Now we know why the BRICS chose this moment in time to announce their intention to launch a new currency backed with Gold and a new cross currency transaction clearing system for trade.  Apparently, the agreement forged in 1973 between the FSoA and the House of Saud to price Oil in Dollars expired a week ago on June 9th.  That is a big fucking deal and I am quite surprised this is the first time I have heard this mentioned.

It was that agreement that stabilized the Dollar after reneging on the Bretton Woods accords after WWII which pegged the Dollar to Gold.  It was the Birth of the "Petrodollar" and solidified the Dollar as World Reserve Currency.  As of June 9th, this is No More.

Now, there are so many dollars sprinkled around the world and so many assets priced in dollars that it doesn't help anyone to crash the dollar overnight, but the future demand for dollars is vastly diminished.  Other countries no longer need to borrow dollars to buy Oil.  They can borrow Rubles or Renminby instead.  Thic almost certainly will lead to lower demand for USTs at the treasury auction, which is going to make it even harder to finance the federal deficit.  The next few treasury auctions could prove very interesting.  Interest rates could skyrocket, bringing on an lmost intant recession.  It could dry up liquidity also, locking up the markets. It's a clusterfuck waiting to happen.

https://www.fxstreet.com/analysis/the-petrodollar-is-dead-and-thats-a-big-deal-202406141938

The petrodollar is dead and that's a big deal

RE