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In 1959, Europe restored monetary sanity convertibility, but the US started running large balance of payments deficits. Bretton Woods established a system where all currencies were convertible to the dollar and the dollar to gold. However, instead of settling deficits in gold, foreign central banks could use dollars as official reserves. This allowed the US to buy abroad and at home simultaneously, leading to a buildup of dollar reserves. In 1971, when countries like Britain wanted to redeem their dollar reserves for gold, President Nixon refused. Without convertibility, Europe couldn't lecture the US about its budget. The 1960s saw financial crises involving the dollar, and in 1971, Nixon declared that the US wouldn't pay its debts in gold.

The US dollar is the bedrock of the world's financial system, and a rapidly rising dollar can destabilize financial markets. Despite the US printing many dollars, global demand is so high that the supply isn't enough, preventing rising US inflation. The risk comes when other economies slow down relative to the US. With less economic activity, fewer dollars circulate globally, increasing the price as countries chase them to pay for goods and service debts. This creates a "dollar milkshake" effect, forcing countries to devalue their currencies as the dollar rises. The US becomes a safe haven, sucking in capital and further increasing the dollar's value, potentially leading to a sovereign bond and currency crisis. Central banks may try to intervene, but the momentum can become unstoppable. The world is stuck with the dollar underpinning the global financial system, so everyone needs to pay attention to the dollar milkshake theory.

There is a possibility that multiple world reserve currencies can exist simultaneously. Many countries are becoming disillusioned with the US dollar as the reserve currency and are open to trying something else. One potential scenario is if countries realize that the US dollar will not remain the reserve currency forever. Similar to banks, smaller banks would not want to use a system built by their biggest competitors. Likewise, nations would prefer their currency to be the world reserve currency, but realistically, only a few countries could achieve this. Therefore, some countries might prefer a currency that nobody can control rather than one controlled by their rivals. The challenge lies in getting everyone to agree on an alternative.

No country can be truly democratic or independent without control over its own currency. The people, not unelected bankers, should have the power to determine the value and control of their currency through the democratic process. Paper money needs to be backed by a hard asset to maintain its credibility. Countries are forced to borrow US dollars because oil must be paid for in this currency. Consequently, they pay interest to the private owners of the US Federal Reserve, including US citizens themselves. Any threat to the petrodollar, like the creation of the euro, is fiercely opposed. Wars are not fought for democracy and freedom, but rather to protect the private bankers who control the world's printing press. It is time to hold these central bankers accountable for the financial hardships and bloodshed they cause.

"the dollars, days as the reserve currency are numbered." "we shortened that number ourselves with a self inflicted wound when Biden announced those crippling sanctions or hope they were intended to be crippling against, Russia." This sent "a strong message to the world that you don't want to hold dollars, that you don't wanna have the US dollar and US treasuries as your reserves because, you know, you run the risk of being punished by the US government." "And so we told the world, get rid of dollars and buy gold, and that's exactly what they've been doing." "That's why the of gold is at an all time record high, you know, despite the fact that retail investors have been selling gold all year." "Gold keeps going up, setting one record after another." "Gold is on pace for its best year since 1979." "That is not a coincidence."

In the early eighties, the US dollar floated high against the Japanese yen and German Deutsche Mark, buoyed by the Reagan era combination of tight money and a high budget deficit. That was good news for Japan and Germany because the high dollar meant a low yen in Deutsche Mark, and low prices for Japanese and German exports. More sales and more jobs. But the high dollar was bad news for The US. Higher export prices, declining sales, lost jobs, and calls for government protection. As Ronald Reagan's treasury secretary, James Baker believed that free markets made their best choices without government interference.

That's why when most people around the world think about what money actually is, they're probably thinking about the US dollar. Between 1720 to 1815, if you asked someone to name a currency, they would have probably said the French livre, because it was France that held the reserve status from 1720 to 1815. But then, if you asked someone to name a currency between 1815 to 1920, you would have probably heard the British pound. Now after World War II, everything changed with the creation of the Bretton Woods Agreement, because after that point, most people would have probably said the US dollar.

