It’s petrodollars. Rise in oil prices hurts global economy China, Asia and Europe which of course is linked to US. Trump doesn’t want a collapse before 2020.
Remember US reserve currency is backed by military. I don’t think this is a good situation but US has been stuck here since Breton Woods. When you run out of gold to back your money you back it with a gun.
I’ve always thought that US currency should have pics of aircraft carriers, missiles, nuclear explosions on them as a real reflection of what backs the the buck.
“I’ve always thought that US currency should have pics of aircraft carriers, missiles, nuclear explosions on them as a real reflection of what backs the the buck.”
Brilliant insight.
And stop the flow of oil out of the gulf, all options are on the table, worldwide.
Every nation will very quickly realize the stakes and understand everything they believe they have is at risk.
“Remember US reserve currency is backed by military. I don’t think this is a good situation but US has been stuck here since Breton Woods. When you run out of gold to back your money you back it with a gun.”
Federal taxing power really has more to do with giving the dollar value, an insight going back to Alexander Hamilton. People need dollars to pay their taxes, creating a demand for them.
What gold backing did is provide a brake that kept the quantity of dollars in check and inflation at bay.
But the decision at Bretton Woods to use the dollar as the world’s reserve currency set in motion the Triffin Paradox, which ultimately forced a choice between scrapping the reserve currency role or scrapping gold backing- and Nixon chose to scrap gold.
What Nixon actually did was “suspend” convertibility to gold by Executive Order.. meaning that the Bretton Woods Agreement is still there but inoperative, and gold convertibility can be restored if any President wants to issue a countermanding Executive Order. Somebody out to mention this to Trump....