President Trump’s attempted seizure of Venezuelan oil reserves—valued at approximately $10 trillion—is not simply a resource grab or a foreign policy maneuver. I argue that it is a desperate structural intervention necessitates by the United States’ crippling $38.5 trillion national debt.
To understand this move, one must look past the military headlines and focus on the mechanics of the U.S. Treasury. Whenever the U.S. government runs a deficit, it effectively “prints” credit, which must be absorbed by debt holders in the form of Treasury notes and bonds. The stability of the American economy depends entirely on the world’s willingness to buy this debt.
The Collapse of the Old Petrodollar
For decades, the demand for U.S. debt was artificially sustained by the “Petrodollar” system established in the mid-1970s. The arrangement was simple: the U.S. provided military protection to Saudi Arabia, and in return, the Saudis priced oil exclusively in USD and reinvested their surplus profits into U.S. Treasuries. This “recycling” allowed the U.S. to print money without immediate hyperinflation, as there was always a buyer for our debt. U.S. banks also skimmed 2-4% on these exchanges.
However, that era is ending. Saudi Arabia has increasingly divested from the dollar, diversifying its sales into currencies like the Chinese Yuan, the Indian Rupee, and the Russian Ruble. As the BRICS nations move away from the dollar, the automatic buyer for U.S. debt is disappearing.
Venezuela as the New Collateral
This brings us to Venezuela. The seizure of the world’s largest proven oil reserves serves two critical monetary functions that replace the crumbling Saudi arrangement:
- Asset-Backed Credibility: It gives the U.S. government direct control over a tangible asset (“real wealth”) to balance against its massive issuance of fiat currency (“paper wealth”). Essentially, the oil serves as collateral to reassure skittish global investors.
- Forced Dollarization: By controlling Venezuelan output, the U.S. can mandate that this oil be sold exclusively in U.S. dollars. Just as we once required of Saudi Arabia, the U.S. could eventually require oil companies to invest a portion of their revenues back into Treasury notes. This artificially manufactures demand for the dollar and keeps the U.S. government solvent.
The War on “Real” Economies
This theory also explains the destruction of the Iranian economy through sanctions and the targeting of their nuclear infrastructure. The U.S.—a “financial economy” based on credit issuance—cannot tolerate the rise of independent “real sector” economies (based on commodities and production) that operate outside the dollar system. Suppressing Iran, like seizing Venezuela, is about maintaining the supremacy of the financial dollar against the real asset.
The Cost to the Taxpayer
Ultimately, this is not “free money.” While the oil acts as collateral, the mechanism relies on expanding the money supply (issuing credit) to develop these resources. This cost will not be paid through direct income taxes, but through the hidden tax of inflation.
The inflation will not be immediate; it will lag behind the credit issuance, appearing years later as the money supply expands to accommodate the new debt. In very simple terms, the oil wealth is the collateral for our future debt, and the American people will pay for the development of this industry through the devaluation of their own currency.
That is my assessment of the situation, supported by the economic realities of the $38.5 trillion deficit.
References & Further Reading:
• Ray Dalio: Specifically his analysis on the “Big Cycle” of empires and debt crises.
• Jay Rogers: Fourth Political Theory in Biblical Perspective (contains an analysis of Dalio’s principles).
Contextual News:
• Fortune (Jan 2026): Venezuela, Trump Action, and the National Debt.
• VegOut Mag (Jan 2026): Why the U.S. Can Spend $38 Trillion It Doesn’t Have.
