Summary of الخيار النووي!.. هل تبيع السعودية الديون الأمريكية؟ وهل يمكنها التسبب في انهيار الدولار؟

00:00:00 - 00:20:00

In this video, Ashraf Ibrahim discusses the significance of the Chinese president's recent visit to Saudi Arabia, and discusses the possible implications of this visit on the Saudi economy and the petrodollar system. Ibrahim also reminds viewers that, in order to subscribe to the Economic Informant, it is still important to donate.

• 00:00:00 In this video, Ashraf Ibrahim discusses the significance of the Chinese president's recent visit to Saudi Arabia, and discusses the possible implications of this visit on the Saudi economy and the petrodollar system. Ibrahim also reminds viewers that, in order to subscribe to the Economic Informant, it is still important to donate.
• 00:05:00 The petrodollar is a term given to the dollars that countries pay in exchange for oil or crude oil, and it is given this name as the majority of the quantities of oil that are sold all over the global markets with negligible exceptions are sold in US dollars, even if the United States is not a party to those deals in any way. The fixed exchange rate system was written off ever since the Nixon announcement, but the main guarantor of the dollar's strength then became the confidence in the commitment of the US government and the strength of its financial position. The Americans sought to go back to linking the dollar to another vital and strategic commodity in the global market instead of gold, even if implicitly, and this deal was known in the media as the petrodollar deal.
• 00:10:00 The following is a transcript excerpt of a YouTube video titled "الخيار النووي!.. هل تبيع السعودية الديون الأمريكية؟ وهل يمكنها التسبب في انهيار الدولار؟" followed by a 1-paragraph summary of the Triffin dilemma: America's problem when converting its currency into a global reserve currency. This conflict between pumping and curbing makes the state, whose currencies serve as global reserve currencies, contested by two opposite interests. This results in a chronic deficit in the current account of that country, which means the outflow is more than the inflow. This creates a budget deficit, which means the amount of money available within the country is less than what is needed to cover government spendings. In order to finance this budget deficit, America borrows from the few countries that have had no need for their large dollar balance.
• 00:15:00 The US Treasury has agreements with other oil-exporting countries not to release the exact number of their bonds' value, until 2016. This data, as of October 2022, shows that Saudi Arabia owns US Treasury bonds worth $121 billion. This number is constantly changing, but is currently stable at $121.1 billion. This puts Saudi Arabia at number 16 on the list of the largest foreign owners of US bonds. The $121 billion is not a small number, but it is not a huge number in the context of the total American national debt, which is $31.2 trillion. This huge debt is divided into two large categories: debts to government agencies and debts to public entities or the public. The government agency debt is the money that the US Treasury borrowed from other government agencies inside America itself, and this is only 6.82 trillion dollars. Someone might ask: what drives other US government agencies to borrow from the Treasury? I'll tell you, there are US government agencies such as the Social Security Fund, the Military Pension Fund, and others with surplus funds that they don't need immediately. So, instead of saving that money, these entities lend it to the government and the Treasury with an interest rate. The second and largest type of US debt is
• 00:20:00 The presenter questions whether it is possible for Saudi Arabia to sell large quantities of oil in currencies other than the dollar in the near future, and suggests that currencies such as the Chinese yuan may be potential candidates.