On the petrodollar

There's a lot of discussion going on about the Petrodollar coming to an end a few days ago due to the expiration of a treaty.  There are sites debunking this, claiming that no such treaty formalized the Petrodollar and that it's all just fake news.  The truth, as usual, is somewhere in the middle.

Yes, there was a Petrodollar agreement.  But it was an informal one, not part of a treaty.  And the relationship has been slowly but steadily unwinding.  Saudi Arabia joined the BRICS this year, and that's a move that, in geopolitical terms, aligns them against the West.  I'm not sure if the BRICS founders intended for it to become a proxy for a new anti-Western political bloc, but that's sort of what it is now whether anyone likes it or not.  Any country that joins BRICS is going to be seen as an enemy by the West, or at least not a friend, even if the country's motives are purely economic and otherwise friendly.

In the past, the U.S. government could enforce its monetary policy using military force and the threat thereof.  (Mostly implicitly, of course, not explicitly, because explicit threats are way too gauche for most career diplomats.)  That paradigm, though, is not so much the case anymore.  A series of failures and humiliations has eroded the rest of the world's fear of the U.S. military.  Other countries are no longer cowed into using the dollar, so they feel safe in exploring other options.  They're looking to Russia and China as examples, and perhaps even military protectors, and they're gradually lining up to hitch their wagons to the BRICS horse.

The dollar's inflationary chickens have slowly but steadily been coming home to roost, and there are a lot more chickens out there that haven't moved yet.  Where does money go to die?  Well, we might just find out the hard way.

The upcoming election, by the way, won't have any effect on any of this stuff.  No one in Washington is ready for what could possibly come.  They wouldn't even believe you if you warned them.  Intellectual and educational deficiencies aside, it's simply too far outside their normalcy bias.

Fukuyama's infamous slogan notwithstanding, history has not ended.  And I fear that within the next decade or so it will get way more exciting than any of us would ever want.