The speaker discusses the impact of the global economy on the US dollar and its need to be backed by tangible assets. They mention that international financiers are gradually losing faith in the dollar as the world's reserve currency, leading to its depreciation. To maintain its status, the US is turning to its European colonies for tangible assets since they are losing their African and Latin American colonies. The speaker expresses concern about this surreal and submissive cycle.

The global financial system relies on the US dollar, and a rapidly rising dollar can destabilize markets. Despite the US printing dollars, global demand remains high for trade, debt servicing, and reserves. Countries need dollars to buy commodities like copper, oil, and soybeans, creating constant demand. The US benefits from this system, controlling access and settlement. A slowdown in other economies coupled with US growth can create a dollar shortage, raising its price and hurting countries needing dollars to pay for goods and debts. This leads to a "dollar milkshake" effect, forcing countries to devalue their currencies and causing capital to flow into the US as a safe haven. This can trigger sovereign bond and currency crises, with central banks unable to stop the momentum. The lack of alternatives to the dollar means the world is stuck with it, making the "dollar milkshake theory" a critical risk to monitor.

The speaker argues that "the dollars, days as the reserve currency are numbered" and claims this was worsened by "a self inflicted wound when Biden announced those crippling sanctions or hope they were intended to be crippling against, Russia." This, they say, sent a strong message that "you don't want to hold dollars, that you don't wanna have the US dollar and US treasuries as your reserves because, you know, you run the risk of being punished by the US government." "If you do something that the US government doesn't approve of, you could be sanctioned, and you may lose, those reserves at a time when you really need them." Consequently, "And so we told the world, get rid of dollars and buy gold, and that's exactly what they've been doing." They note "that's why the of gold is at an all time record high, you know, despite the fact that retail investors have been selling gold all year." "Gold keeps going up, setting one record after another." "Gold is on pace for its best year since 1979." "That is not a coincidence."

In 2000, Saddam Hussein announced that Iraq would sell oil in euros instead of dollars, leading to the US invasion in 2003. Similarly, Venezuela's plan to sell oil for euros in 2002 resulted in a failed coup backed by the US. Despite having the largest oil reserves, Venezuela is now one of the poorest economies. Libya, with the largest oil reserves in Africa, also faced consequences when Muammar Gaddafi suggested selling oil for gold instead of dollars. NATO intervened in Libya, leading to Gaddafi's execution. These countries wanted to break away from using the dollar for oil payments, but faced the wrath of America.

Larry Johnson and Glenn discuss the shifting dynamics of the US dollar, the international financial system, and the rise of competing powers. - Johnson recalls the 1965 term exorbitant privilege describing the US dollar’s reserve-currency advantages. In 1971, the US closed the gold window, ending fixed gold value for the dollar; the dollar later became backed by “our promise,” enabling the petrodollar system as oil purchases were conducted in dollars. The dollar’s dominance rested on predictability, a stable legal system, and non-abusive use of the dollar as an economic tool rather than a political weapon. - Trump-era sanctions expanded broadly, impacting friends and adversaries alike, and BRICS nations began moving away from the dollar. Russia’s disconnection from SWIFT after its 2022 actions is noted as a turning point that encouraged the BRICS’ development of alternative financial infrastructure, including China’s cross-border interbank payment system (CIPS). This shift accelerates the decline of the dollar’s dominance. - Nations like Russia and China (and India, Brazil) are unloading US Treasuries and increasing gold and silver holdings. This is tied to concerns about the dollar’s reliability and the reduced faith in paper promises. The BRICS countries reportedly plan a currency tied to gold, with components of their reserves backing individual BRICS currencies, signaling a structural move away from the dollar. - The paper-gold issue is central: for every ounce of real gold, there is a range of 20-to-1 to 100-to-1 in paper gold. This disparity can undermine trust in the paper promise and create a run on physical gold. The price gap between New York (lower) and Shanghai (higher) for gold demonstrates a market dislocation and growing demand for physical metal. - Glenn emphasizes that a unipolar dollar system allows the US to run large deficits via inflation, which acts as a hidden tax on global dollar holders. Weaponizing the dollar through sanctions challenges trust and accelerates decoupling, prompting other nations to seek alternatives to reduce exposure. - Johnson argues that the US is confronting a historic realignment: the Bretton Woods order is dissolving, the dollar’s international dominance is waning, and sanctions and coercive policies are provoking pushback. He highlights Japan as a major remaining dollar treasuries holder that is now offloading, further increasing dollar supply and depressing its value. - The geopolitical implications are significant. Johnson warns that potential US actions against Iran—given their strategic position and the Gulf oil supply—could trigger a severe global disruption, including a price surge in oil. He notes that such actions would complicate global stability and magnify inflationary pressures. - The discussion also covers NATO’s cohesion, Western attempts to shape global alignments, and how rapidly shifting leverage could undermine existing alliances. Johnson suggests that Russia’s strategic gains in the war in Ukraine, combined with Western missteps, may prompt a rapid reevaluation of settlements and borders, while also noting that Russia’s position has hardened. - On Venezuela, Johnson argues that the stated pretexts (drug trafficking, oil control) were questionable and points to economic motives, including revenue opportunities for political allies like Paul Singer, and to Greenland’s strategic interests as possible motivators for US actions. - Looking ahead, Johnson predicts hyperinflation for the United States as the dollar loses value globally, while gold and silver retain value. He asserts that the ruble and yuan may hold value better, and that a mass shift toward de-dollarization is likely to continue, potentially culminating in a new multipolar financial order. - Both speakers agree that trust and predictability are crucial; the current trajectory—threats, sanctions, and unilateral actions—undermines trust and accelerates the move toward alternative currencies and stronger physical-commodity holdings. The overall tone is that a pivotal, watershed moment is unfolding in the global monetary system.

