"How the Muslim Arab World Became a Servant of the United States, Giving It Real Wealth in Return for Nothing More Than Interest Payments, a Promise of Future Repayment, and the So-Called American Security Guarantee of Avoiding the Fate Suffered by the Palestinians."

"How the United States Was Founded on and Continues to Rely on perpetual Interest-Bearing Public Debt"

Photo by Etnownews.com

Introduction

When the United States gained independence, it inherited substantial debts from the American Revolutionary War. The new government owed money to soldiers, suppliers, foreign governments, and private lenders, yet it lacked sufficient tax revenue to repay these obligations immediately. To solve this problem, Treasury Secretary Alexander Hamilton proposed that the federal government issue bonds and assume existing war debts. These bonds were essentially promises to repay borrowed money with interest at a future date.

A Treasury bond functioned as an IOU from the government:

"Lend money to the United States today, and the government will repay the principal plus interest in the future."

For example:

* An investor lends the government $100.

* The government issues a bond as proof of the agreement.

* The investor receives periodic interest payments.

* At maturity, the government repays the original $100 principal.

Governments roll over debt to run the economy by issuing new bonds to pay off older, maturing bonds. Instead of paying off the principal balance from tax revenues, they continually replace old debt with new debt, allowing them to fund public infrastructure, social programs, and daily operations without needing to raise taxes.It is important to note that Treasury bonds were not created by the Federal Reserve. The Federal Reserve was established much later, in 1913. U.S. government bonds originated in the 1790s as a way for the young republic to finance itself and manage the debts left behind by the Revolutionary War.

"How did Saudi Arabia help the United States regain its status as a superpower after its decline in the 1970s?"

"How the U.S. Almost Lost Its Superpower Status After Becoming the Dominant Global Reserve Currency Following World War II by cheatingly Printing More Dollars Than Its Gold Reserves Could Support, Later Refusing to Honor Its Promise to Exchange Dollars for Gold at $35 per Ounce, and Eventually Being Rescued by the Petrodollar System with Saudi Arabia."

During World War I and World War II, the U.S. supplied the Allies with weapons and goods. Instead of accumulating unpayable war debts, the U.S. was paid in physical gold, centralizing the world's wealth in American vaults.

While Europe and Asia saw their factories, infrastructure, and cities decimated by warfare, the United States mainland was untouched. The U.S. was the primary producer of goods globally, shifting from a debtor to the world's largest creditor Representatives from 44 allied nations convened to design a post-war global financial system. Because the U.S. held the majority of the world's monetary gold, they pegged the dollar to gold at a fixed rate of $35 per ounce. Other nations then pegged their currencies to the dollar, establishing it as the world's primary reserve asset.

However, by the late 1960s, the US was spending heavily on the Vietnam War and domestic programs, printing far more dollars than it had gold to back up. When foreign countries (like France) noticed this and began demanding actual gold in exchange for their paper dollars, the US faced a massive depletion of its reserves.

In August 1971, President Richard Nixon abruptly ended the dollar's convertibility into gold. This event, known as the "Nixon Shock," effectively turned the US dollar into a fiat currency—money backed entirely by government decree and global confidence rather than a physical commodity.

"How Saudi Arabia forced other nations to purchase dollars Reinvested Its Oil Revenues into U.S. Treasury Debt, Exchanging Real Wealth for Promises of Future Repayment, Interest Payments, and American Security Guarantees, Helping Keep the U.S. Debt System Alive."

With the gold backing gone, the US needed a new way to ensure the global demand for dollars remained high. The solution was engineered in the mid-1970s through a series of agreements with Saudi Arabia and other OPEC nations.

The deal was straightforward:

Saudi Arabia agreed to price and invoice all of its oil exports exclusively in US dollars.In exchange, the US provided Saudi Arabia with military protection, weapons, and a "A guarantee to protect their oil fields from themselves and their brothers, primarily Israel."

The surplus billions earned by oil-exporting nations were then funneled back into US banks and Wall Street via buying US government bonds (a process called petrodollar recycling).Because oil was priced primarily in U.S. dollars, countries around the world needed dollars to purchase energy imports. As a result, many governments and central banks held significant dollar reserves, which increased global demand for the dollar even after the end of the gold standard. This helped support the dollar's international role and gave the United States greater monetary flexibility than under the gold-backed system, where the supply of dollars was constrained by gold reserves. 

How the System Works

Acquiring Dollars for Oil: Oil is universally priced in U.S. dollars on the global market. If a country like India or Japan needs to import crude oil, their central banks or national corporations must first convert their local currency into U.S. dollars through global forex markets to pay the oil-producing nations. 

The Recycling Loop (Petrodollars): Oil-exporting countries (such as those in the Middle East) accumulate massive amounts of U.S. dollars from these sales. Because the U.S. financial system is highly liquid and perceived as safe, these nations invest those excess dollar profits into U.S. assets.

Financing U.S. Debt:

The primary destination for these oil profits is U.S. Treasury bonds. By buying U.S. debt, oil-exporting nations lend money to the U.S. government, which allows the U.S. to continually fund its budget deficits(Spending more than tax revenue) and borrow at lower interest rates.

Allah's Warning Against Interest (Riba)

The Qur'an

"Allah has permitted trade and forbidden riba (interest)."— Qur'an

"O you who believe! Fear Allah and give up what remains due to you of riba, if you are believers. And if you do not, then be informed of a war from Allah and His Messenger."— Qur'an

"O you who believe! Do not consume riba, doubled and multiplied, but fear Allah so that you may be successful."— Qur'an

"Whatever you give in riba to increase through the wealth of people will not increase with Allah."— Qur'an

The Hadith

Muhammad said:

"Allah has cursed the one who consumes riba, the one who pays it, the one who records it, and the two who witness it."— Sahih Muslim

He also said:

"Avoid the seven destructive sins." When asked what they were, he included consuming riba among them.— Sahih al-Bukhari and Sahih Muslim

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