Thursday, June 02, 2016

The Kingdom of Saudi Arabia and US

Jun 2, 2016  Justin Arn

Photograph of Nixon in Saudi Arabia to negotiate Petrodollar Scheme.
Nixon Arrives in Saudi Arabia

On Friday, Bloomberg's Andrea Wong published another article in her continuing coverage of the US Treasury Department's disclosure of Saudi Arabia's Treasury Holdings. The Kingdom's holdings had been held secret for 41 years, that is, since the Nixon Administration. In her latest article, Wong tells the story of the Petrodollar, the strength behind the American Dollar, and in effect the American Economy for the last half century.

No matter what you think of Saudi Arabia, its Human Rights abuses, and its relationships with neighboring countries in the middle east; it's critical that you understand the relationship between the Kingdom and US via Treasury Bond holdings. The reason for this is that in effect, our currency has had value throughout the world as a result of one thing; the petrodollar system.

That system will end someday. Most think that day is coming quite soon. When it does, the world will not value the dollar the way it does currently. Understanding what that means and how that happened is the first step toward ensuring that, after the dollar's desmise, whether its in 2 years or ten years, we find other ways to ensure that countries outside the United States Continue to want to do business with us.

I urge you to read Ms. Wongs' reporting; keeping your critical mind at work during the read.