Changes

The petrodollar system became essentially a protection racket for the large oil-producing countries in the [[Middle East]] aligned with the [[US]], such as [[Saudi Arabia]], [[Kuwait]], the [[United Arab Emirates]] (UAE), [[Bahrain]], and [[Qatar]]. The US [[military]] supposedly granted "[[security guarantee]]s" to these countries in exchange for their agreement to denominate oil sales in [[US dollar]]s and recycle the dollars into the [[US Treasury]] [[market]] to finance the US [[federal government]] [[budget deficit]], thereby creating [[demand]] for the US dollar outside the [[United States]] and helping keep [[interest rate]]s lower than they otherwise would be.  

The petrodollar system became essentially a protection racket for the large oil-producing countries in the [[Middle East]] aligned with the [[US]], such as [[Saudi Arabia]], [[Kuwait]], the [[United Arab Emirates]] (UAE), [[Bahrain]], and [[Qatar]]. The US [[military]] supposedly granted "[[security guarantee]]s" to these countries in exchange for their agreement to denominate oil sales in [[US dollar]]s and recycle the dollars into the [[US Treasury]] [[market]] to finance the US [[federal government]] [[budget deficit]], thereby creating [[demand]] for the US dollar outside the [[United States]] and helping keep [[interest rate]]s lower than they otherwise would be.  

Any country that needed Persian Gulf oil needed US dollars to buy the oil. [[Congress]] constantly looked for any excuse to inflate the US monetary base to [[export]] dollars to meet global demand.

Any country that needed Persian Gulf oil needed US dollars to buy the oil. [[Congress]] constantly looked for any excuse to inflate the US monetary base to [[export]] dollars to meet global demand for dollars.

   

   

The petrodollar system was a massive prop for the US dollar ever since [[Nixon]] severed the dollar's last link to gold in 1971. As a US ally, [[Iran]] under the [[Shah]] was originally intended to be a major buyer of US Treasury debt in the petrodollar system. After the break in [[diplomatic]] relations and the imposition of [[economic sanctions]] as a result of the [[1979 Islamic Revolution]], it made more imperative a disproportionate reliance on the smaller [[Gulf States]] to buy US Treasury debt.

The petrodollar system was a massive prop for the US dollar ever since [[Nixon]] severed the dollar's last link to gold in 1971. As a US ally, [[Iran]] under the [[Shah]] was originally intended to be a major buyer of US Treasury debt in the petrodollar system. After the break in [[diplomatic]] relations and the imposition of [[economic sanctions]] as a result of the [[1979 Islamic Revolution]], it made more imperative a disproportionate reliance on the smaller [[Gulf States]] to buy US Treasury debt.