The rise of the global financial industry is treated by many economists as a critical component of the rise of neoliberalism. What few address is the role of the 1973 OPEC Oil Embargo and the 1979 Oil Shock in making modern financialization possible. Here, it will be demonstrated that the dramatic transfer of wealth from the industrialized, capitalist world to OPEC’s members triggered by the Oil Embargo and the Oil Shock created a vast pool of liquid capital. Oil prices inflation, as a result of Embargo and Shock, also triggered a balance of payments crisis that created unprecedented global demand for credit. Processing this capital and mitigating the inflationary pressures which followed the 1973 Shock encouraged the development of more liquid, internationally mobile instruments that made financialization possible and ushered in the effective privatization of money creation. This transformation of the creation of money, the rise of a new global debt cycle, and petrocapital-fuelled changes to financial practices laid the foundations of modern finance and the neoliberal world order as we know them.
Author(s): Ryan C. Smith
Publisher: Palgrave Macmillan
Year: 2022
Language: English
Pages: 251
City: Cham
Acknowledgments
Contents
List of Archives
Abbreviations and Acronyms
List of Figures
List of Tables
1 Introduction
Notes
2 Understanding Money and Finance
Financialization
Inflation
Notes
3 It Was the Best of Times, It Was the Worst of Times
Turmoil in the Core
Decolonization, Commodities, and OPEC
Notes
4 When Oil Shocked the Globe
Understanding Petrodollar Recycling
Notes
5 A Monetary Revolution
Opportunity in Crisis
The Euromarket’s Oil Transformation
Notes
6 Private Sector Takes the Control
Notes
7 A New Global Debt Cycle
International Syndication at the Bank of Scotland
Notes
8 Adapting with Derivatives
Interest Rate Futures
Swap Contracts
Notes
9 Revolution and Oil Shock
Revolution and Stranded Assets
Persian Gulf Crisis
Notes
10 The Crash of 1982
Notes
11 Conclusion
Works Cited
Index