Saudi Arabia, despite its wealth, isn't in the top 10 for gold holdings officially, suggesting the numbers we see aren't the full story. After the gold window closed in '71, the US aimed to remove gold from the global financial system. Declassified documents reveal that in the early '70s, Europeans considered revaluing their gold to pay for oil deficits. US officials like Kissinger, Weintraub, and Volker, however, opposed this, preferring Saudi Arabia to invest in treasury bonds instead of accumulating gold. This led to the Bill Simon deal, which, in hindsight, seems unfavorable.

Speaker 0 argues that Venezuela may not want to ally with this Western form of economic exchange, noting they have tried to join BRICS twice but were vetoed by neighboring Brazil. They describe Venezuela as one of the few countries not controlled by private equity oligarchs and central banksters, and say Venezuela pushed back on a monetary exchange that relies on high-interest promissory notes back to Rothschild Boulevard, like Saddam Hussein, Bashar al-Assad, and Muammar Gaddafi. They claim Maduro has effectively been kidnapped, and that Trump said, “kidnapped is fine.” The question is how such events can be real and presented as beneficial to Americans, asserting that economically, there is no benefit to the average citizen or to national security, and that it puts the United States in more imminent, grave danger as the U.S. “agitates around the world,” including in relation to Israel’s enemies. Speaker 1 adds that there will be a political and economic reset, suggesting that silver and gold are at record highs and that gold and silver have tripled historically in short periods, leading to a system reset of sorts. They say Venezuela’s attempts to join the system were to be part of a new framework that Russia, China, Iran and BRICS were trying to create, which would go against the dollar as the global reserve currency and directly affect the U.S. economy. They ask whether this should change. Speaker 0 elaborates that the issue is about flipping countries into the same central banker–controlled monetary exchange system. Speaker 1 notes that Trump, from day one, warned that if you mess with the U.S. dollar or trade outside of the dollar, the U.S. will punish you via sanctions or strikes, and that this is what has been happening. They discuss the possibility that if the system resets and a combination of gold, silver, and possibly crypto or other minerals backs a new dollar or digital currency emerges, the entire game could reset and eliminate these types of issues. In such a scenario, countries might have a looser ability to choose or replace the type of system their country is under.

The US dollar's dominance is being challenged by countries like Iran, Libya, and China who are bypassing it in trade. Gold is being used as an alternative currency, with countries like Germany and Venezuela repatriating their gold reserves. The Federal Reserve's increasing currency printing is seen as a threat to the dollar's stability. These actions are seen as accelerating the demise of the dollar standard, signaling a need for change soon.

