The Petrodollar was the monetary system put in place to provide stability to the dollar after President Nixon ended the Bretton woods system on Aug 15, 1971.
Bretton Woods came about in July 1944 and basically established the U.S.Dollar as the world reserve currency, It was established that the U.S. would hold the world reserve currency and that the U.S. dollar would be backed by gold with $35 U.S. dollars being redeemable for one ounce of gold. All other world currencies would be backed by gold by being pegged to the U.S. dollar.
It was the monetary system that was in place after WW2, and it lasted 27 years.
However, the gold that was supposed to be backing the dollar was being sold off thru the back door to pay defense contractors for the Vietnam war and it was becoming clear to French President Charles De Gaulle that the United States was not honoring the Bretton Woods system and that we did not have the gold to back up the U.S. dollars.
So in early August 1971 President Georges Pompidou sent a naval warship to New York harbor with instructions to bring back its gold from the New York Federal Reserve Bank.
Nixon didn’t have much of a choice but to take us off the gold standard and end the Bretton Woods monetary system.
Now, In October of 1973 in response to the US supplying weapons to Israel during the Yom Kippur War Saudi Arabia proclaimed an oil embargo which caused oil prices go up 5 times.
In response, Richard Nixon had Henry Kissinger and other U.S. foreign advisers come up with a solution in regards to the instability of oil prices and lack of faith that nations had in the U.S. dollar.
So in 1974, Henry Kissinger was sent to Saudi Arabia to talk to the Saudi Royal family.
An agreement was reached that the U.S. would provide military hardware and support to Saudi Arabia. In return, Saudi Arabia would price its oil in U.S. dollars and take their excess currency and profits and purchase U.S. treasury bonds.
Saudi Arabia then convinced the other members of OPEC (Organization of the Petroleum Exporting Countries), to do the same.
Also in May of 1973, (S.W.I.F.T) Society for Worldwide Interbank Financial Telecommunication was founded to establish common standards for financial transactions.
Now when any country traded around the world they first had to trade into U.S. dollars to purchase oil and other commodities under the guidelines laid out under (S.W.I.F.T).
Events around the world are bringing a quick end to the old system. And nations around the world are learning how to do trade outside of (S.W.I.F.T.). This will mean much less demand for U.S. dollars or Petrodollars and much less demand for U.S. Treasury bonds.
This will likely not turn out well for most people, especially Americans who don’t understand what’s going on and have enjoyed the benefits that come from being citizens of the country that holds the world reserve currency. I recently wrote a book that explains what can be done to protect yourself. My book was designed to be a quick read and Chapter 6 explains how to prepare for the new monetary system.