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by JumpCrisscross
2891 days ago
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> Foreign demand for USD does in effect lower US govt borrowing costs This is correct. But petroleum trading in dollars is an effect of the dollar's hegemony, not a cause. Every dollar transaction contributes to the dollar's network effects. But petroleum's contribution is small and overstated. Petrodollar hypotheses are closer to conspiracy theories than useful models. The U.S. dollar is underwritten, ultimately, by American consumption. About 15% of American imports are petroleum [1][2], so it's a significant factor. But it's not special in any particular regard. [1] https://traderiskguaranty.com/trgpeak/what-are-the-top-10-u-... [2] https://wits.worldbank.org/CountrySnapshot/en/USA/textview |
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