Petrodollar 2.0 Emerges in the Middle East - Here's What to Do

I'm skeptical about how this will end for the United States. But President Trump just bought the dollar another two decades of reserve status... at a significant cost.

Dear Fellow Traveler:

The original petrodollar deal was a handshake in the desert.

Oil for dollars. Protection for loyalty.

A loop of military assurance and monetary supremacy that allowed the U.S. to run trade deficits for decades without consequence. That system had operated for decades. Until it started to break down over the last 15 years…

What changed? By 2023, Saudi Arabia was openly conducting oil trades in yuan with China.

Russia had largely shifted away from the dollar for its energy exports.

Central banks globally were dumping Treasurys and hoarding gold at record rates.

The U.S. suddenly became the largest oil producer.

The Federal Reserve's money printing during the COVID pandemic had debased the currency while adding trillions to the national debt. BRICS nations have been actively developing alternative payment systems. The dollar's share of global reserves had fallen below 55% for the first time in decades.

The writing was on the wall…

Either America must find a new way to keep foreign capital engaged, or it will watch the dollar's primacy collapse entirely.

Well, a new deal has emerged — one not forged in diplomatic backchannels, but in data centers, LNG terminals, and server farms across the American heartland.

Once again, Saudi Arabia is involved.

But this time, they're not selling oil.

They're buying infrastructure. They’re leasing the grid. They’re funding the cloud.

And just like that, we may have entered Petrodollar 2.0 — a financial engineering feat so seamless that most Americans won't realize what has happened until it's already in place.

Oil for Dollars, Dollars for Power

The 1970s petrodollar system was simple.

Saudi Arabia priced oil in dollars.

Other oil producers followed.

In exchange, the U.S. provided military protection and economic access. The dollars earned from oil sales were recycled into U.S. Treasury securities and Wall Street investments.

Everyone won.

The U.S. has the privilege of printing the reserve currency.

The Saudis got global oil demand and security.

The world had a stable medium of exchange.

But as interest rates collapsed, inflation rose, and America's debt ballooned past $36 trillion, that trade lost its appeal. Foreign sovereigns have stopped buying Treasuries as they once did. They wanted yield. Real assets. Ownership.

So the U.S. offered something new. This is the Art of the New Deal.

Even though it comes at a steep cost.

Rent-Backed Infrastructure for Dollar Continuity

Enter Saudi Arabia's $600 billion investment announcement in the U.S. in 2025.

On the surface: a feel-good story of modernization, technology, and friendship.

But underneath?

It feels like a masterstroke of capital control.

While U.S. policymakers discuss reshoring and energy independence, they're allowing Riyadh to invest in the very physical infrastructure that will define this century.

More than $20 billion could be funneled into AI data centers through DataVolt, in partnership with Nvidia, Oracle, and AMD.

Its energy giant, Aramco, is working on building stakes in LNG terminals and refining capacity in Texas.

Saudi capital is flowing into fiber, server farms, and cloud capacity across key states.

The entertainment sector is seeing funding through Savvy Games and other sovereign-linked partnerships. Meanwhile, the financial institutions helping to tie these threads together include BlackRock, Morgan Stanley, and Goldman Sachs, all of which are structuring joint investment platforms with sovereign wealth funds.

This isn't speculative.

It's real.

These are contracted investments, multi-decade agreements, and permanent cross-border capital structures. These are toll booths on the future economy, and Saudi Arabia is buying the right to collect.

They're not alone.

Singapore's GIC, the UAE's Mubadala, Qatar Investment Authority, and Norway's Norges Bank have all committed capital to similar U.S. infrastructure and real asset strategies, ranging from fiber buildouts to power grids, data storage, and water rights.

The world's sovereign wealth funds are not betting on growth.

They're buying income. They’re getting yield.

Is This the New Petrodollar?

Yes. But it's more sophisticated.

In the old deal, they recycled oil money into U.S. bonds.

In the new one, they recycle infrastructure rent into dollar cash flows.

What matters isn't what they own — it's what currency the rents are denominated in. As long as the cash flows are in dollars, the system remains intact.

