zevenenergie wrote on Today at 01:36:09:I note that your links are primarily about American dependence on domestically produced oil and oil from abroad, and indeed a small part comes from the Strait of Hormuz. So the blockade does not have that much effect on America that way.
But.... there is such a thing as the petrol dollar, and that is where the crux lies.
If the petrodollar system were to truly disappear, it would not have an “instant crash” effect, but rather major slow shifts in the world order.
However.... the war in Iran is a catalyst; Iran has the capacity to close the Strait of Hormuz.And only wants to let ships through if the oil is not paid for in dollars.
There is little that America can do to counter that; after all, we are seeing that now, so that is a fact.
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America therefore cannot withdraw, because then Iran would hold its neighboring countries hostage. And then all payments in the middel east would no longer be made in dollars.
If the petrodollar system weakens at an accelerated rate due to developments in the Middle East, this has several disadvantages for the US:
1#First, demand for the dollar decreases because countries need less USD to buy oil. As a result, central banks may reduce their dollar reserves, putting pressure on the value of the dollar.
2#Additionally, it becomes more expensive for the US to finance debt. Foreign parties then buy fewer US government bonds, forcing interest rates to rise to attract investors.
3#A weaker dollar also leads to higher inflation in the US because imports (such as energy and goods) become more expensive. This directly affects consumers.
4#Furthermore, the US loses geopolitical power. Sanctions and financial pressure tactics work less effectively when the world is less dependent on the dollar.
5#The so-called “exorbitant privilege” also partially disappears: the ability of the US to finance large deficits relatively cheaply and easily.
6#At the same time, increased competition from other currencies, such as China's, arises, and regional trade blocs may emerge without the use of the dollar. Finally, it can lead to more instability in financial markets, because there is less constant capital inflow into the US.
I remember numerous times you’ve highlighted the likelihood of one calamity occurring due to an alignment of events yet so far, none of these doomsday predictions have occurred. And it’s not just that they haven’t occurred, they’ve not even been remotely close.
Yet you’re doing it again. Why? Ask yourself why.
Assuming all six of those things begin to occur, do you think that US isn’t going to respond in someway? Do you think the citizens of the US (which are the de facto engine behind the economy) aren’t going to adjust in someway to mitigate any consequence? The price of gas has increased recently, but there’s no significant difference in every day life here.
You’re assuming the economy is like a game of chess. You trap someone and it appears they have no space to move to, but this isn’t chess. The economy, the people behind the economy, have an almost unlimited number of moves, but you can’t see the spaces.
In fact, it’s better to think of it as if the spaces have never even been created yet. People think up new spaces as they go along and they move there. Economics are alive, and moving in ways that don’t follow patterns.
Challenge yourself to think broader, you’ve narrowed your vision.
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