I sat down for an interview with Radio Sputnik Moscow this morning where we discussed China’s new oil futures contract and the beginnings of the petroyuan trade. I touch on the coming financial and political crisis that will hasten the conversion of a portion of the world’s trade to the Yuan at the expense of the dollar.
And at some point giving up the petrodollar is the key to how the U.S. can give up its reserve currency status, if that is, as Martin Armstrong pointed out this morning, what we want to do in the long run.
Sputnik published a transcript of the interview which you can read here.
Also, in many ways I agree with this article by Mike Shedlock on the near-term effects of the Petroyuan. His point is that the U.S. is getting out from underneath the burden of the reserve currency, which, economically speaking, is a very good thing.
But, both Shedlock and Armstrong continue to labor under the misconception that the U.S. didn’t or doesn’t want to protect King Dollar. That’s nonsense. Today things may have changed but the history is clear. We have regime changed those that threaten U.S. dollar hegemony and the ability to use it as a weapon for political purposes.
The world is shifting out from underneath that system. Alternatives to the major post-WWII institutions which have been the pillars of U.S. political and economic dominance have been built. They are not mature, but they will over time unless the U.S. begins acting like a partner with them as opposed to an entitled bully.
That’s the real effect of launching the Petroyuan. It is about allowing China and Russia the room to grow more independent of the U.S. and European systems. The ones who are trapped by this shift are still the Saudis who have no real power left in this battle royale.