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America faced with ogre’s choice of escalate Syrian conflict or lose Saudi Arabian alliance

America faced with ogre’s choice of escalate Syrian conflict or lose Saudi Arabian alliance

Since the beginning of October when President Obama backed down from confrontation over the alleged gas attacks that killed dozens of people in Syria, tensions between the United States and their necessary ally Saudi Arabia have grown strained as the religious battle between Sunni and Shiite nations force the U.S to have to pick a side.  And with the current Saudi ruler being closeted from public view due to his failing health, a number of princes in the royal family have used this opening to threaten America with an ogre’s choice… escalate and support their position in the Syrian conflict, or risk losing the decades long alliance which would bring an end of the dollar as the world’s reserve currency.


Given America’s weakened financial state, the list of options has gotten down to an unpleasant choice: either escalate versus Syria and Iran, or lose Saudi Arabia. These consequences lead, in turn, to a deepening of the financial crisis. Whichever path the president takes, he cannot avoid financial and/or military complications. The United States must either serve the interests of a foreign king, or lose its privileged financial position. There does not appear to be a third choice.  – JR Nyquist, Financial Sense

The metaphor of the ‘ogre’s choice’ means that a victim has the option to either die slowly, or die quickly.  In this case, sending in military units of any strength creates the potential for an all out global war with Russia, who has backed the Syrian government with weapons, ships, and advisers.  The other option of course, is for Saudi Arabia to break the 1973 petro-dollar agreement, and begin selling oil to Europe and China in currencies other than the world’s reserve.  Eliminating this agreement would instantly cause inflation to skyrocket inside the U.S., and collapse the bond markets as interest rates climb to levels which would trigger trillions of dollars in derivatives, and bring our bankrupt government into default.

As nations emerge both economically and militarily from America’s shadow, geo-political events are changing as well, and nations such as Saudi Arabia have more options to choose from to support their economy and national security.  And just as we saw the Chief of Saudi intelligence first appeal to Russian President Vladimir Putin, then threaten him over their stance on the Syrian civil war, the linchpin that holds the U.S. together via control of the world’s currency is slowly moving away from 40 years of being under our thumb, and at any time, can transition away from America and form a new alliance with the next global power.

Kenneth Schortgen Jr is a writer for, and hosts the popular web blog, The Daily Economist. Ken can also be heard Friday evenings giving an weekly economic report on the Angel Clark radio show.



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