Thursday, October 26, 2017

US ‘Empire of Debt’ will go to war to stop emergence of petro yuan

Superb commentary by Max Keiser. The Saudi's also want to de-dollarize.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan. This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan. Inbuilt in the move is a true Chinese win-win; the yuan - according to some - will be fully convertible into gold on both the Shanghai and Hong Kong exchanges. The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.


Matt Franko said...

China probably thinks that if they can get Saudi to accept yuan for the oil, then they can resell it for USD and get EVEN MORE USDs which is the whole purpose for China in the first place.... zombies never sleep....

NeilW said...

This 'US dollar' thing is total crap anyway.

That's just a convenience in the financial clearing system, to save a network of price quotes. You can buy energy in any currency you want and always have been able to.

In any physical deal the buyer pays with the currency they have and the seller receives the currency they want. If they don't, the deal never happens in the first place. The job of the financial system is to bridge that gap and charge for it. So if the US, or any other country, tries to throw sand in the wheels unsurprisingly another over the counter route bypassing the US dollar springs up.

Is there a notion here that trade is being driven by the price rather than the price being driven by the trade? If you buy spot, eventually you have to sell spot to somebody else or take delivery of some oil.