by Robert Bonomo — “A Bad Month for the Dollar” Oct 1, 2013
Robert Bonomo is a blogger and novelist based in Spain. He has a Masters Degree in Management from Boston University and worked for Cofinoga, the banking arm or Galeries Lafayette.
September has not been a good month for the U.S. dollar. The world’s reserve currency is sustained in large part by the Petrodollar, the agreement by the Saudis and OPEC to price oil in dollars and only accept dollars for payment. The US gets a guaranteed demand for its fiat currency and in exchange the US has agreed to protect militarily Saudi oil fields. However, after President Obama was forced to back off his plans to attack Syria in support of the Saudi backed insurgency fighting the Assad regime, one of the pillars of the Petrodollar scheme was shaken to its core.
If America has no more stomach for war in the Middle East, how certain can the Saudis be that America will protect the regime militarily if the need arises? Now that the President has acquiesced to public opinion in his decision on whether to use military force, can he be counted on in the future to hold up his end of the bargain in the Petrodollar scheme? The United States may have by far the world’s largest military, but what use is it if it can’t be used? And even when it is, seven years of war in Iraq has done little more than bring the country under the influence of Iran.