Changes

In August 1971, [[President Richard Nixon]] ended the convertibility of U.S. dollars into gold, in the face of mounting inflation and debts caused in part by out-of-control government spending and in part by the [[Vietnam war]]. This caused a run on U.S. gold reserves and the value of the dollar to free fall. In June 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 dollars, 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 debts caused in part by out-of-control government spending and in part by the [[Vietnam war]]. This caused a run on U.S. gold reserves and the value of the dollar to free fall. In June 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 dollars, 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 Treasury debt, which is a universally fungible international medium of exchange. Virtually all transactions for oil globally had been conducted in dollars until late 2022 when Saudi Arabia began accepting [[Chinese]] yuan.  This gave the U.S. an “exorbitant privilege” in that it could issue unlimited 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 Treasury debt, which is a universally fungible international medium of exchange. Virtually all transactions for oil globally had been conducted in dollars until late 2022 when Saudi Arabia began accepting [[Chinese]] yuan.  This gave the U.S. an “exorbitant privilege” in that it could issue an unlimited 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 [[capitalism|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 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.  

When the [[Federal Reserve]] raised [[interest rate]]s to take care of U.S. needs, it made [[capitalism|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 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.