Dollar No Longer Primary Oil Currency As China Begins To Sell Oil Using Yuan

This is one of those “shoes” that we have been waiting to drop. The rest of the world is fed up with our monetary policies and the inflation that we’re exporting. While small countries can’t do much about it, the larger countries can, and as you can see from the article, they have.

In a nutshell, China is now completely set up and ready for any country to buy and sell oil using their yuan, instead of US Dollars. This is the equivalent of a death knell for the dollars.

[From Dollar no longer primary oil currency as China begins to sell oil using Yuan – National Finance Examiner | Examiner.com – ]
“On Thursday, Sept. 6… just a few days ago, China made the official announcement. China said on that day, our banking system is ready, all of our communication systems are ready, all of the transfer systems are ready, and as of that day, Thursday, Sept. 6, any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do using the Chinese currency, not the American dollar.

Yuan

When we convinced Saudi Arabia to use US Dollars for oil purchases, we set up a global currency for oil, commonly referred to as petrodollars. The demand for petrodollars is a demand for US Dollars. The US Dollar is also the global reserve currency. This means that other countries keep a lot of their reserves in US Dollars, which also creates demand for them.

All of this demand for US Dollars keeps the dollar valuable, because things in high demand have value. Now that there is another currency option in which to purchase and export oil, the demand for dollars will drop. As more and more countries jump on this bandwagon, the demand for US Dollars will drop further, and as a result, the value of owning dollars will also drop.

We’re facing a situation where there is fewer and fewer countries wanting dollars at the same time we’re inflating the money supply (Quantitative Easing). Just one of these would be enough to severely hurt the value of the dollar, but both of these will cripple our economy. Most likely, in ways that we can’t even conceive. Between the drop in demand and the inflation of the money supply, we are looking at the very real possibility of becoming a third world country, economically.

We produce very little in this country. Most of our manufacturing base has been moved overseas, due to cheap labor and high corporate taxes. Most of the work that Americans do is service orientated. Why is this important? Because when the dollar collapses, we won’t be able to afford goods that are made overseas. The only things that we’ll be able to buy are that which we make ourselves in this country.

Luckily, we still grow a lot of our own food. Not that food will be cheap, as exporting food for the higher prices on the global market will probably be the only way farmers will be able to afford to continue running their farms.

The last shoe to drop would be the loss of the US Dollar being the global reserve currency. With the way that we are destroying our currency, I wouldn’t be surprised to wake up tomorrow and hear that we’ve lost that, too.

Check out the podcasts on hyperinflation for information on how this is going to affect us:

 

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