The End of the Petrodollar – The True Story
Yes, there was a secret deal with Saudi Arabia. Yes, China and BRICS alternatives beckon. But the true story is one of intrigues and double-crosses. And dead bodies.
28 June 2024. London. This month many stories were circulated on social media concerning the end of the petrodollar. This is of course a topic that I covered fairly comprehensively in this article, which was published in Fortune in March last year, and when I threw a completely new light on the inflation of the 1970s.
Parts of my analysis has become widespread knowledge, such as my emphasis on the deal between the US and Saudi Arabia – forced on that country the way the Mafia markets its ‘protection’ racket. However, it seems much confusion remains about the details of the events half a century ago, and most of all different versions of what happened were circulated this month, giving quite a misleading spin to the facts.
It started with some reports in early June, which stated that 9 June 2024 was an important date, because this is when the 50-year old “Petrodollar Agreement” would run out, as Saudi Arabia was not going to renew it. Signed on 8 June 1974, we hear in these reports, it ran out half a century later, on 9 June 2024. Such reports triggered a response by the Defenders of Mainstream Narratives reminiscent of those articles in the newspapers in 2020 that “debunked” reports that most people were not threatened by Covid 19, or that the injections were risky and could have seriously harmful consequences.
The 1970s inflation had been sold to us as being due to an external supply shock, triggered by a war. But as I pointed out in my March 2023 piece, it was instead engineered by the US Federal Reserve. As I explained, it was actually the USA that triggered the oil embargo and oil price rises in late 1973 and early 1974, as cover for its central bank’s policy of massive monetary expansion, escalated to all vassal state central banks, which had been implemented since August 1971, when the USA defaulted on its obligations to convert on demand US dollars into gold. The oil price surge, which happened after the first bout of inflation had peaked, was engineered by the US, as cover for the inflation and in order to transfer wealth from Europe and Japan to the US and in order to shore up the US dollar and global network of military bases. For this, a deal was forged between Saudi Arabia and the US, whereby the US would “protect” Saudi Arabia militarily, including ensuring the stability of autocratic rule by the Saud family, in exchange for the agreement by the biggest oil producer, Saudia Arabia, to sell its oil only in US dollars, and invest 80% of its resulting oil revenues in US Treasury securities. This policy supported the US dollar and simultaneously plugged the twin deficits of the current account and the government budget. It also ensured that the world’s oil spending ended up back in the US, so that the proliferating number of foreign military bases and operations could be maintained and financed.
The agreement to reinvest the Saudi oil revenues in the USA had been kept secret, and even the statistics on the main buyers and holders of US Treasuries were kept hidden for many decades, whereby Saudi Arabia was not revealed as the main financial supporter of the USA (an aggregated figure for “Gulf state investors” only was published, until a few years ago). Those who spoke of the “petrodollar” in the 1980s or 1990s were marked as “conspiracy theorists”. The 80% reinvestment requirement was first revealed by John Perkins in his 2004 book Confessions of an Economic Hitman, which was based on his personal experience, including as US consultant on “development consulting” contracts in Saudi Arabia. (The book is highly recommended). Of course he was also censored for spreading “misinformation”.
China launched an oil futures contract denominated in Chinese yuan already in 2018. And Saudi Arabia has been negotiating to sell oil for Chinese currency since at least 2022. But the US is busy trying to avoid this.
So is there any significance to the date of 9 June 2024? A number of reports by mainstream media, establishment financial houses and official “fact checkers” have come forward to engage in recasting the narrative and sow seeds of doubt about the end of the petrodollar.
Fact checkers denounce baseless conspiracy theories – claim no secret deals between US and Saudi Arabia
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