Sunday April 24, 2016
For decades the US and Saudi Arabia have shared a peculiar relationship: the Saudis sell relatively cheap oil to the United States for which they accept our fiat currency. They then recycle those paper dollars into the US military-industrial complex through the purchase of billions of dollars worth of military equipment, and the US guarantees the security of the Saudi monarchy.
By accepting only dollars for the sale of its oil, the Saudis help the dollar remain the world’s reserve currency. This has meant that we can export inflation, finance the warfare/welfare state, and delay our day of financial reckoning.