China has got a major victory in the Middle East and the U.S dollar is Officially in trouble the Chinese have Broken a deal between Saudi Arabia and Iran two historic Rivals that have now Agreed to restore diplomatic ties we are Both the Saudis and Iranians reopening Embassies in their respective capitals And on track towards peace I think we Can see the different approaches being Made on the global stage we have the United States sanctioning Iran on their Energy exports and telling the Saudis to Pump more oil or else that approach Obviously didn't work in fact a ton of Weapon sales are to the Saudis are for Defense against Iran but if there's Peace in the region it doesn't take a Genius to realize that U.S armed sales Could form quite a bit now China is Taking another approach and it's Building their influence by forging Peace in the Middle East and this has Huge implications for American power in The region especially the US Dollars Hegemony now even the mainstream media They have admitted that this is a big Loss for the United States this movement I shattered the idea that America is Number one in the Middle East and of Course Washington they are downplaying The incident saying we support any Effort to de-escalate tensions in the Region we think it's in our interest
This is not about China but as you Quickly see this move is a concrete step Towards a new world order but who cares About the Middle East right does peace Between Saudi Arabia and Iran even Matter yes it matters a lot because if There's lasting peace in the region we Will see the dollarization accelerate Like never before and let's quickly Recap why the Dollar's future is Dependent on the Middle East there are Two systems that are keeping the dollar At the top spot today one is the euro Dollar system which is the flow of Dollars that's happening outside of the United States for example the majority Of global trade is done in U.S dollars Plus over 60 percent of foreign debt is Issued in dollars as well many countries They need greenbacks to import staff and To service their debt so there's Global Demand for the reserve currency but that Is is also dependent on how useful the Dollar is what physical stuff or Commodities can I buy with those pieces Of paper and the most useful commodity Is oil now since the 1970s when Nixon Sued the deal of the century the Saudis And by extension OPEC they have been Pricing their oil to the world in U.S Dollars they then take their dollars and Recycle them back into U.S treasuries Landing the U.S government money now This is called the petrol dollar system
What China did in the Middle East is Give Saudi Arabia an out to depend Less On the United States and start to break Away from the dollar network if the Saudis start to price their oil outside Of the dollar maybe in the Chinese Yuan Or the real this will destabilize the Dollars the world Reserve currency we Are at the beginning of true Deteriorization especially if the Kingdom and Iran joins bricks which is Becoming very likely now let's realize That Saudi Iran rivalry has lasted for Decades it centers around religious Differences and a struggle for how in The region with a conflict in Yemen as Well we can see how the map has been Split into different factions countries Like Egypt and UAE siding with the Saudis versus Iran and Iraq who are Close allies so getting them to the Peace table is an incredible feat and we Need to understand why this matters the Only reason why they are coming together To work things out is because there's Something worse out there and that is The fear of the West more specifically The fear of Western sanctions we know Saudi Arabia is an oil Giant and their Economy revolves around it in 2022 there Are all revenues hit 326 billion dollars But their oil sales are 79 of their Total exports Saudi Arabia is highly Dependent on energy sales and with the
Price of oil dropping well below 80 Today which is also signaling a Recession their oil revenue is also Contracting higher oil prices help their Economy grow by 8.7 last year the Fastest in the world so if anything Happens to their energy sales their Economy could collapse what are we Seeing today the United States imposing A price cap on Russian Isle sure that Didn't Russia but he has put Pressure on their revenues the Saudi Energy Minister has said publicly that The kingdom won't sell oil to any Country imposing price caps and that Sounds very familiar it sounds like Russia's position on oil sanctions as Well plus we also have the United States Reviving The no pack Bill to pressure OPEC to stop making production cards Basically they want to force the world's Biggest oil producers to sell cheap oil The US wants to bring inflation down on The supply side so the crisis facing Saudi Arabia is existential if they get Hit by G7 sanctions and the price cap is Imposed their Western Oil revenues will Tumble so why do you think they are Pivoting towards China and Asia at large Now for Iran it goes a little deeper Than falling oil prices they are already Part of the western sanction list in Back they have over 4 000 sanctions Imposed on them and it's just under
