The biggest commodities market in the world is oil. It is 10 times larger than the next metal commodity which is gold or almost three times the amount of all metal markets combined.
When Nixon left the gold standard in 1971 the US dollar subsequently lost value for several years resulting in an inflation shock.
It is for this reason that the US struck a deal with Saudi Arabia in 1979 to use US dollars for oil contracts. These dollars would be then recycled back to the US through contracts with US companies.
Not only that, countries who use US dollars have to borrow US dollars, generating interest revenue for US Banks and wealth creation for the US treasury.
It is said that US dollars are the biggest export earner for the USA.
In the same way oil exports generate profits for oil rich countries, US dollars generate profits for the US.
At university I was taught that it was not prudent to print money. Yet all money is printed. It is in fact the biggest swindle going around. Whoever has the legal right to own a printing press owns a gold mine. They can make money from nothing.
The question isn’t whether or not you print money but who prints money and what they do with it once you print the money.
I believe governments should control the money supply. Money creation however should only be used to fund sovereign infrastructure such as dams, ports, airports, telecommunications, railroads and power stations. Nothing else.
During Covid the RBA printed money to destroy the economy rather than build it. They printed $300 billion so that businesses could close down. The impact of this stupidity will be felt for decades to come.
The key point to note however is that the biggest market in the world is the US dollar. Whenever an entity uses it they are ultimately paying interest back to the US.
That is why the US controls the oil market and enforces entities to use US dollars. With no physical asset to underpin the dollar is would lose its reserve currency status and value as it did in the 1970’s.
The US cannot afford for other countries to trade in currencies other than the US dollar.
Believe or not this is driving the conflict in Ukraine.
Read more at: https://www.visualcapitalist.com/size-oil-market/
