You explanation is excellent, and consistent with my beliefs. I guess, however, I haven't worked out the implications of "PROVIDED they ONLY SELL in DOLLARS".
I understand that the New York banks took a cut of the windfall profits produced by the oil price. Besides U.S. bonds, my understanding is that they also required to Saudis to invest in fly-by-night schemes that profited only the banks.
Given that, why is it fundamentally different if, instead of dollars, the Saudis accepted German marks (at that time), and then they converted the marks into dollars before handing them over to the bank? With their volumes. the spreads and commissions would be minuscule, so I don't see how that would make a fundamental difference.
Given that, why is it fundamentally different if, instead of dollars, the Saudis accepted German marks (at that time), and then they converted the marks into dollars before handing them over to the bank? With their volumes. the spreads and commissions would be minuscule, so I don’t see how that would make a fundamental difference.
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This may already be explained, so forgive if it is redundant. If Saudis will only accept USD for oil, then everyone who buys Saudi Oil, has to have some USD for the purchase, thus ensuring that all these countries will hold USD.
That helps to secure the USD as the world’s currency. However, given sactions,(financial warfare) and the US control of the SWIFT system, countries are increasingly trying to get around that.
It seems that the Dollar will eventually be somewhat sidelined, but as yet, there is no other currency that could be used as a replacement, so it’ll probably take a while, unless they crash the system and force some new scheme.