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Saudi Arabia Matters

Why Saudi Arabia Matters

Today’s post is a little outside the box, I don’t usually write about Geopolitics. It’s good to have a little variety!

Over the past few weeks the crown prince Mohammed bin Salam has arrested more than 200 Saudi citizens, including 11 princes and four government ministers, on corruption charges, just as tensions with Iran are escalating. Should the rest of the world be concerned or is this just a Middle East problem ?

A little history

After World War II, the U.S. had the largest gold reserve, that made the U.S. in a position to reconstruct the global monetary system. At Bretton Woods in 1944 the new system was created. The U.S. dollar was tied to gold at $35 per ounce. This made the U.S. dollar the world reserve currency.

Over spending and Korean/Vietnam Wars by the late 1960’s the number of dollars to gold was plummeting. By 1971 the gold reserve dropped from 547 million ounces to 261 million ounces. In 1971 Nixon dumped the dollar tied to gold. To keep the reserve currency status Nixon made a deal with the Saudi elite and priced all oil in U.S dollars. This is how we have the U.S petrodollars as the reserve currency today.

The petrodollar system is why people and businesses everywhere in the world take U.S. dollars. Other countries have had little choice over this. The oil producers recycle those dollars back to purchase U.S. securities (such as Treasury bills), which creates liquidity in the financial markets, keeps interest rates low and promotes non-inflationary growth. So the U.S. can keep having deficits.

Final Thoughts

I am not saying the U.S dollar is going to lose its reserve currency but what happens in Saudi Arabia can influence us here and around the world. It certainly could effect the oil and stock market. There is a article by George Friedman that gives you a lot more insight into Saudi Arabia and history around middle east. Saudi Arabia’s Saturday Night Massacre. Also check out the Word of the Week Petrodollar.

In my opinion this is just noise, like North Korea it might raise oil prices and add some volatility in the market.

What do you think, does Saudi Arabia matter? Will it effect the oil or stock market? Or is it just noise in the market?

 

 

Don’t wait for retirement to enjoy life !!

Second Month of Blogging

Second month of Blogging 

Disclaimer I suck at writing and might even suck at blogging, so why do I do it ? Maybe to get better at writing and blogging?

It’s certainly not for the money – I am pretty happy just getting a couple views a day.

Like so many other people I enjoy reading and being part of the FIRE community. I have been fortunate and have had some success in my own financial life, but not even close to the net worth some of the other bloggers. I continue reading other people’s successes and it inspires me to keep investing and saving. Maybe that’s why?

 

All the comments from Pursuing Retirement have been positive and encouraging and I really enjoy seeing how many read my posts, and what countries people are from. For me having a blog has been a huge learning experience. That is one reason why. What is your reason for reading financial blogs?

 

2 month Pursuing Retirement update

It has been 60 days since Pursuing Retirement was born. The blog has published 37 articles and had 3209 views from 10 countries. ­ That is a huge win !! I have learned how to use WordPress and set up a website(at least the basics). It has been a great experience.

 

Goals for October/November

Lately, the schedule for the blog has been, Sundays the Word of the Week, and an article I write about the Word of the Week. Tuesday, a video or something of interest, and on Thursday’s Interesting Stuff on the Web which is cool things I have read throughout the week. I read a lot of articles and there is always a few that I feel is worth you reading. .

The blog has to focus on social media because as of now there is only a Facebook page and Google+. Considering having a presence on Twitter and Pinterest? If anybody has tips to share I would appreciate them.

 

Thank You for all your views