The entire economic system of the us is predicated on the petrodollar. It's the most important piece in this whole jungle tower. That is the us economy. Let me explain why, before we talk about what just happened, so petra dollars, essentially the arrangement that nixon did with the saudis back in the 70s in the 70s, when nixon cut the ties between the dollar and the gold, he shifted to oil.

He basically made a deal with the saudis that opec would only sell in dollars. Essentially, if you wanted to buy oil, i mean come on, who doesn't need to buy oil they'll have to pay in dollars. Now that sounds insignificant. I mean who cares about which currency you're paying it who gives a well hold on a second their support.

I'll explain a second! Why? So, basically, if you buy in dollars, you create demand for the dollar, because if you want to buy oil, you need to sell your own currency, whatever it is, to buy some dollars, which means there's always a demand for dollars. And if you want to do any oil projects, if you want to hedge against currency risks, you have to keep dollars on your balance sheet, because you know that's how you manage risks. Basically, it creates a massive massive demand for the dollar and in case you didn't know that opec generates about eighty percent of the world's global oil production. Now you think about russia is a big producer.

Oh opec is way way bigger. Now, i'm not gon na name. Every single country that is an opec but basically the three main players, are saudi uae and qatar and out of those three basically saudis, they call the shots. No disrespect to my brothers in qatar in the uae, but i mean saudi is like the us.

In the sense that saudi to opec is like the us to nato they're very, very important - and i guess in that example um, canada and the in the uk would be the uae. They're always moving concert right. So basically here's the thing. So lately you've been hearing a resurgence of all these um dollar rip fraudsters and that basically promote this idea that the petra dollar is about to die and that the u.s dollar would lose its status as the world's reserve currency.

That status is basically maintained because of the petrodollar, because the demand for dollars are so high. Every single government wants to hold on to dollars on their national bank because it keeps the world's safest, most secure currency, for whatever reason as a foreign currency reserve. Now, over the years, there's been a lot of chatter about different fraudsters and idiots about how the dollar is about to die, and mainly it came from the community of the precious metals pushers and it comes almost like a wishful thinking. They really want the dollar to die because they've been preaching about gold or they know it's not going to die and they want to still sell gold.

Lately there have been people who you know wrote books about it, so they needed to promote their books and it's way easier to sell drama. I mean i'm just going to make you a bet. This video that says, good news in the title, is going to have one-tenth of the views of the bad news title i had just two days ago. That's the reason why people are preaching this legalization rip the u.s dollar.

Okay, let me explain something that might or might not happen, but here's the deal the whole setup is based on. What's going to happen with petrodollars, now russia is going to make some wave with commodities. Obviously, russia is going to their own system of basically trying to trade commodities for rubles or maybe yuan's. I don't know exactly what's going to happen there and there might be some silver parallel system for russian commodities.

Okay - and you know it's going to be - maybe another currency - that's going to be used in the global trading system for commodities, but as long as the u.s can keep petrodollar status, this whole russian commodity staying is not a big deal. Now it's not cool, but it's not thesis breaking. Let's go this way now, where the thesis can break and where the dollar can lose its reserve currency status and you know completely fall apart is in this scenario, and before i explain it, let me explain why this is important. So basically, if you are the us economy, if you're the u.s government, you need to print money right, that's basically how things work, but nobody really prints money like that.

It's not like the us can just print money. The way the u.s prints money is basically it issues, bonds, people buy those bonds and that's how you print money. Now, here's the basically the idea, the people who buy these bonds from the us government are people who need the dollar. For whatever reason, and as much as i you know, love retail investors, domain consumers of u.s bonds are governments and if there's a high demand for the dollar, you know what happens.

The higher the demand is the lower the yield, the lower the demand, the higher the yield, the opposite. We talked about a lot with the one market. You know it's like how good of a deal you're getting on the car you're buying right. If you paid more for a car, you got a shittier deal.

