Saudi threat to America: the dollar may lose its international status and unable to Washington for the financing of its debt
Analyst reveals the risks of the Saudi threat to America: the dollar may lose its international status and unable to Washington for the financing of its debt
Sunday, April 17, 2016; 02:01 (GMT +0400)
Washington, United States ( Cnn ) – escalation in the rough refers to US press reports , between Washington and Riyadh , because of what is said to be a Saudi warnings of the possibility of passing legislation that might allow prosecution against the backdrop of September / September 2001 attacks, but what could happen to the world if Saudi Arabia already has decided to withdraw its financial assets of America or even stop investing in bonds?
Author economy specialist, Louis Camarossano, had previously been his attempt repercussions of any political crisis between the two countries on economic analysis, saying that Saudi Arabia, a major role in maintaining the dollar as a reserve major in the world.
Camarossano indicates that the important thing is not the amount of oil exported from Saudi Arabia to the United States, especially as it sells oil to many countries of the world, but what is important is the role of Saudi Arabia in conformance with America to keep the dollar coin calendar of oil to the Organization of Petroleum Exporting Countries “OPEC”, which means that currency America is the main reserve for those countries.
He adds that this Camarossano based understanding since the seventh decade of last century’s why creating a phenomenon known as “petro-dollar” and the resulting global demand does not depend on the US dollar or securities denominated in US dollars.
And because of the high indebtedness of the United States of America , Washington is mainly dependent on financing its budget by relying on foreign bonds , which buys much of it, which means that the US government should ensure always demand for its currency.
The US dollar had been turned into a global currency in the aftermath of World War II, as approved agreement “Bretton Woods” and the status of the dollar as a reserve currency for countries that theoretically would be able to request a transfer of the holdings from dollars into gold you get from the US Treasury.
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With the expansion of the global economy and the increasing pressure on the US gold reserves by countries such as Switzerland, France, President Richard Nixon to end the effects of the agreement “Bretton Woods” in the August / August 1971, commenting the possibility of swapping dollar gold from the US Federal Reserve.
As the dollar as a reserve currency for the whole world, America was able to maintain over the past years on the frequency of large – scale spending without fear of a major inflation because of its ability to transform the problem of inflation to the outside through the meet global demand for the dollar.
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Camarossano The attention that the moment in which America lose the ability to print the dollar and export it to the outside as the world ‘s reserve currency will end their ability to finance large fiscal deficits.
arabic.cnn.com
