© Unknown
Each element of various countries' recent and increasing steps to get away from dollar dependency, in and of itself is insufficient to end the domination of the US dollar through Washington's ability to force other countries to buy or sell their oil only in dollars. Yet each unilateral provocation and sanction action by Washington forces other countries to find solutions only four years ago not deemed possible or practical.
Since the 1973 oil price shock following the Yom Kippur War, Washington and Wall Street have moved to ensure that OPEC, led by Saudi Arabia, would sell its oil only in US dollars. That insured that demand for the US currency could be more or less independent of the internal state of the US economy or of the Government debt or deficits. That system, dubbed petrodollar recycling by Henry Kissinger and others at the time, was a vital underpinning of US global ability to project its power at the same time it allowed its major corporations to walk away from national domestic taxes and investment, in the process of out-sourcing to places like China or Mexico, Ireland or even Russia. Were a significant group of nations to abandon the dollar and turn to other currencies or even barter at this point, it could start a chain-reaction of events that would lead to sharp US interest rate increases and a new US financial crisis that would be far uglier than that a decade ago.
Comment: The US has but one play to execute. Everyone else can jump-shift.