Oil prices surged Monday after the world’s largest exporter announced surprise production cuts, and a slew of foreign governments are making deals to sell oil and gas without any input from the U.S.
Saudi Arabia, Iraq and a number of other Gulf states said Sunday they’re cutting their oil output, which was shortly followed by Russia declaring additional cuts to their own oil exports, the BBC reported. Brent crude oil traded above $84 a barrel after seeing a 6% jump thanks to these and other decisions to relegate America’s place in the global oilfield, the BBC and others noted.
Economists and people with common sense were quick to realize that the cost of absolutely everything is likely to continue to go up, as everything we do as a species revolves around the energy sector. For example, humans need oil to make the trucks that bring food to our local supermarkets. The price of the goods in that supermarket is highly dependent on the cost of oil, so the more oil goes up, so too does our cost of living. Duh.
If oil gets too expensive or low in stock, the countries and farmers that make our food won’t be able to give us any, so we’ll see mass starvation and the potential collapse of western society. We saw Europeans choosing between eating and heating in 2022 because of inflation and other macroeconomic causes. By February 2023, people in California were experiencing the same issue.
So, what is the government doing to fix this crisis?
— AJ Joshi (@AJ) March 29, 2023
The U.S. is demanding that producers increase output to mitigate these issues, the BBC reported, almost laughably. Instead, China has swept in and said they’d be happy to accept their currency – yuan – for energy trades. France and China just completed their first yuan-settled liquified natural gas (LNG) trade, according to NASDAQ.
And they’re not alone. Brazil and China announced an agreement on the same day to conduct all future trade transactions in their own currencies, according to Forbes. India has also paid for Russian oil in non-dollar currencies, and a wealth of other nations appear to be considering similar processes. (RELATED: Financial Expert Explains Why The Economy Is Collapsing In One Perfect Tweet)
One former money manager wrote Friday that “the U.S. dollar is losing its reserve currency status” as a result of the purchase choices by foreign governments. I highly recommend you check out her full thread for more apocalyptic information.
The US dollar is losing its reserve currency status
Here’s what you should know 🧵
— Genevieve Roch-Decter, CFA (@GRDecter) March 29, 2023
The data contained in the thread was enough to prompt a response from Twitter CEO and billionaire Elon Musk. “Serious issue. U.S. policy has been too heavy-handed, making countries want to ditch the dollar.” He continued, noting “combined with excess government spending, which forces other countries to absorb a significant part of our inflation.” (RELATED: Dear Kay: I Just Saw The Banking News. Are We Screwed?)
While the dollar remains the dominant currency for trade right now, this may not be the case by the end of 2023. When you combine this external threat against those already ravaging our domestic economy, it doesn’t feel like the smartest people are making macro-decision for your savings accounts, nor for America’s existence as a whole.