America's gold was supposed to back the dollar. Leaving the gold standard was the most costly mistake we ever made. After the world war, they promised gold backed dollars, but they broke that promise. They printed paper backed by nothing, funded wars we couldn't afford and shouldn't have been involved in. But France caught on and sent a warship to get back their gold. Truth is, if more countries followed, our vaults would be empty and game secretary of the treasury to take the action necessary to suspend temporarily the convertibility of the dollar into gold. Turns out, when you fake the money, everything else follows and you screw the next generation over. Prices shot up, paychecks didn't, life got tougher, and nobody knew why.

The transcript presents a sequence of claims about the origin of the petrodollar system and the role of U.S. leadership in shaping how oil is priced and traded globally. It asserts that the petrodollar was "actually a device invented by Kissinger and Nixon," attributing the concept to the efforts and ideas of two prominent U.S. officials, Henry Kissinger and Richard Nixon. It then references a specific historical event: a secret meeting between U.S. President Richard Nixon and the Kingdom of Saudi Arabia, with Kissinger serving as Secretary of State and national security adviser. The meeting is said to have occurred aboard a battleship, the USS Quincy, and is described as one for which "very few records were kept." The transcript links this clandestine encounter to a broader strategic arrangement involving Saudi Arabia, implying that the purpose of the meeting was to secure the United States’ exclusive rights to develop oil from Saudi Arabia using U.S. dollars. According to the speaker, the underlying exchange was that Roosevelt promised the king of Saudi Arabia weapons and protection in return for the United States obtaining the exclusive right to develop Saudi oil using dollars. The consequence of this arrangement, as stated, is that oil would subsequently be priced in U.S. dollars. Furthermore, the text asserts that if other countries attempted to obtain oil without using dollars, those countries historically needed "more freedom in their lives," implying a link between currency choice for oil transactions and the level of political or economic freedom in those countries. In summary, the transcript presents a narrative in which the petrodollar system originated from a high-level U.S.-Saudi agreement tied to weaponry and defense guarantees, formalized through a secret meeting on the USS Quincy, and culminating in oil being priced and traded in U.S. dollars. It frames this development as a deliberate construct by Henry Kissinger and Richard Nixon, with a consequential condition that deviating from the dollar-based oil trade would relate to a demand for greater freedom in the countries involved.

Peter Schiff and the hosts discuss how surging gold and silver prices relate to potential banking instability and a broader dollar crisis. Key points: - Silver production is about 800,000,000 ounces per year, while bank shorts on silver are claimed at 4,400,000,000 ounces according to some reports. The implication is that if silver continues to rise, the biggest banks in America could face severe coverage challenges for their short positions. The discussion notes that many banks are “barely covering their asses to stay afloat.” - Gold and silver price levels are highlighted: gold at about $4,600 per ounce after a bounce, and silver at about $92 per ounce. Peter Schiff, introduced as a silver and gold expert and economist, has authored The Real Crash, How to Save Yourself and Your Country, and America’s Coming Bankruptcy. The host mentions the book. - Peter Schiff’s perspective on timing and crisis: he says the 2013 book predicted the current situation and that gold and silver have risen significantly—gold up, silver up substantially. He believes the price moves signal a major warning of a financial or economic crisis, comparing it to the subprime warning before the 2008 crisis. He asserts this time the warning concerns the U.S. government sovereign credit and a potential dollar crisis and U.S. Treasury crisis, possibly unfolding next year. - Connection to global debt and the dollar: Schiff explains that much debt is sustainable because the U.S. dollar serves as the global reserve currency, enabling continued spending. He notes foreign central banks buying gold instead of U.S. Treasuries, moving out of dollars into gold, and cites U.S. intervention in oil-rich Venezuela as part of broader moves to keep oil prices down. He argues that the dollar’s reserve status is eroding, and a meaningful decline in the dollar relative to other currencies could soon impact consumer prices and interest rates, leading to higher costs for Americans. - Impact on the average person: Schiff asserts that the reserve currency status has long supported a standard of living that relies on importing goods paid for with dollars created “out of thin air.” As the dollar collapses and the world shifts away from the dollar, the dollars earned and saved by ordinary people will buy less, with price spikes across goods and services. He suggests a future scenario where prices rise dramatically while wages do not keep pace, giving an example of a hamburger potentially rising from $15 to $30 or $50, and services versus goods diverging in price movement. - Preparation and investment stance: Schiff emphasizes that gold and silver have performed well since the turn of the century, outperforming the Dow in real terms. He argues for moving wealth into real money rather than paper assets and notes, in general terms, opportunities in mining stocks as a hedge, including juniors and mid-tier producers. He references the broader strategy of diversifying out of U.S. stocks, bonds, and dollars to protect wealth during what he describes as a coming real crisis; he stresses focusing on real assets rather than relying on the dollar. - Final remarks: Schiff reiterates that the crisis is coming and that some Americans should consider protecting wealth through precious metals and mining opportunities, while the hosts acknowledge the outlook and thank him for the insights.

