‘Look at China, with 1.5 billion people. India probably has more than that. And there are other nations in Southeast Asia... Indonesia... Pakistan... Bangladesh. It seems that the trends in development are gradually shifting in that direction.’

—Vladimir Putin 

America stands like a colossus on an increasingly slippery world.  

Oswald Spengler, German historian and philosopher; author of Decline of the West

Last week, more grease was added. America’s landmark deal with Saudi Arabia expired. It was the deal made in the 1970s by Wall Street bond dealer extraordinaire, William Simon. In essence, it solved two problems at once — one for the US, the other for the Saudis.  

The US needed to export dollars. The Saudis needed to export oil. The agreement said that henceforth, if you wanted to buy Saudi oil, you had to pay in dollars. Then, the Saudis could immediately exchange them for US Treasury bonds.  

But there was one other important point. The US would provide ‘security’ for the Saudi government.  

Presto! A ‘foreign entanglement’ of the sort the founding fathers warned against. TipRanks: 

The petrodollar agreement, formalized after the 1973 oil crisis, stipulated that Saudi Arabia would price its oil exports exclusively in U.S. dollars and invest its surplus oil revenues in U.S. Treasury bonds. In return, the U.S. provided military support and protection to the kingdom. This arrangement was a win-win situation for both; the U.S. gained a stable source of oil and a captive market for its debt, while Saudi Arabia secured its economic and overall security.  

The ‘deal’ was secret. The Saudis did not want the rest of the Arab world to know how closely they were working with Israel’s ally, the US. And even today, the ‘fact checkers’ say the deal was ‘fake news,’ that nothing formal ever existed which mandated the Saudis would sell oil only in dollar. 

Formal or informal, the actual terms of the relationship have been away from the public for more than 40 years. But the sweetheart deal was part of the reason the US attacked Iraq rather than Saudi Arabia, following 9/11. The perps were almost all Saudis, not Iraqis. But Saudi Arabia was a major holder of US debt with a special status. That deal expired on June 9^th, according to reports.  

Decline of the West

Yesterday, we gave our opinion. The two leading candidates for the White House are equally unqualified for the job... but perfect for the mega-political challenge ahead.  

That is, we believe the ‘decline of the West’ began around the end of the 1990s. In 1999, you could have sold the 30 stocks in the Dow index and gotten enough money to buy 41 ounces of gold. Today, you’ll get only 17 ounces. In other words, the real value (measured in the gold) of America’s leading businesses has been more than cut in half. That’s a sign of decline. Not definitive... but suggestive. 

In 1999, the US and its allies were on top of the world. The richest country in the world. The most admired. With the best technology. Coolest culture. The US had a balanced budget. And except for bombing the hell out of Serbia, it was more or less at peace. The Soviet Union had recently given up... leaving the West without a rival.  

It was at that unlikely moment that America lost its footing. Elite firepower lobbyists took control of Congress. Balanced budgets and peace were soon things of the past...  

In 1999, the US owed $5.6 trillion.  A lot of money.  But still manageable.  Now it owes $35 trillion.  Much of this debt – a total of nearly $100 trillion, public and private – cannot be repaid. Instead, it and the fictitious wealth it represents will disappear as the credit cycle runs its course.   

Nature is full of patterns.  Once astride the world, a hegemon must find the hapless, hopeless leaders who will help it slide off.  The US has found them.  Neither Biden nor Trump will cut spending. Neither will withdraw from the role of global Alpha Nation. Neither wants to restrain the firepower industry or break the war mongers' grip on Congress. 

How significant the end of the Saudi deal will be, in the near term, we don’t know. As a practical matter, the world's oil markets function in dollars. Both buyers and sellers have dollars and know that dollars are easily converted to any other asset they want. 

But the slippage is underway.  Here’s this from Responsible Statecraft: 

Global opinion of US goes down the toilet 

Dragged down in important part by disapproval over the U.S. position on the Gaza war, the popular image of the United States abroad has declined over the past year, according to a new poll of public opinion in 34 countries released Tuesday by the Pew Research Center. 

The survey, the latest in an annual series that dates back more than two decades, also found that international confidence in U.S. democracy has fallen. A median of four in ten of the more than 40,000 respondents said U.S. democracy used to be a good model for other countries to follow but no longer is. That view was most pronounced in the ten European countries covered by the poll. 

When you’ve got the gun in your hand, you don’t necessarily care what others think of you. But if the Top Gun, butt-kicking nation could remain in charge forever, we might be part of the Roman Empire, not the US empire.  

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