At one point Wednesday, the most read stories on Bloomberg’s public website were, in order, an article about Microsoft laying off engineers, Apple delaying augmented reality glasses and a short piece quoting Mohammed Al-Jadaan, Saudi Arabia’s finance minister, who’s in Davos this week.

The Kingdom, Al-Jadaan told Bloomberg Television, has “no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro [or] whether it is the Saudi riyal.”

“Good enough!” exclaimed an editor somewhere, when a journalist suggested this headline: “Saudi Arabia Says Open to Settling Trade in Other Currencies.”

This is now a meme. And that’s appropriate because Zoltan Pozsar, champion of the “New Monetary World Order” thesis, which revolves in no small part around the idea of the Saudis settling oil sales in yuan, “thrives on memes,” as he put it earlier this month.

It’s not a good idea to “thrive on memes.” The defining feature of memes is that they’re stupid. The idea of the Saudis settling mass quantities of oil sales in yuan (which is what’s almost always implied in mainstream financial media articles like the one Bloomberg published Wednesday) is likewise stupid, which I guess explains why it’s a good meme candidate.

“Xi visited Saudi Arabia. The red carpet was rolled out,” Manus Cranny said. “Was there a discussion around paying for oil in yuan? Fill or kill on this rumor?”

I’ll answer that: Kill. Here’s Rabobank’s Michael Every to explain why (from last year’s epic “Why ‘Bretton Woods III’ Won’t Work”):

Saudi Arabia may export some oil to China and be paid in CNY. It exported $56 billion of energy to it in 2019 — but that is a fraction of the $2.6 trillion traded global oil market. Because the Saudis’ own currency is pegged to USD, it would open itself up to FX volatility using CNY. As such, the Saudis would price oil in USD and allow (some) payment in CNY; then the Saudis would sell the CNY back for USD. There are limits to what Saudi Arabia would sell in CNY, however, to avoid accumulating CNY of no use to them unless everyone else makes the same shift.

If that’s not enough for you, here’s Cameron Crise to explain the same thing, only using a series of questions (from a blog post dated March 15, 2022):

The question is, what will the Saudis do with CNY? If they convert it to dollars, then it’s functionally not much different than if China had paid in USD. If they retain it in RMB, however, the question is where they’ll invest it. Are there enough bonds to warehouse the annual yuan proceeds of Saudi Arabia and other oil exporters? There are approximately 27 trillion yuan of central government bonds, so net Saudi yuan proceeds would amount to a little less than 1% of that per year. That sounds feasible, right? It seems like it, until you consider that according to Bloomberg data, the 50 largest institutional holders of government bonds — which include a lot of domestic asset managers — hold a total of just over 700 billion yuan of bonds. The Saudis could conceivably match that in less than four years. Having lots of demand for your bonds seems like a nice problem to have, but a problem it will be if there isn’t enough paper for domestic banks and investors. So the question remains: Would China be prepared to ramp up government debt if that’s the price required for an internationally-accepted petroyuan?

Al-Jadaan didn’t say, on Wednesday, that any sort of epochal shift was afoot. First, he regaled Bloomberg with a perfunctory nod to the Saudis’ desire to facilitate amicable relations with pretty much anyone. “We enjoy a very strategic relationship with China and we enjoy that same strategic relationship with other nations including the US and we want to develop that with Europe and other countries who are willing and able to work with us,” he said.

Turning specifically to China, Al-Jadaan obfuscated: “There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal or whether it is their currency.” Pressed for something more concrete, Al-Jadaan demurred. “I don’t think we are waving away or ruling out any discussion that will help improve trade around the world.”

Well, no. The Saudis aren’t going to just invite Xi to Riyadh for a summit and then “wave him away.” Autocrats like other autocrats, and given the frosty relationship between Mohammed Bin Salman and Democrats both on Capitol Hill and in the White House, of course the Kingdom is open to hearing ideas about prospective yuan-denominated energy transactions.

But, again, what do you do with a bunch of CNY once you have it? Nobody seems to have any answers for that. And, as noted above, if the answer is just that you convert it into dollars, then what are we even talking about? The Saudis run a dollar peg. Further, the Saudis need US weapons and security guarantees against Iran and its regional proxies. Tehran is a military ally of Beijing. How is that going to work? That’s another question nobody seems to have any answers for.

The Credit Suisse Institute recently released a 40-page report called “The Future of the Monetary System.” It was co-authored by Pozsar. The report conceded, at various intervals, that “declaring the demise of US dollar hegemony and dominance is premature,” but it was chock-full of hypotheticals and “ifs.” For example:

[G]iven the heavy weight of China as an energy importer, it is well possible that the renminbi will gain a greater share in energy trade. Moreover, if oil exporters were to increasingly accept the renminbi and if their access to Chinese assets were increased, this would in turn boost the role of the renminbi as a reserve currency. At the CSRI Fall Conference, Zongyuan Zoe Liu, a fellow for international political economy at the Council on Foreign Relations, pointed out that China has been developing a platform for trading commodities in renminbi that would support such a trend. In this context, trading volumes on the Shanghai crude oil futures market advanced to third-highest globally in 2019, although they remain significantly lower than for the WTI and Brent contracts. Moreover, at the China-Gulf Cooperation Council (GCC) summit in late 2022, Chinese President Xi called for the joint use of the renminbi in oil and gas pricing, although no formal agreement was reached. However, with expanded energy cooperation between China, Saudi Arabia and other GCC members, a move toward the greater use of the renminbi in oil and gas pricing, trading and settlement between China and the region seems likely.

Fair enough. But what, exactly, does “greater use” mean? Prior to 2022’s crypto implosion, Bitcoin saw much “greater use” in the financing of extravagant lifestyles, but it was still a novelty. Maybe you could pay for a penthouse in Miami with Bitcoin, maybe you couldn’t, but you damn sure could in dollars.

More importantly, this entire discussion almost always ignores the elephant in the room: The Party. “The key problem with the current USD-centric system (or any monopolistic monetary system for that matter) is that shifts in US monetary policy, US interest rates and the US dollar have outsized effects on other countries,” Credit Suisse said.

That’s correct. And anyone inclined to participate in a yuan-based system has to ask themselves whether they want to subjugate their economic fortunes to the vagaries of CCP policy decisions. Jack Ma can speak to that. But he probably won’t. Because the last time he spoke up he lost what would’ve been the biggest IPO in history and was forced into hiding for almost two years.