Petrodollar Saga: How this affects the Presidential Election

The Petrodollar Background
Saudi Arabia has decided not to renew its petrodollar deal with the United States, which expired on Sunday, June 9, 2024. The petrodollar system, established in 1974 through a bilateral agreement between the US and Saudi Arabia, standardized oil pricing and trade in US dollars. As a result, every country purchasing oil from Saudi Arabia had to pay in dollars. This practice was adopted by several other oil-producing countries, solidifying the petrodollar system and strengthening the US dollar's global dominance.

Dissolution of the Petrodollar Agreement
With Saudi Arabia opting not to extend the petrodollar contract, it can now sell oil using other currencies, such as the Chinese RMB, Euros, Yen, and Yuan, as well as exploring digital currencies like Bitcoin. This shift diminishes the dominance of the US dollar. According to bestselling author and investment manager David Wright, the high standard of living in the US is largely due to the strength of the dollar.
The US economy benefits significantly from exporting dollars and issuing debt through treasury bonds, which stabilize the economy, lower interest rates, and maintain financial market liquidity. The dissolution of the petrodollar agreement could undermine America's global financial dominance, leading to higher interest rates and more expensive mortgages, rents, auto loans, student loans, and credit cards. This strain on the banking system, national deficit, and federal budget might result in higher taxes and decreased dollar value, making travel and imported goods more expensive. With the standard of living at risk, electing a presidential candidate capable of addressing these challenges is crucial.

Trump's Advantage: Embracing Cryptocurrency
At the time of writing, the presidential election betting site Polymarket favors Trump's odds at 55%, with President Joe Biden trailing at 33%. Trump's advantage has been bolstered by his pro-crypto stance, which aligns with the current weakening of the US dollar and the acceptance of cryptocurrency by Saudi Arabia. Despite legal issues surrounding both Trump and Biden, Trump's odds remain strong.

Biden's Scramble for Crypto Votes
President Biden's re-election team has noticed the shift in odds favoring Trump and is now considering accepting crypto donations through Coinbase Commerce. Statistics show that approximately 28 percent of US residents possess cryptocurrency. Without addressing this demographic, Biden risks losing a significant portion of voters to Trump.

Can Biden Reverse the Tide?
With over four months until the 2024 Presidential Election, Biden still has time to turn the tide. His team must effectively communicate his capability to mitigate the implications of the petrodollar dissolution and lead the US into a new era of cryptocurrency dominance. Convincing the 28 percent of crypto owners in the US of his leadership could be pivotal.

Prolonged Dusk Or A New Dawn?
The dissolution of the petrodollar agreement marks a significant shift in global economic dynamics, challenging the long-standing dominance of the US dollar. As the 2024 Presidential Election approaches, the choice of leadership becomes critical in navigating this new economic landscape.
Donald Trump's pro-crypto stance positions him favorably, especially as the weakening of the USD coincides with the rising acceptance of cryptocurrencies. His lead in the polls reflects a public inclination towards a candidate who appears adaptable to the changing financial environment.
Conversely, President Joe Biden's recent efforts to embrace cryptocurrency donations indicate a strategic pivot to regain lost ground. With 28 percent of US residents holding cryptocurrency, Biden's move to appeal to this demographic could be pivotal. If he can effectively address the implications of the petrodollar saga and present a vision for a crypto-integrated future, he may sway crucial voters.
As the nation stands at the crossroads of economic transformation, the election will determine whether America faces a prolonged dusk of diminished financial influence or a new dawn of digital currency leadership. The candidates' ability to adapt and lead in this evolving economic context will shape the future of the US and its position on the global stage.