On December 9, 2022, Xi Jinping reportedly stated during a state visit to Riyadh that Palestine should be addressed as a state with 1967 borders and a capital in Jerusalem, a claim not covered by Western media but reported in Middle East press. In the afternoon, he invited the six Gulf Cooperation Council states to trade oil and gas in Shanghai for yuan, signaling the end of the Bretton Woods system. The speaker published a commentary on their website asserting that Bretton Woods ended that day, a claim they felt Western media ignored, leading them to develop multicurrency mercantilism as a handbook for understanding future developments. The alternative to the dollar, according to the speaker, is the dollar plus all other currencies and commodities. The ruble, yuan, rand, UAE dirham, Malaysian ringgit, or any currency that two parties to a transaction accept, along with gold, oil, and recently silver and other commodities, can serve as stores of value or economic inputs. The transition to alternatives could be stable unless there is wider war. Historically, transitions from a hegemonic currency to a rival currency have been accompanied by world wars. The dollar replaced sterling after World War I and established dominance after World War II. The central question is whether a new hegemon will emerge and how the United States’ willingness to use violence to preserve hegemony will fare given its growing economic dependence on China and vulnerability. China is not forcing use of the yuan; it invites use, but participants are not obligated. Globalization, the speaker argues, accelerates as more than 40% of the global economy under sanctions (e.g., Iran, Russia) gains optionality to use other currencies, re-integrating with global trade. Russia is engaging in substantial trade with India and China, selling oil and gas, while Iran trades with China as its main oil buyer. Venezuela, previously a major oil supplier to China, faced sanctions; the speaker notes it was invaded yesterday, implying altered trade dynamics. The “Angel Paradox,” named after Norman Angell, posits that sanctions harm the sanctioner more than the sanctioned when interdependent economies go to war; this paradox has been reinforced, particularly with Russia, which has become more sovereign and less dependent on Europe after 19 rounds of sanctions, emerging stronger and contributing to Russia becoming the world’s fourth-largest economy, with the ruble performing well in 2025. Europe, the speaker contends, has weakened due to energy costs, and 19 rounds of sanctions have diminished its growth and industrial capacity. The concept of resiliency, stability, and inflation is highlighted: trading in one’s own currency with partner currencies yields more predictable flows, reduces volatility, and may lower inflation while enabling steadier long-run growth. The speaker notes that more countries have moved to local currency trade since 2022, illustrating the ongoing shift away from hegemonic currencies. Speaker 1 adds that Russia did not anticipate SWIFT exclusion and responded by mandating ruble payments for oil and gas, accelerating the development and globalization of Russia’s own payment system, MIRS, akin to SIPs, and praising Central Bank Governor Elvira Nebolmina for stabilizing the transition.

