The Road to 2025 (Part 3) – USD Dominated Financial System Will Fall Apart

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It’s our currency, but it’s your problem.

– U.S. Treasury Secretary John Connelly to European Finance Ministers, 1971

Today’s post will cover a topic that consumed my thoughts for many years, but one I haven’t discussed much lately. Namely, the terminal nature of a global financial system being propped up artificially by central bank shenanigans.

First, it’s crucial to understand that at the very core of our global economy is a financial system dominated by the U.S. dollar. The USD is a fiat currency directly backed by nothing, the supply of which can be arbitrarily altered and manipulated by a group of unelected bureaucrats in charge of the Federal Reserve. This money system represents the most powerful tool of centralized power on planet earth.

The USD is unique in that it grants the U.S. the “exorbitant privilege” of having a national currency which at the same time serves as the global reserve currency. This was solidified toward the end of World War 2 with the Bretton Woods agreement, and was accepted because the U.S. agreed to offer sovereign nations holding dollars a right to exchange these dollars for gold at a fixed price. This fell apart in 1971, but was shortly replaced with an unofficial “petrodollar” system, which allowed the USD to remain the world reserve currency despite no longer being redeemable in gold.

Before moving on, I want to share a few excerpts from an article I read yesterday titled, The De-Dollarization in China:

Petrodollars emerged when Henry Kissinger dealt with King Fahd of Saudi Arabia, after “Black September” in Jordan.

The agreement was simple. Saudi Arabia had to accept only dollars as payments for the oil it sold, but was forced to invest that huge amount of US currency only in the US financial channels while, in return, the United States placed Saudi Arabia and the other OPEC neighbouring countries under its own military protection.

Hence the turning of the dollar into a world currency, considering the importance and extent of the oil market. Not to mention that this large amount of dollars circulating in the world definitely marginalized gold and later convinced the FED that the demand for dollars in the world washuge and unstoppable.

An unlimited amount of liquidity that kept various US industrial sectors alive but, above all, guaranteed huge financial markets such as the derivatives – markets based on the structural surplus of US liquidity.

Pricing key commodities such as oil, which everyone in the world needs, in USD creates a massive structural support for the dollar versus other government fiat currencies. If other nations constantly have to convert to USD before purchasing commodities, there’s a constant underlying global demand to buy USD on a daily basis. No other country has this sort of structural support for its currency, and it allows the U.S. to be far more fiscally irresponsible than other countries without suffering devastating currency devaluations on the global market.

Despite the tremendous advantage such a system offers the U.S. on the world stage, there haven’t been any rival countries that could realistically challenge it given American economic dominance. This is no longer the case.

As also noted in the article highlighted earlier:

Still today, the US GDP accounts for 22% of world’s GDP, while 80% of international payments are made in dollars.

Hence the United States receives goods from abroad always at comparatively very low prices, while the massive demand for dollars from the rest of the world allows to refinance the US public debt at very low costs.

This is the economic and political core of the issue…

Therefore the United States is about to be ousted as world’s currency due to its continuous series of wars and military failures (former President Cossiga always told me: “The United States is always on the warpath and up in arms, but then it is not able to get out of it”) and, like everyone else, it shall pay for its public debt, which is huge and will be ever more its problem, not ours.

This is absolutely key. There’s now a huge mismatch between the use of USD in the global financial system and the U.S. share of the world economy. China and Russia are acutely aware of this and have been taking major steps to transition to a more multi-polar currency world. There can be no multi-polar geopolitical world without a multi-polar currency world, which is why they’re working toward dethroning the USD. I believe they will succeed.

Specifically, I think by 2025 the world will have a completely different global financial system from the one chaotically birthed in the 1970s. The USD will lose its total dominance on the world stage, resulting in major implications geopolitically as well as at home. Though plenty of people see this coming, everybody has their own opinion on what comes next. While it can be fun to engage in speculation, nobody really knows what the world financial system will look like in ten or twenty years. Plenty of bureaucrats have their well-oiled plans, and plenty of bloggers are convinced they know, but I promise you, nobody really knows.

Cryptocurrencies have expanded the possibilities greatly. Thanks to Bitcoin, we now have a decentralized, voluntary, open source, free-market global currency. This is one of the most extraordinary creations in human history, and opens up possibilities for our species that never existed before. Sure, nation-states won’t just roll over and give up their money creation addiction any time soon, but the point is we finally have other options and can choose to opt out while still conducting global transactions. In summary, the next few years will be characterized by currency wars, not just between rival nation-states, but also between paranoid and authoritarian nation-states and new free market currencies.

Readers know what I want to see. I will never get excited about transitioning away from the USD just to be under the thumb of another oppressive nation-state currency from Russia or China.

