Foreign demand for US Treasury bonds is becoming less reliable, as historic Saudi deal shows
By
The Economist
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Summary
In 1974, US Treasury Secretary William Simon made a secret deal with Saudi Arabia's king, offering preferential access to American Treasury bonds in exchange for the kingdom investing its oil revenue in US public debt. This historical arrangement highlights a once-reliable source of foreign funding for the US Treasury market that is now becoming less dependable.
Key quotes
· 3 pulledIn 1974, soon after the first oil shock, William Simon, America's treasury secretary, flew to Jeddah to sign a secret deal with the king of Saudi Arabia.
He promised the Saudi government preferential access to American Treasury bonds.
In exchange, the regime agreed to invest some of its immense oil revenue in American public debt.
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