China Is Days Away From Killing the Petrodollar
Not long ago, there was a popular joke in China that went something like, “Who is Xi Jinping?”
The answer was, “The husband of Peng Liyuan,” the famous singer Xi is married to.
Today, Xi is China’s president. He leads 1.4 billion people. And he’ll likely be the most powerful person in the world soon.
As I mentioned last Wednesday, Trump’s new steel and aluminum tariffs are part of a larger, escalating battle between the US and China.
China is rapidly displacing the US as the dominant global power. This shift is inevitable. China’s economy will be twice as large as the US economy by 2030.
This leaves the US with limited options…
- It could kick back and let China displace it as the most powerful country in the world.
- It could start a military war with China.
- And it could push the current trade battle into an all-out economic war against China.
I think a full-blown economic war is the most likely. Under President Trump, it’s all but certain.
That said, the Trump administration seems to underestimate China’s position—in both the short and long term.
For decades, the US has been able to exclude virtually any country it wants from international trade. Right now, if one country wants to trade with another, it basically needs US permission first.
That’s because (for a short while longer) the US dollar is the world’s most important currency. The US Navy also dominates the world’s oceans, controlling most major shipping lanes.
But China is building a new international system. Eventually, it will let China and its trading partners totally bypass the US.
And, as I’ll explain shortly, a key piece is set to fall into place on March 26…
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