The USA cannot be in every village and board room. Without the dollar, it is not the master of the world. This explains almost everything. – Denis Rancourt

The truth is that the US foreign policymakers don’t actually care that much who ends up owning or operating the wells. They mostly care what currency the oil is bought and sold with. The war machine primarily serves Big Finance, not Big Oil. – Contemplations on the Tree of Woe

… Economics shapes everything — aesthetics, values, behaviors, beliefs, myths, laws, institutions, militaries, wars, religious practices, hopes, dreams, fears, entertainment, desires… If your survival depends on obtaining resources in a certain way, your brain will usually find ways to tell you that this is the right thing to do. – Toby Rogers

Unlocking the dollar from gold freed the USA to print as much money as it wanted, and to disregard any trade deficit (or “debt”) that it might accumulate, as long as the dollar kept its place as the de facto world currency. The mechanisms were brilliantly explained by Michael Hudson in his 1972 book “Super Imperialism: The Economic Strategy of American Empire”.

Put another way, before the petrodollar system, the US had to export goods to keep the dollar strong. But the petrodollar system made dollars the only currency capable of purchasing oil, which everyone needed. And so, after the petrodollar system, the US could just export dollars. The fourth-order effect of the petrodollar system was to financialize and deindustrialize the American economy. When a country can produce a particular good for export at a lower relative cost than other countries can produce it, that country is said to have a comparative advantage in that good. The petrodollar system gave the US (Federal Reserve) comparative advantage in manufacturing dollars. It could manufacture them at zero cost! No one else could manufacture them at all.

Under conditions of free trade, a country will both produce and export more of the good for which they have a comparative advantage, but will produce less and import more of those goods for which they do not. And that’s exactly what happened in the United States. America produced more dollars and produced much less of everything else. When I say “produced more dollars,” I mean that literally. When a commercial bank makes a loan, it creates new dollars out of thin air. It manufactures them on demand, like Printful.com but instead of t-shirts, banks make greenbacks.

The finance industry was, by far, the biggest beneficiary of the petrodollar system. The manufacturing sector, along with its union workforce, was the biggest victim. The collapse of America’s manufacturing heartland into the wasteland we call the Rust Belt was directly caused and exacerbated by the petrodollar system. Viewed as a whole, then, the petrodollar system was incredibly beneficial for (a) commercial banks, (b) arms manufacturers, (c) real estate owners, and (d) stockholders. For everyone else, the petrodollar system turned out to be a Trojan Horse, a promising gift that destroyed the recipient.