The agreement that covers the cost of the United States' war!

Whenever its interests are even slightly challenged, one country does not hesitate to impose economic sanctions, threaten military action, or even launch attacks -- that country is the United States.

This year alone, from the controversial US capture of Venezuela’s President Nicolás Maduro on his own soil to an ongoing confrontation with Iran — tensions have escalated sharply.

Experts say Washington is spending nearly $2 billion a day on this conflict.

It is widely known that the United States has no shortage of money. But the question remains -- where does all this money come from? What is the source?

To understand that, we need to go back in time.

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The period was 1944–45. The world was struggling with massive loss of life, destruction and economic fragility. At that time, every major power was promoting its own currency as the strongest.

Amid this uncertainty, global leaders sat down to decide what would become the world currency. Representatives from 44 countries signed a historic agreement in Bretton Woods in the US state of New Hampshire.

Under that agreement, the dollar became the international currency, while gold was set as the standard.

There was another key factor. As World War II neared its end, the United States held more than 50% of the world’s gold reserves -- and it fully leveraged that advantage.

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Under the system, countries would trade with each other using dollars. The US assured the world that for every dollar, they could claim 888 milligrams of gold if they wished.

In other words, dollars could be converted into gold.

But since the dollar was strong, most countries did not bother exchanging it for gold. This system continued for about two decades.

The problem began during the Vietnam War. Germany was the first to exchange its dollars for gold from the US. Switzerland followed.

Washington realised that if others did the same, its global dominance would collapse.

To prevent that, then President Richard Nixon held a secret meeting and in 1971 announced the end of the gold standard.

This event became known as the “Nixon Shock”.

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It is often said that while others think 20 years ahead, the US plans for 100.

After abandoning the gold standard, Washington entered a new arrangement -- the petrodollar system.

But its roots go back to 1945.

On 14 February that year, aboard the USS Quincy in the Red Sea, US President Franklin D Roosevelt and Saudi Arabia’s founder Abdulaziz Ibn Saud reached an understanding.

The deal was simple: the US would provide military protection to Saudi Arabia, and in return, Saudi oil would remain accessible to Washington.

Fast forward to 1973 -- the Yom Kippur War.

In response to US support for Israel, Saudi King Faisal bin Abdulaziz Al Saud halted oil sales to the West, especially the US.

He famously said, “We can live on dates and milk, but you cannot live without oil.”

Oil prices surged fourfold.

In this crisis, US Secretary of State Henry Kissinger brokered the 1974 petrodollar agreement.

Under this deal, oil would be sold exclusively in dollars. Any country wanting oil had to first obtain dollars. In return, Saudi Arabia received full military protection and support.

Within a year, all OPEC countries aligned with this system.

Thus, the dollar once again established global dominance.

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Saudi pipeline helps ease Hormuz chokehold on global oil supply

At the heart of the petrodollar system lies a subtle but powerful strategy -- tying global oil trade to the dollar, making the world dependent on it.

This included a mechanism called “petrodollar recycling”. Oil-exporting countries like Saudi Arabia would reinvest their surplus earnings into US treasury bonds and financial assets.

This created a cycle -- countries needed dollars to buy oil, and those dollars eventually flowed back into the US economy.

As a result, Washington could borrow at lower costs, and even print money through the Federal Reserve with fewer constraints -- something it has been doing for decades, including to fund wars.

Over the past 50 years, this silent system has shaped the global economy.

The US dollar remains America’s most powerful weapon, backed by Middle Eastern oil -- and by extension, much of the Muslim world.

And when Iran threatens the Strait of Hormuz, it directly targets this sensitive nerve.

Meanwhile, the petrodollar agreement -- typically renewed every five years -- faced a setback when Saudi Arabia declined renewal in 2024.

This suggests that cracks are quietly emerging in US dominance -- even if the world is yet to fully grasp it.