Saudi Arabia is thinking about abandoning the dollar
The American dollar is currently the world's reserve currency, meaning it is the primary means of handling transactions between nations that have differing currencies. To qualify as a reserve currency, it must be stable and readily available, and it can be considered a safe-haven currency. In some ways, a reserve currency can become a self-fulfilling prophecy because its very status enhances its value. For Americans, that status helps prop up America's enormous debt load. That's why it was very disturbing to learn that Saudi Arabia, disgusted with the current management in Washington, D.C., is looking to start pricing its oil sales to China in yuan, not dollars.
The fact is that the Saudis do not trust Biden's America. As the Wall Street Journal explains:
The Saudis are angry over the U.S.'s lack of support for their intervention in the Yemen civil war, and over the Biden administration's attempt to strike a deal with Iran over its nuclear program. Saudi officials have said they were shocked by the precipitous U.S. withdrawal from Afghanistan last year.
Savvy readers will have noted that two of the three reasons for the Saudi dismay with America reflect concerns Americans should also have: the appalling deal Biden is trying to strike with Iran, which will flood the mullahs with money and accelerate their nuclear program; and the collapse of American prestige and military strength signaled by the chaotic, incompetent, and deadly withdrawal from Afghanistan.
The Biden administration is borne up by its virtue-signaling. While Democrats aren't normally disturbed by sharia law (or they wouldn't be lusting after a deal with Iran), Saudi Arabia offends them deeply. Ostensibly, it's because the Saudis ordered the killing of Jamal Khashoggi, whom the regime deemed a threat. It was a bungled dark op and gave leftists an opening to attack a regime that has long supported America; that's opposed to Iran; and, because Israel shares the enmity with Iran, is warming up to Israel.
During the Trump years, there were even more reasons to support Saudi Arabia. The Saudi crown prince, Mohammed bin Salman, has been slowly and carefully modernizing Saudi Arabia, giving rights to women and otherwise helping his people become more productive.
In other words, the leftists hate Saudi Arabia because it's been good to America and her allies and is slowly modernizing, and they love Iran because it's the opposite.
Borne up by its twisted virtue-signaling and its suicidal commitment to the chimera of "green energy," the Biden administration has treated Saudi Arabia with cavalier scorn. Now that chicken is coming home to roost as the Saudis turn to the Chinese Communist Party, which has been courting them for years:
China has stepped up its courtship of the Saudi kingdom. In recent years, China has helped Saudi Arabia build its own ballistic missiles, consulted on a nuclear program and begun investing in Crown Prince Mohammed bin Salman's pet projects, such as Neom, a futuristic new city. Saudi Arabia has invited Chinese President Xi Jinping to visit later this year.
There are a few things that may prevent a yuan deal from becoming the first domino to fall in a complete disaster for the American economy. First, even with Biden's choking off our oil industry, America buys from Saudi Arabia only a quarter of the number of barrels it bought in the 1990s.
Second, despite the Biden government's spending binges and money-printing, our currency may still be a bit more stable than the yuan. The Chinese, through their Belt & Road Initiative, have extended themselves on every continent except for Antarctica. If all goes well, they either get money from the people for whom they've built ports and dams or they own those ports and dams. However, if things don't go well, they're overextended with a lot of property they can't utilize. In the same way, at home, their formerly supercharged real estate market is on the edge of collapse. Like the Soviet Union, China may look more robust than it is.
When one considers what the Democrats have done to the American economy in only a year, what we may be witnessing is a race to the economic bottom between China and America. And frankly, this is one race I believe Biden can actually win.