Since World War 2, the US has operated under the mantle of being a champion and protector of democratic values. At the same time, its policy in the Middle East has involved close relationships with autocratic regimes, and military engagements more reflective of an imperial power than a defender of human rights.
While conventional wisdom tells us this policy is largely motivated by oil, this week's guest, Jerry Robinson, makes a compelling case that the true motive is protecting the status of the US Dollar as the dominant reserve currency.
Jerry is an economist and author whose site, FollowTheMoney.com, provides tools and strategies to gain financial freedom.
Many deficit hawks point to 1971, when Nixon ended the practice of pegging the US dollar to the price of gold, as the point when America started down the path of accruing debt and rampant deficit spending. While this is true, it only tells half the story.
The other half is that Nixon pegged the US Dollar to another hard asset shortly thereafter - namely oil.
In an agreement with Saudi Arabia, America agreed to provide weapons and military protection to the kingdom and, in exchange, the Saudis agreed to sell their oil exclusively in US Dollars and put their excess reserves in US Treasuries. Other oil producing nations shortly followed suit, creating a global demand for US Dollars and allowed the US to spend freely without weakening their currency or raising taxes.
It also created a situation where, in order to protect the status of the dollar, the US had to engage in policies counter to its democratic principles, such as militarizing the region with weapon sales and involvement in military conflicts with no clear democratic objective.
The most notable example was the US war with Iraq in 2002, a war fought under the weak pretense that the country was hiding weapons of mass destruction. While this is often blamed on the fever caused in the aftermath of 9/11, what's overlooked is that, two years prior, the Iraqi government had begun selling their oil in euro.
Shortly after the invasion, the country reverted to selling their oil in US Dollars, despite the fact the euro was the stronger currency at the time.
When looking at US foreign policy through this lens, America's weak reaction to human rights abuses in Saudi Arabia and strong reaction to those in Venezuela make sense. In both cases, the interest of the US is to ensure the current petrodollar regime remains intact.
Moral arguments aside, this arrangement is unsustainable in the long term. Oil consumption is predicted to peak in the coming decades and decline as the economy comes to depend on renewable energy sources. Countries such as China and Russia have a vested interest in removing the power the United States has in global financial markets, as well as the clout to do so.
Few Americans would argue with a foreign policy that puts greater focus on human rights and democratic principles, which would make part of transitioning away from the petrodollar easier. The question is, do Americans think those principles are worth higher taxes?