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Why did the White House roll out the red carpet for the Crown Prince of Saudi Arabia Mohammed bin Salman Al Saud? The Biden administration tried to make Saudi Arabia “a pariah” but that never worked. While the press fawns over the way President Trump acted with the Crown Prince, we want you to understand why the U.S. and Saudi Arabia are blood brothers.
To understand why Washington rolls out the red carpet for a country it frequently criticizes, you have to go back to the 1970s. When Nixon ended the gold standard in 1971, the dollar was vulnerable and the U.S. needed a new anchor, and fast. Treasury Secretary William Simon cut a secret deal with Riyadh: Saudi Arabia could buy U.S. Treasuries outside normal auctions, on privileged terms no other nation received, as long as they priced all their oil in U.S. dollars. That single agreement created the petrodollar system, guaranteed global demand for the U.S. currency, and allowed Washington to borrow endlessly without facing the consequences any other country would.
This is now a decades-old arrangement where the U.S. and Saudi Arabia are locked into each other’s survival.
On Tuesday, Saudi Arabia announced a massive new U.S. investment package this week and President Trump bragged that America will “make money” from Saudi Arabia’s cash, as if foreign capital were a gift to the American people.
It can’t work that way while these investments exist inside a system that lets Washington rack up debt without limit. That debt devalues the dollar, which is a theft from working Americans. That’s the real cost of the petrodollar, and it’s one Washington would rather you never think about.