The year was 1974 and President Richard Nixon had dispatched his Secretary of State Henry Kissinger to Saudi Arabia to strike a secret deal. Three years earlier, in August 1971, Nixon had already administered the “shock” that ended the Bretton Woods system governing global finance since World War II — suspending the dollar’s convertibility to gold in a televised address that transformed every major currency overnight. By 1973, the system had fully unraveled.
The world wouldn’t know for another 50 years what Nixon and Kissinger replaced it with, striking a deal that would quietly govern the global economy for the next half-century. Riyadh agreed to price and trade its oil in U.S. dollars and channel its petroleum windfalls back into U.S. Treasury bonds; in return, Washington promised military aid, equipment, and security guarantees—a deal that would quietly govern the global economy for the next half-century.
