interest rate]]s to take care of U.S. needs, it made [[capital flight|capital flow out]] of other countries, and the value of their currencies fall, forcing [[inflation]] on them. Not a single country in the world was left untouched. Many countries did not want to be held hostage to the implicit and explicit negative consequences of dollar [[hegemony]], and wanted to remove the “exorbitant privilege” that they believed the U.S. abused to their individual and collective detriment.  

 

Whenever the [[Federal Reserve]] raised [[interest rate]]s to take care of U.S. needs, it made [[capital flight|capital flow out]] of other countries, and the value of their currencies fall, forcing [[inflation]] on them. Not a single country in the world was left untouched. Many countries did not want to be held hostage to the implicit and explicit negative consequences of dollar [[hegemony]], and wanted to remove the “exorbitant privilege” that they believed the U.S. abused to their individual and collective detriment.  

On June 12, 2024, BRICS News [[tweet]]ed, "Saudi Arabia's 50-year-old petrodollar agreement with the United States has expired, with no new agreement in place. Saudi Arabia will now sell oil in multiple currencies, including the Chinese RMB, [[Euro]]s, [[Yen]], and Yuan, instead of exclusively in US dollars."<ref>[https://twitter.com/BRICSinfo/status/1801005240658858443 BRICS News], Jun 12, 2024. twitter.com/BRICSinfo</ref>

On June 12, 2024, BRICS News [[tweet]]ed, "Saudi Arabia's 50-year-old petrodollar agreement with the United States has expired, with no new agreement in place. Saudi Arabia will now sell oil in multiple currencies, including the Chinese RMB, [[Euro]]s, [[Yen]], and Yuan, instead of exclusively in US dollars."<ref>[https://twitter.com/BRICSinfo/status/1801005240658858443 BRICS News], Jun 12, 2024. twitter.com/BRICSinfo</ref>