Bankruptcy of Our Nation (Revised and Expanded). Jerry Robinson

the more brilliant aspects of the petrodollar system, oil consumers are first required to purchase oil in U.S. dollars. Second, the excess profits of the oil-producing nations are then placed into U.S. government debt securities held in Western banks.

      This system would later become known as petrodollar recycling, as coined by Henry Kissinger. Through their exclusive use of dollars for oil transactions, and then depositing their excess profits into American debt securities, the petrodollar system is a “dream come true” for a spendthrift government like the United States.

      Despite its obvious benefits, the petrodollar recycling process is both unusual and unsustainable. By distorting the real demand for government debt, it has “permitted” the U.S. government to maintain artificially low interest rates. Washington’s dependence upon these artificially low interest rates allows large amounts of reckless spending to continue unchallenged. But unless the United States has discovered a novel way of defying history and the basic laws of economics, the massive economic distortions and imbalances generated by the petrodollar system will eventually self-correct when the artificial dollar and U.S. debt demand is removed. That day is coming.

      The petrodollar system allows the United States to buy oil with a currency it can print at will.