Today, it seems to be an article of faith among US policymakers and many economists that the world’s appetite for dollar debt is virtually insatiable. But a modernization of China’s exchange-rate arrangements could deal the dollar’s status a painful blow.
The petrodollar standard may not hold with the Saudis now selling mostly to China. So what happens to all the stranded dollar notes? I guess they all scramble to Texas to buy their last gasp of oil? Then we get bout of hyper inflation?
I dunno, yet. With or without the petrodollar we are still in conflict. The environmentalists plan to burn oil, lots of it, in the next few years, so they have a conflict in any event, mostly a self contradiction. But that contradiction is likely resolved with cash handouts, which most liberals these days would prefer.
There are just too many under currents to sort out until something breaks. Even the MMTers have gone on a trilemma with YCC and the are out out of the picture. And the possibility that a combination of Fed taxes and Congress taxes may just inflict a bout of deflation and save the petrodollar. The next step is to see if Biden's dream is whittled down to another cash handout. To many events have to be revealed before any of this is clear.
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