This week we have 2 exciting news

- Saudi Arabia will not renew its 50-year petrodollar agreement with the United States, which expired on Sunday, June 9, 2024.

This will allow Saudi Arabia to sell oil in any currency, not just US dollars as before.

- India has just decided to withdraw 100 tons of gold from the United Kingdom to its country.

Once again, the liquidity of the dollar is threatened, but in reality, if we have knowledge, we will see that it is not like that, or even the opposite.

We know why there is Inflation and Deflation, why do central banks have to adopt monetary policies to regulate the economy?

If Money is more than goods then inflation, and Money is less than goods then Deflation.

For example, if BRICS countries want to have a common currency, they must balance the amount of money printed with the ability to create goods of that bloc, and the problem is who controls this amount of money in circulation?

Look at Greece, in the European common currency (EU), Greece is one of the poorest countries in the bloc, always having to borrow money, while the UK is rich and powerful, so it cannot use a common currency mechanism to used for both Rich and Poor countries, so the UK decided to separate from the EU, so Brexit happened.

Because if you keep printing money to save poor countries all the time, the value of money will decrease. Whoever is richest keeps the most money, that person loses.

Basically, Currency cannot maintain the guarantee of Gold forever, because the need to exchange goods continuously increases, while the gold guarantee will not be enough, that's why Goods increase, Money is not enough, it will cause Deflation is more terrifying than inflation, so the dollar mechanism without the gold standard is ideal.

For example, if BRICS or Russia, or any other country anchors Money to the Gold standard, they definitely will not be able to print more Money when there is no Gold.

- If more money is printed to serve trade and exchange of goods, without gold, it is no longer a gold standard.

In the end, it still comes back to the two words "Liquidity", so if the value of a currency wants to be more valuable, it must be more liquid, not attached to Oil or Gold, remember that.

China has spent a huge amount of money on diplomacy with the Arabs, with the hope of being able to pay for Oil in yuan, but until now it has not been officially accepted, why?

Share with you a typical example: On April 27, 2023, the "South China Morning Post" published an article with the title: "China pays yuan with Argentina with imported goods, officially entering South America to dethrone the US dollar" And the trade balance data of the two countries is as follows:

- China exports 7.09 billion US dollars to Argentina

- Argentina exported 6.8 billion to China

That means Argentina gave China 7.09 billion USD, but received only 6.8 billion USD, a loss of 0.3 is about 300 million USD.

If Argentina does not accept dollars, but instead accepts Chinese currency, then imagine what this $300 million can buy outside?? Besides using it to buy Chinese products??

That's the power of liquidity, so $300 million can be received in Chinese Dong if you still trade with it, but if you still trade with it, try 3 billion to see if you will receive dollars or Chinese Dong.

That's why if Oil doesn't pay in dollars, let's say it pays in Chinese, or Russian, or all kinds of currencies, then the Arabs will have to keep a pile of mixed, illiquid currencies. Who is the real person??

What's more, America is committed to using advanced weapons to protect it, if it pays for Oil in dollars, contributing to increasing the value of dollar liquidity.

You are Arabs, will you give up this greenback?

Just as China tried to import Gold, India withdrew 100 tons of Gold from the UK to the country....

P2 will share this interesting perspective so you can understand more