The Petrodollar and Its Discontents Point to Bitcoin's Role in the Financial Future

, the currency of the United Arab Emirates. That all sounds very worrisome for the dollar, and for U.S. financial hegemony.

DEFI OIL: Brent Crude Futures value the production of crude oil in the North Sea, one of two major oil benchmarks.Because the petrodollar system emerged very soon after the Nixon administration ended the Bretton Woods regime of gold-backed U.S. dollars, the two are sometimes viewed as analogues. One widespread but reductive characterization describes dollars as “backed” by oil starting in the 1970s, the way they once were by gold.

In a worst-case scenario, if those oil earnings didn’t get back into the global capital system, credit markets could have seized up and collapsed. The most conspiratorial view of the petrodollar system hangs on the genuinely secretive U.S. efforts to help solve the issue. The fate of the credit system and funding for U.S.

Those investments rose not because of any deal, then, but despite formal barriers, seemingly attracted by the fundamentals of the dollar assets themselves. The desire to skirt U.S. barriers, in fact, led to an offshore market for dollar bonds and deposits in Europe, sold via London- and sometimes Luxembourg-based banks and branches. These became known as “Eurodollar” assets.

On this count, the neoliberal explanation seems to be winning: political attempts at creating a petrodollar alternative have been fizzling for decades. Current worries about Russia and China cutting deals with Saudi Arabia are easily recognizable in thisObviously, that didn’t happen.characterized those 2009 fears of a game-changing anti-dollar deal as something that “would make a good plot for a Hollywood movie, but it doesn’t make much sense as economics.

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