If we want to evolve, explore the limits of human potential and usher in a world of monetary freedom, it’s important to support the key principles represented by Bitcoin. Don’t say “I like the idea, but it’ll be shut-down.” That’s giving up the battle without a fight. I genuinely think we can create a new paradigm for humankind. We have the tools, we just need the will.

Part 1: The Road to 2025 – Prepare for a Multi-Polar World
Part 2: The Road to 2025 (Part 2) – Russia and China Have Had Enough

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In Liberty,
Michael Krieger

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24 thoughts on “The Road to 2025 (Part 3) – USD Dominated Financial System Will Fall Apart”

  2. The U.S. will allow continued growth in Crypto currencies until they won’t anymore. The U.S. will take control soon. For this reason and a few others…is why the Spying on all people everywhere not just here in the U.S. will continue. It has all been cleverly planned this Spying. More devices listening in than ever and will continue, your computer use more than ever before and social media will all continue to capture data and ID of all across the globe. So that the U.S. and London based bankers their owners (the real controllers) will take what you think is yours in the form of Crypto and make it theirs. That is what is going to happen. Until then, make as much money as you can, leave the U.S. and pay cash for a homestead somewhere else.

    Reply

    • Wayne,

      I really agree with you. I just read that Coinbase refused to take Bitcoin for the Wikileaks shop. (This article is linked to at wikileaks twitter account.) There is another article about the horrendous level of spying at Plantir. It is so bad that even their exeuctives are paranoid. I will try to link to this article if I can get my computer to act right again. Pantir is into everyone’s business.

      As Nancy says, this also doesn’t take care of the oil. Taking care of that problem could be helped by groups of people forming local energy cooperatives to use whichever form of alternative energy is best at their location.

      But there is simply overwhelming evidence that the govt. is tracking the “crypto”, so I believe, some other methods will need to be used.

  3. I’d love to see cryptocurrencies take over, but the energy demand hasn’t been addressed yet.

    Meanwhile, history is replete with examples of NON-DEBT fiat money being successfully used… and also successfully attacked and destroyed by debt-money national banks. (Lincoln’s Greenbacks, for one, undermined by the Bank of England; the ‘Chicago Plan’ supported by majority of economists during the Great Depression; and again analyzed by IMF economists, with a positive recommendation, etc., etc. Maybe it will take the inevitable Crash of all Crashes to jog memories about what has been proven to be an efficient and fair monetary system.)

    Reply

  4. Bitcoin and Co won’t be succesfull until they leave behind the illusion of one size fit all and embrace “local cells federation” manageable approach like mobile phones did. Cryptocurrency for sports fans and for movie fans does not have to be the same coin

    Reply

    • Arioch, cryptocurrencies are still in their nascent stage of development and will evolve over time. But it will take time.

      Look no further than how people buy their music now. p2p evolved into i-Tunes and now streaming is making downloading Mpeg files obsolete.

      But that process has taken 20 years.

    • Genaro, hopefully so. Because as of now I can see almost no call for decentralization and creating “living foam” with micro-bubbles collapsing and being born again. Some experiments in Etherium at automatic currency exchanges, a good sign, but that is proof of concept and that is all.

      What were all bitcoin wars as of now? Struggle for gigantization and power. Bitcoin Classic, Bitcoin Unlimited, Bitcoin this, Bitcoin that – how is that different from, say, UNIX Wars or Sony Betamax vs JVC VHS war for market domination?

      How to make BitCoin fast enough to serve all the transactions, including my morning cup of coffee that frankly no one cares about a minute after I drunk it. One ring to bring them all together, that seems to be everything they talk about.

      And since p2p is based on total and persistent transparency – BitCoin too – it means my cup of coffee has prospect to be wielded in mankind history forever. Even in 100 years from today my grand-grand children might be asked for officials about my every spending on BitCoin. And they would not have even plausible deniability, that physical cash naturally has.

      Then they say, “BitCoin is anonymous”. It is not and never was. t is pseudonymous. Wallet IDs in BTC are conceptually not that different from Facebook users numeric IDs, or VKontakte, or GooglePlus, etc. Those we say BitCoin is anonymous should be bold to say the same about but every social network out there, where everyone of us can open many separate virtual accounts (like one person can has many BTC wallets). If it was about some lo-education fanboys, ok. But BTC is discussed by allegedly most sharp and most crypto-versed individuals out there. Still they do not.

      Yes, I am freaking out. I am frightened by this tendency.
      Problem – reaction – solution.
      Due to open spying from traditional banks, let get people sold on persistent and transparent financial socnet, the ultimate spying device, in the name of freedom and anonymity.