Russia as the most sanctioned country Iran has also their assets Frozen by the United States is trying to get them back In the world court now we are talking About over 1.7 billion dollars from Iran's central bank now that's nothing Compared to the Frozen Russian reserves But it's still a lot of money and According to the United Nations up to 120 billion dollars of Iran's money has Been blocked by the United States and That is on top of the current sanctions On Iranian oil so it should be very Obvious why Iran is moving towards peace With the Saudis and the economic Alliance with China is because they need New trading partners outside of the West Essentially the United States has United The Middle East thanks to their Sanctions and threats now let's talk About China's plan their agenda is very Simple and we'll be talking about it for A long time it's all about oil and the Dollarization they want to secure their Energy security and at the same time Break the walls ties to the dollars now Energy security very straightforward by Securing peas in the Middle East China Will secure an uninterrupted flow of Energy from both Iran and Saudi Arabia For example we have Saudi aramco Pledging energy Supply to China for the Next 50 years so peace in the Middle East guarantees that but let's focus on
The dollar situation because it's much More interesting we must understand China's current geopolitical position Today they are drifting slowly towards An economic War of the United States we Have technology sanctions flying around Spy balloon sanctions and even warnings Of a hot War by 2025 by American Four Star General and if the West sanctions China they will be affected to a Significant degree as well it will Backfire but China was also the enormous Economic damage because the world still Runs on the dollar system let's take China's holding of U.S treasuries for Example we know they have been dubbing Their U.S bonds ever since the Russian Sanctions happened in February 2022 the Latest treasury data shows us that China Has videos their treasury Holdings by Seven billion dollars in January but it Is still at a snail's pace China can't Afford to dump all their dollars yet Because it is still the reserve currency They need dollars to import staff and to Suppress the Chinese Yuan to make their Exports more competitive and the only Way that they can digitalize faster is If the dollar loses ground as an International medium of exchange and That's why they are making moves at the Birthplace of the petrol dollar itself Which is the Middle East now if Saudi Arabia Iran and OPEC starts pressing oil
Outside of the dollar and uses the Chinese Yuan for example it allows China To trade more using their local currency Relieving pressure to rely on dollars They can buy crucial Imports using the Yuan and start releasing more of their Dollar denominated Holdings and that's Why the Middle East is just so important To China apart from Just Energy security If the Gulf States and Arab Nations Cooperate that China can effectively De-dollarize and reduce the impact of Western sanctions they can sanction Prove themselves better but let's take a Look at Iran and Saudi Arabia together As a whole they are part of OPEC and now Stronger as a group especially when it Comes to decision making but there's Another group that's going to get Stronger very soon and I'm talking about Breaks now we know Saudi Arabia wants to Join bricks they have expressed interest But one issue that came up was if their Long-term rival Iran was cool with that After all Iran has also applied to join China and Russia in the brics block as Well but guess what now it isn't much of A problem if the Saudis and Iranians are Back on track towards peace now if the Kingdom and Iran both join bricks this Changes everything we can see both of Them control over 16 percent of oil Production together and together with China Russia and Brazil we are talking
About over 35 percent of world oil Production brics plus could become Another oil superpower they can outrival The oil production of the NATO countries Which mainly come from the United States And Canada but the real danger to the Dollar is how the brics group can Accelerate the dollarization if they Expand now that talks about a new brics Currency Russia's lavrov has hinted many Times that they will discuss this during The 2023 brick Summit in South Africa But whether that becomes a reality who Really knows but the most immediate Danger to the dollar is the rise of Bilateral trade this means using each Other's local currency for their exports And imports for example China could use The Saudi riyal to buy oil and the Kingdom can then use the Chinese Yuan to Buy Electronics from China and the end Result is still the same they bypass the US dollar bilateral trade is just Another term for non-dollar trade and in The first five months of 2022 China Breaks bilateral trade grew by an Impressive 12.1 percent and this was Almost four percentage points higher Than China's overall trade growth and What does this mean this tells us one Thing China's moving their trade away From the West and more towards the brics Group we can see bilateral trade between China and Russia growing by an insane
