QUESTION: Some declare that the complete power of the greenback is oil, which backed it after the gold normal fell. I do know you mentioned that was a handy idea, and a few now declare Trump’s journey to Saudi Arabia is Petrodollar 2.0. You managed cash for OPEC and had been even in an OPEC assembly, so who higher to handle this problem than you? I used to be at your 1985 convention in Princeton, and there have been all of the Arab nations attending of their white robes, whereas the Hasidic Jews had been attending from the NY garment trade of their black garb. That was an eye-opening convention. So my query is, does oil have any foundation for supporting the greenback, or is that this one other conspiracy idea, like gold going up with inflation?
Yours really
SM
BTW, Anybody who refuses to interview you is a part of the Deep State propaganda.
REPLY: Sam, it’s good to listen to from you. You convey up outdated reminiscences. We’ve got grown outdated collectively. If I recall, you had been there along with your father. I keep in mind when he died. To start out with, the proportion of world commerce attributed to grease and petroleum merchandise is roughly 8-10% primarily based on the 2022 information. Merchandise Commerce in 2022 globally totaled round $25 trillion (WTO information). Of that, crude oil and refined petroleum product exports worldwide had been estimated to be between $2.2 and a couple of.5 trillion (relying on worth fluctuations and commerce volumes). This contains contributions from OPEC, that are solely 40% of crude exports, and non-OPEC exporters just like the U.S., Russia, and Canada.
Subsequently, if we take the $2.5 trillion and filter out OPEC, this involves $1 trillion. Now let’s take a look at simply Saudi Arabia, with Nixon’s secret deal (memo) made in 1974 was a negotiation to not assist the greenback, however to cope with the Oil Embargo of 1973. Saudi Arabia’s annual oil gross sales will be measured in each quantity (barrels) and financial worth (income), which fluctuates primarily based on manufacturing ranges, OPEC+ agreements, and world oil costs. Even when we take a look at the numbers from 1974, OpPEC was solely about 13% ($112 billion) of world merchandise commerce ($846 billion). This vital share was a direct results of the 1973 oil disaster, throughout which OPEC member nations imposed an embargo and drastically elevated oil costs, resulting in a quadrupling of oil revenues.
Saudi Arabia sometimes exports 6.5–7.5 million barrels per day (bpd) of crude oil and petroleum merchandise. In 2023, Saudi Arabia’s oil income was estimated at $211 billion (primarily based on ~7 million bpd and ~$80/barrel). Which means Saudi Arabia’s whole petro gross sales quantity to .0084% of world commerce. The Petrodollar 2,0 is sophistry and simply one other conspiracy idea. In the event that they priced all of the oil in yuan, it could not alter the world financial system.
Given the variety of emails pouring in on this topic and other people claiming Trump’s journey is Petrodollar 2.0 or no matter, I’ll lay out the reality. This seems to come back from the perpetual greenback bears who by no means look exterior the US and continually forecast the demise of the greenback because the Nineteen Seventies. Why anybody listens to them reveals that the outdated saying idiot me as soon as, disgrace on you, idiot me twice, disgrace on me! They’ve been flawed for greater than 50 years. They by no means take a look at the information and have ZERO understanding of worldwide funding flows.
Sure, we had been all coping with OPEC cash in Geneva throughout the Wild ’80s. That’s the place all of the OPEC cash was being managed. Even the Saudi oil minister had a home in Gstaad, Switzerland. That’s the place I discovered to ski, in addition to attending thrilling events. Sure, I even participated in OPEC conferences by cellphone. They might put me on the speaker field. So, I believe I do know extra from the within out quite than cooking up theories from the surface. That is all tied into this de-dollarization idea as effectively. I’ll attempt to put this collectively ASAP.
