The petrodollar has been the anchor of the world’s dollar-reserve currency system since Nixon abandoned the last vestige of the gold standard in 1971. It has also been a huge boon for the US, and abandonment of it will make it much harder for Americans to live beyond their means. From Nick Giambruno at internationalman.com:
Obama pulled out his veto pen 12 times during his presidency.
Congress only overrode him once…
In late 2016, Obama vetoed the Justice Against Sponsors of Terrorism Act (JASTA). The bill would allow 9/11 victims to sue Saudi Arabia in US courts.
With only months left in office, Obama wasn’t worried about the political price of opposing the bill. It was worth protecting Saudi Arabia and the petrodollar system, which underpins the US dollar’s role as the world’s premier currency.
Congress didn’t see it that way though. Those up for reelection couldn’t afford to side with Saudi Arabia over US victims. So Congress voted to override Obama’s veto, and JASTA became the law of the land.
The Saudis, quite correctly, see this as a huge threat. If they can be sued in US courts, their vast holdings of US assets are at risk of being frozen or seized.
The Saudi foreign minister promptly threatened to sell all of the country’s US assets.
Basically, Saudi Arabia was threatening to rip up the petrodollar arrangement, which underpins the US dollar’s role as the world’s premier currency.
Donald Trump and the Saudis
Unlike every president since the petrodollar’s birth, Donald Trump is openly hostile to Saudi Arabia.
Recently he put this out on Twitter:
Dopey Prince @Alwaleed_Talal wants to control our U.S. politicians with daddy’s money. Can’t do it when I get elected.
The dopey prince that Trump is referring to is Al-Waleed bin Talal, a prominent member of the Saudi royal family. He’s also one of the largest foreign investors in the US economy, particularly in media and financial companies.
The Saudis openly backed Hillary during the election. In fact, they “donated” an estimated $10 million–$25 million to the Clinton Foundation, making them the most generous foreign donors.
To continue reading: Donald Trump, Saudi Arabia, and the Petrodollar