ThatsTooOP
ThatsTooOP t1_jegdnrx wrote
Reply to ELI5: why does the US need the dollar to be the only primary form of currency for oil? by aresyves
Well, imagine you and your friends like to play a game where you trade toys with each other. If everyone agrees to use marbles as the currency for this game, it becomes easier to trade toys because you all know how much marbles are worth.
Now, imagine that many countries around the world trade oil with each other. They also need a currency that they all agree is worth something, so they can trade oil easily. For a long time, they agreed to use the US dollar as the currency for trading oil. This means that when countries buy or sell oil, they use US dollars to do it.
ThatsTooOP t1_jegf5x4 wrote
Reply to comment by aresyves in ELI5: why does the US need the dollar to be the only primary form of currency for oil? by aresyves
If you print more marbles in the toy trading game, their value decreases. Similarly, if a country prints more currency for trading, its value decreases, leading to inflation. In the case of oil trading, if the US prints more dollars, the dollar's value may decrease, and other countries may find a different currency to use for oil trading or create their own.