If you paid less for a car, you got a better deal. So it's the same thing with bond deals, but bond yields are really critical because if bond yields go up, the us government can't issue cheap debt, which is a big problem. You need to be able to issue these bonds at very low rates, because the us is already basically buckling under the pressure of its current debt payments on its usual u.s national debt. So the demand for dollars is really critical to keep the yields down and allow the u.s government to issue cheap debt, and that demand only exists if the dollar system creates demand for the dollars from every single government.

That's buying oil from opec, which is pretty much everyone so now. Let me understand this principle. Here's the big question. So is this happening? Well, the saudis came out and basically said, i think, a week or two ago, hey we're considering switching to the yuan.

Instead of dollars earthquake now this is blasphemous, but, and - and yes, it shows that there's an erosion in the holy status of the us dollar, but i'll, explain to you in a second why it wasn't a big deal. What basically happened and the most important thing that happened is the past two days. We've saw even more improvements, kind of to the situation that showed that this whole saudi thing was just a head fake. So saudi say that, and and basically what's going on here - is that the us government and saudis are not getting along ever since trump left office mbs, which is the ruler of saudi for onto its purposes and biden, don't get along biden.

Uh, you know is angry or when they say buying them in the binder they're angry at what happened with jamal khashoggi, and they want to. You know liberalize saudi and they want to basically punish saudi by making a deal with iran and iran being a massive enemy of saudi. So basically the saudis are feeling like this is treating you like now. If your main trading partner and your partner sells you a very important thing, which is the petrol status and you treat him like eventually he's gon na say, hey dude, i mean i thought your partner said what the basically that was saudi's way of saying that now You have to understand saudi relies on the us for a whole bunch of it's a very big country with a lot of money, but it's a symbiotic relationship as much as the us dollar's status is critical to the u.s economy.

The u.s economy is pretty much on the brink of collapse without the petrol dollar. Saudi is on the brink of collapse without the united states because of military needs. Military technology u.s energy production technology, which is being used on the ground in saudi, which would not be available u.s money that goes into energy production, there's so much intertwined in the symbiotic relationship. It's like trying to separate siamese tweens that have no separation.

It's it's impossible! So, that's why i said it's a head fake, but they did it basically to say: hey. We need more stuff from you. We need you to relax and china played along for the all intense purposes, but china really doesn't want that now and i'll explain that in a separate video, why china doesn't want the reserve currency status today, it's way too soon for them, they're, probably looking at 10 15 years down the road they're not ready, mainly because they're an exporter, they need more inflated yuan right now, um, but that's a whole different story and also they hold a lot of u.s assets and u.s debt. It's a whole different story, but basically, in the past week we heard two things that happened: the u.s sent patriot missiles to saudi to protect them against the houthi rebels in yemen, which was a sign - and this was confirmed by u.s official, basically, the peace offering to Saudis and today, a u.s official confirms that iran and the u.s are halting stalling on this agreement of this nuclear weaponry or nuclear energy, whatever they want to call it, because the u.s is now dragging their feet and they don't want to remove the iranian revolutionary guard From the list of terrorists, which is exactly what saudi have been saying to do, yes, hey, we don't want the iranian national guard off this list of terrorists.

We don't want this deal with iran, so basically the us is now giving more weapons to saudi and basically saying hey iranian deal. Well, let's put it nice for a second. I know it's not a lot, you kind of see it to say. Okay, it really is important.

It's showing you that the us is basically trying to get like. Remember like in the wedding there's a wedding registry. There's all this gift. The couple wants you to buy to them, so the saudis have a list and they just give them two things of that list, which are really two important things now, where the key would be is to see what opec will do on their meeting this week.

There's an opec plus or opec meeting. I don't remember which one exactly are meeting but there's a big meeting and basically the oil countries will meet and they'll decide whether to increase production to help the us. That would be important to watch if they agree to help. That means that there's a relationship going if they say, hey, we're, not helping, then you know they're asking for more from the u.s and then we'll see how the race responds, whether with force or with more kindness.

Let's see what happens, but if you wanted some good news, the us is definitely trying to court saudi arabia because they need opec to increase production, to cover what russia has been doing and basically provide cheap energy to do it. So good news happy sunday see you tomorrow.