Data center rent, LNG export revenue, and server rack leasing.

It’s all denominated in USD.

The dollar stays relevant not because of oil, but because the Saudis and others now co-own the assets that power American industry.

It's dollar hegemony thanks to infrastructure leasing.

How the Rent Loop Works

Here's what I expect the new flow of the dollar to look like.

The U.S. prints dollars and runs fiscal and trade deficits.

Those dollars end up with foreign energy exporters and sovereign funds.

The capital is reinvested in U.S. infrastructure: data centers, terminals, energy projects, and utilities.

These assets generate rent, paid in dollars by U.S. companies, utilities, and federal agencies.

That rent flows back to sovereign owners.

In many cases, these sovereigns recycle a portion of it back into dollar-denominated assets, such as real estate investment trusts (REITs), infrastructure funds, and Treasury securities.

This isn't classical foreign direct investment.

It's a rent loop: printed money becomes ownership, which becomes rent, which becomes reinvestment, and the cycle starts all over again.

The Dollar Curse: Too Big to Fail, Too Late to Fix

Recall that the Dollar Curse is the paradox that accompanies the issuance of the world's reserve currency. Effectively, the privilege becomes a prison.

When your money is everyone's money, you can't just manage it for yourself anymore.

The dollar curse works as follows: America prints dollars to fund its domestic priorities. Those dollars flood global markets.

Foreign nations accumulate them, initially loving the liquidity but eventually drowning in it. They recycle those dollars back into Treasuries to preserve value. This enables America to borrow even more, cheaply, creating an addiction to deficit spending.

Meanwhile, the manufacturing base hollows out as imports become artificially cheap.

The curse is that we can't stop.

If we tighten monetary policy too much, it could lead to a global economic crash.

If we loosen it, we fuel inflation.

If we default, we trigger financial armageddon.

So we continue to print, run deficits, and watch as more of America's productive base is sold off to foreign capital.

This new infrastructure leasing arrangement doesn't eliminate the dollar curse – it merely perpetuates it. Now, instead of owning our debt, foreign sovereigns own our assets.

The system continues, but with different collateral.

But Is It Stabilizing?

Short-term, yes.

These deals keep the dollar attractive.

They support Treasury demand.

They recycle printed money back into U.S. cash-flow assets.

But long-term? No freaking way...

Because we're selling equity, not debt.

We're trading ownership for time.

This is financial triage.

The U.S. gets to delay collapse.

Foreign sovereigns get hard assets.

Our children inherit the leases.

Winners and Losers

Saudi Arabia, Singapore, the UAE, Norway, and other sovereign wealth funds emerge as significant winners, now positioned as landlords of critical U.S. infrastructure.

U.S. financial institutions, such as BlackRock and Goldman Sachs, also benefit from managing and structuring these sovereign-backed vehicles, earning substantial fees and increasing their influence. Multinationals like Oracle, Nvidia, and AMD benefit without losing operational control, while absorbing billions in sovereign capital.

The losers?

U.S. taxpayers.

We’ll certainly be asked to backstop failed infrastructure ventures or provide emergency liquidity to foreign-controlled assets.

Local governments lose too. They’ll increasingly lose leverage over infrastructure tied up in offshore ownership. And the American middle class will continue to pay the rent through energy bills, cloud service fees, and transportation costs, with the profits flowing overseas.

When the next crisis comes, make no mistake…

We'll bail out these entities again. Directly or indirectly.

The only difference is that this time, the capital chains lead to sovereign balance sheets.

They'll still be collecting the rent.

Paid, of course…

What You Need to Do

If this system holds, the playbook is simple.

Own the assets they want to own.

Own the infrastructure. Own the toll operators. Own the dividend-paying cash-flow platforms backed by sovereign capital.

Because the dollar may survive this evolution, but capital is consolidating rapidly, and it no longer cares about borders. It only cares about cash flow.

The future is being leased.

You either collect the rent or pay it… in dollars.

Stay positive,

Garrett Baldwin