It was announced the other day that Saudi Arabia and China are opening a $7 billion local currency swap line.  

It prompted the highest-trafficked tweet of mine ever.

And there it is… the Breaking of the Saudi Riyal’s peg to the USD has begun.https://t.co/1kdki19Ihe — Tom Luongo (Head Sneetch) (@TFL1728) November 20, 2023

Mark Wauck over at Meaning in History linked to it. Mark didn’t really elaborate my point so I posted a reply in his comment section.

They [the Neocons] most certainly are flying by the seat of their pants, Mark [his conclusion]. What is happening now is pure desperation as they try to figure out how to extend and pretend this war through the election cycle to maintain the possibility of the ages-old enmity versus Russia.

But the KSA flip is real. Swap lines are a precursor to intervention. My tweet was high concept but it goes like this:

1) Announce swap lines

2) Start taking real amounts of yuan for oil

3) This breaks the peg of the Riyal to the USD when oil is relatively strong, not in crisis mode

4) The substitution of the CNY for the USD is existential for the US who then attacks the KSA exchange rate, pulling money out of the country…

5) SANCTIONS ON KSA.

6) Expanded swaps to convert USD encumbered assets with Riyal assets, once USD are verboten in KSA.

7) China provides them, with loans repayable in CNY.

Moves that occurred 10 years ago are instructive of why we are where we are today and where we may be headed.

The announcement of the swap lines is likely a pre-announcement of an Economic Hitman-style attack on Saudi Arabia by the US.  It’s not really that difficult to foresee.  

For historical context, Russia was hit hard in 2014/15 by the collapse in oil prices. In retaliation for “stealing Crimea” an attack on oil prices was organized by President Obama and the gaggle of usual suspects to trash the oil price.

In June of 2014 oil closed at $112.36. And the price began dropping the first trading day of July 2014 and didn’t stop until the end of 2015.

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