      > Look no further than how people buy their music now.
      > p2p evolved into i-Tunes and now streaming is making downloading Mpeg files obsolete.

      Exactly! you own nothing, you only rent something temporally.
      Everything as a service.
      There were many stories when such companies went belly-up, and people were locked out of their videos or games they had illusion they owned.

      That is getting a new norm.

      When MPAA-like hyenas were trying to charge people for creating ringtones from CD-Audio discs they grabbed and were demanding to force people into purchasing the readymade ringtones instead (paying twice for same track) – it caused and outrage, back then.
      When Sony was infecting their CD-Audio discs with rootkits – it was a shock.

      Now it won’t. You would get I-Tune and you would subscribe to everything the top market vendor would force upon you. Including for example skyrocketing prices tomorrow. Or retroactively removing music from your players (they already did so with politically incorrect books).

      That is perfectly reasonable thing to do: since you now do not own any media and only rent it from I-Tune-and-Co, at any moment in time they can cancel (no, not even cancel, just deny prolonging) the rent, if some media would be deemed “inappropriate”, or “sold” too cheap.

      Was there different vendors? Sure, for example there was AllOfMP3.com – no more. This was a niche for big boys to play in.

      > But that process has taken 20 years.

      ….to boil frog slowly and make “i own nothing” new normal and even new pride. That is chilling.

  5. While it’s true that no one knows FOR SURE what is going to happen, I think that I can make a pretty good guess. There is pretty close to zero possibility that this government will come to it’s collective senses and start cutting the size of government and stop spending money recklessly any time in the future. Foreign governments will be cutting back or even stopping completely purchasing American dollars and bonds. This will force banks to raise interest rates on what bonds that it does sell making the dollar worth less and less. Eventually any money that the federal government does take in will force it to not send any more money to the various states that would normally receive some small percentage in order to keep the federal government at least partially funded. The states will then decided that since the federal government is sending them nothing that they are better off without the federal government and that’s when the various state governors will hold a convention and draw up plans to break up the United States into probably at least 8 different new countries. Naturally the federal government won’t be happy about this and civil war will likely ensue but this time except for federal employees no one is going to be on the federal governments side.

    Reply

    • Gorbachev showed that Civil War isn’t really necessary. Simply choose to jettison empire, especially those places that cost you more than they bring in. Call it freedom. People will believe it and though they may struggle they will find a way to make it work. There aren’t many places in the former USSR that aren’t better off under the current system.

  7. How Unregulated Finance is Killing Democracy

    Published on Apr 11, 2018
    The twin threats of right-wing populism and unencumbered financial capitalism pose a crisis for democracy across the world, argues Robert Kuttner in his new book, Can Democracy Survive Global Capitalism? In his new book, American Prospect magazine editor Robert Kuttner charts the rise and fall of democracy in the West since World War II. The postwar social order was characterized by a unique “harmonic convergence of forces”—including an economically-directive state, a weakened capital-owner class, and strengthened labor unions—which allowed for economic growth within democratic institutions. But, following the Western economic crisis of the 1970’s and the collapse of the Bretton Woods system, big business was able to again direct the economy as it did in the pre-war period; the difference is that this time, banking and finance have played an increasingly leading role. The anti-regulatory climate this yielded in the 1980’s and 1990’s facilitated the 2008 financial crisis, which has in turn activated right-wing, populist movements against democracy.

    Reply

    • “The anti-regulatory climate this yielded in the 1980’s and 1990’s facilitated the 2008 financial crisis”

      I call bullshit on that.

      As Ron Paul has said many times, we don’t need more regulation, we need to actually enforce the regulations we already have.

      The 2007-8 financial “crisis” was not a crisis. It was a purposefully engineered breakdown which was facilitated first and foremost by captured regulators (See: the SEC) across the board. Then the ratings agencies like Moody’s followed suit, and it was a perfect storm.

      It doesn’t matter how many regulations you put into place if the regulators charged with enforcing the regulations are also corrupt.

    • Genaro, i don’t think you called anything.

      There was an old finnf maxima, true or not, that in Russis laws are cruel which is compensated by them being seldomly enforced.

      See, what you quote RP for os exactly anti-refulatory climate.
      Whether the laws do not exist or are ignored is not much difference for the outcome.
      Both cases there is no real regulation.

      1936 Stalin’s constitution was the most democratic in all then Europe. Just it was more often ignored than enforced.
      So, will you call climate of then USSR democratic or anti-democratic? The democratic laws were there. On paper. Just were not enforced.

