The Demise of the Petrodollars and the New Economy
Two weeks back, Saudi Arabia unceremoniously ended an agreement that had been in force for 50 years, one which has girdered the birth of globalism and underpinned the economic systems of the international world order — the petrodollar deal.
The Most Important Deal You Might Not Have Heard Of
The deal had previously all but guaranteed the dominance of the dollar for the modern era. There are other factors too, of course — American economic and military primacy for one. Yet power is recursive, and the more that the world used dollars as the default reserve currency, the more American dominion became entrenched.
A huge bedrock of that was the fact that oil, nature’s catalyst, could only be bought with dollars through OPEC, and that denomination meant all nations had to have substantial reserves of USD on hand at all times to fuel their economies — something which gave the US enormous geopolitical advantages both back in the 1970s all the way up till today.
The petrodollar was a knock-on effect of the US coming off the gold standard — when the spectre of runaway inflated ‘fiat’ became all but government policy — although at the time economists like Maynard Keynes ‘rejoiced’. The petrodollar agreement kept the currency strong in the face of this threat, as every country in the world was hungry for dollars to keep their trucks moving and their boilers lit.
The End of Fiat?
Its end comes at a time of unprecedented fears about the threat that uncorrelated and unbacked fiat currencies pose to global economic stability. For the last 15 years, we’ve seen an enormous rise in the value of tangible assets; gold, stocks, and of course crypto — the main beneficiary — as populations look for alternate systems of social wealth that aren’t reliant on the auspices of a few civil servants and short-termist politicians behind closed doors. One which establishes financial self-sovereignty and egalitarian economies at a time when state-sponsored capitalism has never looked so fraught as a social system.
Add to this ‘domestic’ fear — if we take the American point of view — the ‘international’ fear of the dollar’s dethronement as the world’s reserve currency. For decades, the BRICS nations — China, India, Russia, Brazil, South Africa — have bemoaned the disadvantageous conditions imposed on them by their requirement to use dollars on the international stage. Now, it seems, they’ve had enough.
New Threats to the Dollar
The talk of a new BRICS currency will radically alter global geopolitics in a way few suspect. The world has become almost comfortable with American hegemony, even those naturally considered its opponents. A BRICS currency, mooted to be reserve-backed by a combination of gold, crypto, baskets of foreign currencies, and industrial assets, would literally change the world. It might be subtle, but once everyone is trading their national wealth in something backed by more than American military dominance — where America’s opinions no longer matter so much — the international landscape of business, and opportunity, will change.
Why This Matters to Crypto
Why does this matter? Why does the end of the petrodollar mean anything for the integration of crypto at an institutional level?
It’s because it’s a symptom of a sea-change that began with crypto in the first place. The ability to consecrate trustless unimpeachable value that can then be traded freely in the digital economy whilst retaining self-authorship and ownership of funds. A return to anti-authoritarian suspicion by the population. The chance for a generation of young people to own their own wealth.
The petrodollar is just the first of many mainstream untetherings from fiat and the latest in a succession of global events that have refocused the importance of true ownership for individuals and institutions. The lack of a truly ‘safe haven’ currency creates a far more dynamic Forex and Real World Asset market with price-relationships less mediated by the price of the dollar that day. Exchange rates will inherently become more volatile.
Institutional balance sheets are, over the next few years, going to become a lot more diversified — with portfolios managed across multiple currency streams and in multiple fiscal environments — including on-chain. This already happens, of course. The point is the end of the petrodollar is the first of many dominoes that will fall that will eventually unseat the dollar’s dominance, and a new, more pluralistic global economy will emerge as a result.
Onomy’s Role in the New Economy
Onomy plans to be the centre of that new pluralist global economy. The chain is designed to be a marketplace for Forex and Real World Asset trading underpinned by the crypto-primitives that have restored wealth-ownership to the masses. The ONEX exchange supports not only crypto assets but also representative real-world assets and currencies that can be traded at the throughput necessary to conduct international trade. Stablecoins can be minted on Onomy using $NOM as one of the underlying collateral types to facilitate on-chain Forex trading at a fraction of its usual bureaucratic cost. All this is managed through the Onomy Superapp, which is not just for individuals looking to store assets but also for institutions who are beginning to bridge their real world portfolios on-chain to interact with the self-sovereign economies that are beginning to emerge.
Petrodollar, BRICS currencies, US economic travails — all of these are just the harbingers of something more. A likely detachment from the money systems almost every person reading this has known their whole lives. The return to real hard assets away from pieces of paper. An increasing look towards a reserve-backing for currencies that doesn’t ultimately extend from the point of a gun. A more sovereign and autonomous market with the crowd being the bank (e.g DeFi), the crowd acting as escrow, the crowd facilitating international trade — all through on-chain systems that are fairer, more equitable and — get this — faster and more efficient. When that new economy arrives, Onomy will be the rails on which it operates. A foundational interface for financial self-sovereignty. The access point to the new era of globalism.
