Expired US-Saudi Agreement Sparks Speculations of American Decline
In the 1970s, a landmark agreement was struck between the United States and Saudi Arabia, a deal that aimed to solve two pressing issues: the US needed to export dollars, and the Saudis needed to export oil. This pivotal pact, made under the leadership of U.S. President Richard Nixon, was kept secret to avoid revealing the close working relationship between the two nations to the rest of the Arab world.
The deal stipulated that Saudi oil would be paid for in dollars, which could then be exchanged for US Treasury bonds. This arrangement not only boosted the US economy but also established the US dollar as the global standard for oil transactions. Fast forward to 1999, and the US owed $5.6 trillion in debt. Selling the 30 stocks in the Dow index would have been enough to buy 41 ounces of gold. Today, the same amount would only buy 17 ounces of gold, reflecting the erosion of the US dollar's value over time.
The deal, which expired on 9th June, may signify the continuing decline of the West, which began around the end of the 1990s. The world's oil markets still function in dollars, but the slippage of this system is underway. The agreement's expiration could be a sign of things to come.
The US's debt burden has significantly increased since 1999. Currently, the US owes $35 trillion in debt, much of which cannot be repaid. This mounting debt, along with the fictitious wealth it represents, will likely disappear as the credit cycle runs its course.
International confidence in US democracy has also fallen. A new poll by the Pew Research Center shows a decline in the popular image of the US abroad over the past year. This decline could be attributed to the fact that neither Joe Biden nor Donald Trump plans to cut spending, withdraw from the role of global Alpha Nation, or restrain the firepower industry.
The US also provided "security" for the Saudi government as part of the deal. However, the erosion of the West's influence and the changing global dynamics are raising questions about the long-term sustainability of such arrangements.
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