Petrodollar Collapse and Global Economy Trainwreck

http://jacobmesmer.com/ What is the petrodollar? You may have heard this in the news recently, but what is it exactly? We'll first need to go back to the end of world war II, when the U.S. was in a perfect condition to negotiate a new currency system. The Bretton Woods system was created to use the U.S. dollar as the global currency. U.S. citizens had to use dollars, both to pay their taxes and because it was the law. But what about other countries? Why would they use U.S. Dollars? The U.S. promised that it would exchange dollars for gold whenever other countries wanted to. So long as the U.S. had enough gold to exchange for dollars, this wasn't a problem. But When the U.S. economy started to slow down, with huge deficits and growing inflation, as well as a growing trade deficit, other countries started to trade more dollars for gold, because they didn't quite trust the U.S. Government. They would rather hold gold in their banks, than dollars. Because the U.S. gold started to rapidly deplete, Nixon ended the gold standard. No longer could other countries exchange dollars for gold. Now, the U.S. had a problem. Why would other countries hold on to U.S. dollars when they could no longer trade them for gold? In the early seventies, the US and Saudi Arabia made an agreement. Saudi Arabia would only sell oil for dollars if the U.S. used their world class military to protect the House of Saud, the royal family that controls Saudi Arabia. This meant that other countries HAD to keep dollars in order to buy oil. So here we are forty years later. And in that time, the U.S. Government has printed a fuck ton of dollars, most of which ended up in other countries central banks. Remember, the only reason countries are keeping these dollars is because they need them to buy oil. This, essentially is the petrodollar system. But what happens when it ends? If countries can buy oil without dollars, all the dollars and the dollar denominated assets like treasure bills, will come flooding back to the united states. This will create massive inflation, a surge in interest rates, and a collapse of the U.S. government and the economy. As long as the Saudis keep accepting dollars, this won't happen. But as soon as Saudi Arabia stops taking dollars for oil, and starts accepting anything else, like gold or euros or SDR's, a massive collapse is just around the corner!