The Petro-Dollar To Petro-Yuan Shift Is Underway Now And It Will Kill The Dollar

Jaime Carrasco interviewed on Palisade Radio

Jamie has a financial background in Canada as a credit analyst; this gives him a good understanding of the credit cycle and economics. He likes looking at the finances of the world from a geopolitical perspective. He says, “The Chinese use two symbols for danger, one signifies danger and the other can indicate wealth. We are on the cusp of some massive changes and the birth of a new system.”

The petrodollar is the glue of the current monetary system which goes back to 1971 when the dollar was unpegged from gold. There was a massive destabilization period that followed this change. The petrodollar is based on getting OPEC and the Saudis to price oil in dollars. It pegged the monetary system into a credit cycle which has built from that point forward. The world needed dollars, so they started to buy U.S. debt.

China and other nations are increasingly moving away from the dollar. They are creating their own systems such as the Petro-Yuan. This credit cycle will become unwound as various countries stop using petrodollar debt. In essence, the mechanics of the change are already in place. At some point soon they will lose control of the interest rate cycle. Central banks have control the overnight rate, but the buyers ultimately control the longer-term bonds. Once power is lost there will be a rapid compounding effect of stagflation. The bottom line will be higher costs of living and there will be a transfer of assets to hard assets like commodities.

Central banks are manipulating every market and inflation is showing up in the stock market. If gold was keeping up it should be much higher. As interest rates rise all markets will be forced to find their true value. He thinks that blockchain technology is a most disruptive invention which will adversely affect the financial industry.

 

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1 thought on “The Petro-Dollar To Petro-Yuan Shift Is Underway Now And It Will Kill The Dollar

  1. Jamie you have no idea how the world economy is structured let alone how it functions. The oil industry globally only comprises 4.6% to 6.5% of global GDP. Your assumptions are completely ludicrous. I will say this, the financial capital of the world will move to China in the 2030’s. America’s economic stature is declining while China’s is rising. The petro-dollar arrangement was necessary because the Saudis needed a place to park their money and the deep stable well of US treasuries was chosen as a vehicle to park their profits. China does not yet have a bond market let alone one large enough to park massive amounts of money. So there can be no replacement of the petro-dollar with the petro-yuan until there is a large enough and stable enough market created in China to park your profits. So what do the Saudis do with all their Yuan they get from China buying their oil? There is no market in China big enough to park trillions of Yuan at a time. So the Saudis, if they want to park that money would need to convert the Yuan into a currency that has a big enough market to park their profits.

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