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Petrodollar warfare

Petrodollar warfare refers to a hypothesis that a hidden, driving force of United States foreign policy over recent decades has been to keep the United States dollar as the world's dominant reserve currency and as the currency in which oil is priced.

According to proponents of the petrodollar warfare hypothesis, because most countries rely on oil imports, they are forced to maintain large stockpiles of dollars in order to continue imports. This causes demand for USDs to remain high, regardless of economic conditions in the United States. This in turn allegedly allows the US government to gain revenues through seignorage and by issuing bonds at lower interest rates than they otherwise would be able to. As a result the U.S. government can run higher budget deficits at a more sustainable level than can most other countries.

 

 

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