The Saudi government is negotiating to sell its oil at a price tied to the Chinese yuan. Although some nations would want the yuan to be replaced by the US dollar as the world’s reserve currency, the status of the economy makes this impossible.

The US dollar has maintained its status as the world’s reserve currency since the 1944 Bretton Woods Conference.

Since the 1944 Bretton Woods Conference, the US dollar has been the world’s reserve currency. The US Treasury’s gold reserves helped establish the dollar to reach the status. As World War II ended, the United States had the world’s largest gold holdings. Other nations’ citizens choose US Treasury securities over US cash to bolster their currencies.

As Washington’s engagement in Vietnam persisted and US deficits rose, nations who owned US assets backed by US gold reserves were concerned. When nations started to trade US commodities for gold, US gold stockpiles fell. This fact eventually led to the US dollar being removed from the gold standard and converted by then-President Richard Nixon into a fiat currency. Since then other countries followed the United States’ approach and switched to fiat money, every country now uses it.

Even though the United States has switched to a fiat currency, the US dollar remains the most valuable in the world. The value of a country’s fiat currency is determined by its people’s perceived wealth and power; the United States stands head and shoulders above all others.

One of the reasons the United States seems to be so robust in preserving its dominant power position is its geographical location. With friendly countries to the north and south, an ocean on both sides and a climate conducive to world-class agricultural land, the United States has various natural advantages. It includes readily navigable rivers transporting goods and services from the country’s center. The development of oil fracturing will also help the United States become more energy-independent. In addition, there are 4.2 trillion untapped Green River Formation oil reserves.

China’s debt-to-GDP ratio is estimated at 342 percent, posing significant risks to its economic stability.

This enduring strength may also be credited to the heritage of the US Constitution, which has made the continual transfer of political power between various political adversaries possible even after the riot and probable insurrection on January 6, 2021. So far, the United States has served as a beacon of stability in a world where economic situations may be harsh, and courts can be unpredictable.

Aside from the physical and non-physical advantages, the United States’ population provides the country with a competitive advantage in the industrial and domestic consumer sectors. Although the US population’s yearly growth rate is reaching stagnation, one might claim that the previous Trump administration’s strict immigration policies slowed demographic growth.

The COVID-19 outbreak exacerbates the slow rate of population growth in the United States. Currently, the projected global population increase by 2060 is between 376 million and 404 million. Nonetheless, the United States would remain a leading producer and consumer market. No other country has a comparable demographic advantage.

The widespread notion is that the United States is a declining nation, while China is a growing superpower. Although it is a widespread proverb, a cold and serious examination of the facts about China, the economic challenges it faces, like of natural resources and an aging population portrays a bleak image of the People’s Republic of China.

Geopolitician Peter Zeihan highlights that money is viewed as a political tool in China, unlike in the US, where it has intrinsic value.

Although many people cheer on China’s economic success and firms prostitute themselves to get access to China’s domestic market, few pay attention to the massive debt that is threatening the Chinese economy and the risks that such a collapse may entail. Chinese debt is estimated to be over $28 trillion. China’s debt-to-GDP ratio is 342% of GDP. Shadow finance is thought to be the reason the debt ratio is much higher.

Geopolitician Peter Zeihan compares and examines the concepts of money in China and the United States. In the United States, money is seen as an economic gain. Money is seen as a political good in China. Money has intrinsic value in the United States. Money is a political good in China; it is valuable only if it can be utilized to achieve a political goal.

China lacks the concepts of rate of return and profit margins, therefore, there is a danger; eventually, the law of supply and demand will triumph, and the Chinese economy will be forced to adapt. The damage that the inescapable correction will impose on the Chinese economy grows with the amount of time it takes to complete this economic adjustment.

The US Constitution’s legacy of peaceful power transitions contributes to the country’s enduring stability in a volatile world.

Although the United States has an open economy in which money may be transported in and out at will, the Chinese government regulates cash movement outside of the nation. Investors risk losing their whole wealth if a political crisis occurs that creates an economic disaster or escalates into a military conflict by restricting the flow of money in and out of China. Examining the bare bones data demonstrates the significant advantage of the US dollar over the Yuan. Any sensible economic operator would prefer to keep their money in the United States than in China.