26.5 percent with a 7.3 percent growth Of Brazil and a 10 growth for India as Well so if Saudi Arabia and Iran joins Brics they can expect their trade to Grow outside of the dollar system brics Will become a self-enclosed ecosystem we Have countries that can supply energy And others like China can supply Finnish Products the Saudi Finance Minister Himself shocked the world doing the davu Summit he told everyone that Saudi Arabia is open to trading in currencies Outside of the dollar so this isn't a Fantasy it is fast becoming a reality And this is what the globalization looks Like very soon we'll see the world split Into two big economic blocks we have the G7 versus the bricks and if bricks Evolves into a bigger group with the Middle East inside we'll see two centers Of trading power the G7 and NATO's Economic power will be around the Current dollar system Financial markets And Technology the bricks will be Focused on Commodities energy and Manufacturing but let's quickly touch on The implications for the United States If the dollar continues to lose Reserve Status this could drag the U.S economy Down doesn't mean that the U.S economy Will crash I believe it will still grow By just more slowly relative to the rest Of the world the good old days of 10 a Year for a decade on the SMP could be
Over now if the world story diversifies Away from the dollar this is going to Put upward pressure on bond yields and We're already seeing the Havoc higher Interest rates are rigging on the U.S Economy we have Banks like svb Collapsing thanks to huge losses from Treasury beds a big part of the U.S Economy is tied to all this leverage on Low interest rates that stretch back a Decade or more and this move towards Peace in the Middle East is going to Take the dollarization to the next level I want us to look at the Middle East as The swing voters of an election they Decide the outcome we have the G7 on one Side and China plus Russia as the Opposing block you'll be countries like Saudi Arabia and Iran they have the Power to shift the world order and it Looks like they are moving closer Towards Asia China and the brics group Now I don't believe that the Saudis will Price their oil in Yuan tomorrow I think They are still more intermediate steps Before that happens joining bricks is an Obvious one pricing their oil in their Own currency the real is another but Let's look at two more concrete signs That we can actually measure the first Saudi Arabia's treasury Holdings right Now we can see the kingdom slowly Unwinding their treasuries but it is not Definitive yet since May 2022 they are
Only down by 3 billion it isn't Significant enough yet but if they keep Dumping U.S bonds then it is a sign that They are showing up their reserves and Preparing for New World Order a world Where they rely less and less on dollar Denominated assets and the second sign Is if Saudi Arabia buys gold remember That gold is priced in dollars So when You buy gold you're effectively selling Away dollar us for the yellow metal and We have China putting the world on Notice buying more physical gold in February adding nearly 25 more tons that Is four months in a row now and it is a Deteriorization cry to the world so Let's watch what the Middle East does if You see the Saudi star stacking gold Month after month then it's obvious Which way the wind is blowing we need to Take the bringing together of Iran and Saudi Arabia more seriously China's next Move will be an ambitious one which is The upcoming GCC Iran meeting with the Gulf States if they succeed and manage To iron out the deal we will see a Stronger all pack and this means another Step closer towards pricing oil in the Chinese Yuan and resisting any Western Sanctions together I want to end this Off with a quote by doctor and now from The Quincy Institute the fact that China Brokered the deal is significant it Shows the role that China could play in
Fostering a Middle East defined mobile Cooperation and trade and less by Conflict and weapon sales has been the Norm 100 U.S dominance the next shoot to Drop will be when either Saudi Arabia or Iran or maybe both joins the brics group Then we will have a true speed of Paradigm shift in the world we're going To see the dollarization proceed in a Very big way because it breaks bands Together and they work more closely Together we could see their economies Grow much faster than the West so let me Know what you think how important is China's victory in the Middle East will This shift the world order let me know In the comments below stay safe be sure To smash the like button and subscribe As we navigate through these crazy times
