The US dollar's status as the world reserve currency began after World War 2 in 1945. At the time America promised the world that the dollars that foreign governments held, could be redeemed with gold. American citizens couldn't even possess gold legally, but that's another story...
By the late 1960's, America had been fighting a war in Vietnam while expanding the welfare state with Lyndon Johnson's "Great Society" programs. Other countries could see America did not have the gold reserves for all of the dollars that were being printed. When some European countries were about to exchange their dollars for gold in 1971, President Nixon "temporarily" took America off of the gold standard. But he was able to work a deal with Saudi Arabia that they would only sell their oil for US dollars. This is what was called the Petro-Dollar a deal that lasted over 50 years.
On Monday Saudi Arabia officially ended this deal and began selling oil for other currencies. What does this mean for the Dollar? This week the dollar has held strong in the currency market, but make no mistake. This will decrease for every other country in the world to desire or need to hold dollars.
In the long term, this will be devastating to the dollar's value against other currencies. For Bitcoin, this could be another step in its ascent to eventually becoming the world reserve currency.
There are rumors that China and the BRICS nations are planning to create a gold backed currency, but do you trust China? I don’t. That is the beauty of Bitcoin, it has taken the human element and issues new Bitcoin according to the protocol set in the original Bitcoin White Paper.
Hans and I are working on some content for the website, when this is ready to go, I will let you know.
Thanks,
Rick
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