Global financial reset
The Trump tariffs are just a small part of a much larger game. We are in a global financial reset.
Here's a summary of what Jack Mallers just tweeted:
In his thread, Jack Mallers discusses the unraveling of the post-World War II economic order, emphasizing the unsustainability of the U.S. dollar’s role as the global reserve currency and advocating for a transition to a neutral reserve asset like Bitcoin.
Post-WWII Economic Framework
After World War II, the United States emerged as the predominant industrial power, with Europe and Japan in ruins. To facilitate global reconstruction, the U.S. initiated efforts such as the Marshall Plan and the Bretton Woods Agreement. The strategy involved the U.S. purchasing foreign goods, running trade deficits, and sending dollars abroad, thereby allowing other countries to produce goods. In return, these countries adopted the dollar as the global reserve currency, accumulating U.S. debt as their savings. This system enabled nations like Japan, Germany, South Korea, and later China to industrialize by producing goods for American consumers.
Emergence of Structural Issues
Over time, this arrangement led to significant challenges. The U.S. continuously printed dollars without corresponding production, resulting in deindustrialization and a shift from being a producer to a consumer nation. Manufacturing jobs declined, the middle class weakened, and countries like China rose by taking over global production. Concurrently, the U.S. accumulated over $35 trillion in debt, prompting other nations to question the wisdom of holding U.S. debt as reserves, especially as the dollar’s value diminished.
The Triffin Dilemma
Mallers highlights the Triffin Dilemma, which posits that if the U.S. dollar serves as the global reserve currency, the U.S. must run deficits to supply the world with dollars. However, this practice undermines the domestic economy, forcing the U.S. to import more than it exports. Global demand for dollars keeps the currency artificially strong, making U.S. goods less competitive and pushing manufacturing overseas. This creates a trap that is now becoming untenable.
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Strategic Shifts in U.S. Economic Policy
To address these challenges, the U.S. aims to reshore production and weaken the dollar to make American manufacturing competitive again. This strategy involves implementing tariffs to discourage offshoring and devaluing the dollar to make U.S. exports more attractive. Mallers notes that this approach aligns with policies advocated by former President Trump and the current administration.
Tensions with the Federal Reserve
A significant obstacle in this strategy is the Federal Reserve, led by Jerome Powell. The U.S. government does not control the dollar directly; a private bank does. The Fed has maintained higher interest rates to combat inflation, which conflicts with the administration’s desire for lower rates to stimulate economic growth and weaken the dollar. Mallers suggests that to compel the Fed to cut rates, the administration might create economic conditions that leave the Fed with no choice but to act, potentially leading to a financial crisis.
Global De-dollarization and the Case for Bitcoin
Simultaneously, countries like China, Russia, and Saudi Arabia are moving away from reliance on the U.S. dollar for trade. The BRICS nations are exploring alternatives, and countries are reducing their dollar reserves. Mallers argues that we are heading back to a neutral reserve currency system. Historically, global reserve currencies were neutral assets like gold. However, in today’s digital economy, gold requires trust to function and is susceptible to manipulation. Mallers posits that Bitcoin, as a decentralized and trustless system, is poised to absorb this shift, serving as a neutral reserve asset in the evolving global monetary order.
In conclusion, Mallers contends that the post-WWII economic system is collapsing, the U.S. is reindustrializing, the dollar is weakening, and Bitcoin stands to be the primary beneficiary in this new era.
sr lecturer responsible organization design @ Radboud University Nijmegen
1 个月To what extent are Kondratieff cycles and Fourth turnings real, undeniable phenomena, rather than patterns you may want to see for some reason, like predicting crisis or reset?