  8. Your comment reminds me of Tim Berners-Lee 30 years ago. Look how that has turned out. TPTB will find a way to co-opt cyrpto. There’s nothing you can do about it. Revolution only replaces the tyrant you know with another tyrant you don’t know. The last 240 years have been a great joyride, but even they were a deal with the devil. When it comes right down to it, freedom was just a way for TPTB to develop the land of North America…the greatest windfall in the history of the world. David Byrne was right…same as it ever was.

    Reply

    • It hasn’t “turned out” anything yet. We are in such early days when it comes to humanity’s experience talking freely with one another across the world. I don’t share your negativity at all about either the internet or Bitcoin.

      I wrote a detailed post on this topic explaining my views last year.

      Bitcoin, Terence McKenna and the Future of the Internet: https://libertyblitzkrieg.com/2017/11/29/the-internets-impact-on-humanity-is-just-getting-started/#more-49186

    • Wall St and the Fed already used the same method to take control of BTC as they did with precious metals: levered derivatives trading, denominated in the fiat USD.

      BTC futures started trading on 12/17/17 on CME Globex… what did the price do within the first 45 days of trading???

      It’s already done… total capture… game over…

      The ruble, rial and renminbi are all just as manipulable as the USD and BTC using the same mechanism (levered derivatives denominated in a central bank controlled fiat currency)… just with quasi-different operators and beneficiaries.

      Sure, the unit of account may change if we’e not careful… but NO digital currency is going to upend the current system, at least not without the direct approval and control of the same interests that run the show today.

      So, as a US citizen who is most assuredly NOT a “citizen of the world”, I will cheer for the USD to remain as the global reserve currency.

      For that to continue I’m sure we’ll eventually need a nice fat world war for US to re-establish dominance over the THEM… probably pretty soon, too…. But that’s ok… US has a pretty good track record in those fights… and we as US citizens need to be reminded that we are still on OUR TEAM… wars, with all the mutual suffering and sacrifice and such, are usually good for that.

      Right? 🙂

  9. Excellent article.

    What people are not getting, unless they are very familiar with the crypto-currency world, is it’s not just one crypto-currency bitcoin against the USD. No. It’s the almost extinct fiat currency world against the people’s money which is comprised of dozens if not hundreds of crypto-currencies at the moment known as altcoins. Many of them much more compelling than bitcoin for many reasons.

    There is no technical way to block or stop these cryptos. So strap yourself in. Get emotionally ready. The world is about to change before your eyes.

    Reply

    • BAHAHAAHHAHAHAHAHAHAH….

      Who are these “People”, comrade?

      And “the people’s money”????? HAHAHAHAHA

      “The People” don’t have a pot to piss in lest the Banker lets him have it.

      Currency may be digitized, sure… it’s a natural evolution and an awesome control.

      But the fiat system will NEVER be eliminated… because it works… really, really well.

      You should really sit and study the beautifully perfect and pure POWER that a fiat currency system truly represents… spend less time on your altcoins whose future purchasing power will inevitably equal their current mass.

    • Uncharted territory.

      What if the banksters go ahead with their own crypto which will be official and stable and will be instantly universal because it will be issued to everyone including the disenfranchised via cards etc.—— and outlaw everything else?

      Making the bankers go away may be troublesome.

  10. Wayne,

    Here is the link I was writing about in my response to you above.

    Hacked emails released by the group Anonymous indicated that Palantir and two other defense contractors pitched outside lawyers for the organization on a plan to snoop on the families of progressive activists, create fake identities to infiltrate left-leaning groups, scrape social media with bots, and plant false information with liberal groups to subsequently discredit them.

    After the emails emerged in the press, Palantir offered an explanation similar to the one it provided in March for its U.K.-based employee’s assistance to Cambridge Analytica: It was the work of a single rogue employee. The company never explained Sankar’s involvement. Karp issued a public apology and said he and Palantir were deeply committed to progressive causes. Palantir set up an advisory panel on privacy and civil liberties, headed by a former CIA attorney, and beefed up an engineering group it calls the Privacy and Civil Liberties Team. The company now has about 10 PCL engineers on call to help vet clients’ requests for access to data troves and pitch in with pertinent thoughts about law, morality, and machines.

    https://www.zerohedge.com/news/2018-04-20/it-was-wall-street-meets-apocalypse-now-how-palantir-spied-senior-jp-morgan

    Reply

  11. Love your work, but fiat currency is a red herring. What matters in the backing of currency is the strength and stability of the gov issuing it.

    As history has demonstrated, it doesn’t matter if gold is behind the dollar.

    If the dollar goes down its because US is going down. Its not the other way around. The country’s social structures are breaking down. That’s what you should be paying attention to. Look at all the attacks on classic Liberalism going on:

    https://therulingclassobserver.com/2018/04/21/the-attack-on-liberalism/

    Reply

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