Mario and Jeff discuss what the current geopolitical and monetary environment means for gold, the US dollar, and the broader system that underpins global finance. - Gold and asset roles - Gold is a portfolio asset that does not compete with the dollar; it competes with the stock market and tends to rise when people are concerned about risky assets. It is a “safe haven store value” rather than a monetary instrument aimed at replacing the dollar. - Historically, gold did not reliably hedge inflation in 2021–2022 when the economy seemed to be recovering; in downturns, gold becomes more attractive as a store of value. Recent moves up in gold price over the last two months are viewed as pricing in multiple factors, including potential economic downturn and questionable macro conditions. - The dollar and de-dollarization - The eurodollar system is a vast, largely ledger-based network of US-dollar balances held offshore, allowing near-instantaneous movement of funds. It is not simply “the euro,” and it predates and outlived any single country’s policy. Replacing it would be like recreating the Internet from scratch. - De-dollarization discussions are driven more by political narratives than monetary mechanics. Central banks selling dollar assets during shortages is a liquidity management response, not a repudiation of the dollar. - The dollar’s dominance remains intact because there is no ready substitute meeting all its functions. Replacing the dollar would require replacing the entire set of dollar functions across global settlement, payments, and liquidity provisioning. - Bank reserves, reserves composition, and the size of the eurodollar market - The share of US dollars in foreign reserves has declined, but this is not seen as a meaningful signal about the system’s functionality or dominance; the real issue is the level of settlement and liquidity, which remains heavily dollar-based. - The eurodollar market is enormous and largely offshore, with little public reporting. It is described as a “black hole” that drives movements in the system and is extremely hard to measure precisely. - Current dynamics: debt, safety, and liquidity - The debt ceiling and growing US debt are acknowledged as concerns, but the view presented is that debt dynamics do not destabilize the Treasury market as long as demand for safety and liquidity remains high. In a depression-like environment, US Treasuries are still viewed as the safest and most liquid form of debt, which sustains their price and keeps yields relatively contained. - Gold is safe but not highly liquid as collateral; Treasuries provide liquidity. Central banks use gold to diversify reserves and stabilize currencies (e.g., yuan), but Treasuries remain central to collateral needs in a broad financial system. - China, the US, and global growth - China’s economy faces deflationary pressures, with ten consecutive quarters of deflation in the Chinese GDP deflator, raising questions about domestic demand. Attempts to stimulate have had limited success; overproduction and rebalancing efforts aim to reduce supply to match demand, potentially increasing unemployment and lowering investment. - The US faces a weakening labor market; recent job shedding and rising delinquencies in consumer and corporate credit markets heighten uncertainty about the credit system. This underpins gold’s appeal as a store of value. - China remains heavily dependent on the US consumer; despite decoupling rhetoric, demand for Chinese goods and the global supply chain ties keep the US-China relationship central to global dynamics. The prospect of a Chinese-led fourth industrial revolution (AI, quantum computing) is viewed skeptically as unlikely to overcome structural inefficiencies of a centralized planning model. - Gold, Bitcoin, and alternative systems - Bitcoin is described as a Nasdaq-stock-like store of value tied to tech equities; it is not seen as a robust currency or a wide-scale payment system based on liquidity. It could, in theory, be a superior version of gold someday, but today it behaves like other speculative assets. - The conversation weighs the potential for a shift away from the eurodollar toward private digital currencies or a mix of public-private digital currencies. The idea that a completely decentralized system could replace the eurodollar is acknowledged as a long-term possibility, but currently, stablecoins are evolving toward stand-alone viability rather than a wholesale replacement. - The broader arc and forecast - The trade war is seen as a redistribution of productive capacity rather than a definitive win for either side; macroeconomic outcomes in the 2020s are shaped by monetary conditions and the eurodollar system’s functioning more than by policy interventions alone. - The speakers foresee a future with multipolarity and a gradually evolving monetary regime, possibly moving from the eurodollar toward a suite of digital currencies—some private, some public—while gold remains a key store of value in times of systemic risk. - Argentina, Russia, and Europe - Argentina’s crisis is framed as an outcome of eurodollar malfunctioning; IMF interventions offer only temporary stabilization in the face of ongoing liquidity and deflationary pressures. - Russia remains integrated with global finance through channels like the eurodollar system, even after sanctions; the resilience of energy sectors and external support from partners like China helps it endure. - Europe is acknowledged as facing a difficult, depressing outlook, reinforcing the broader narrative of a challenging global macro environment. Overall, gold is framed as a prudent hedge within a complex, interconnected, and evolving eurodollar system, with no imminent replacement of the dollar in sight, while the path toward a multi-currency or digital-currency future remains uncertain and gradual.

Jeff: Gold is not a monetary instrument the way people often think. It’s actually easy to understand once you move away from the idea that gold is tied to dollar inflation. Gold is simply a portfolio asset, a store of value, and the preeminent safe haven store value. Gold doesn’t compete with the dollar; it competes with the stock market or risky credit markets. The notion of “de-dollarization” largely comes from political context rather than monetary mechanics. Mario: So gold prices rising—how should we think about that trade? Jeff: Gold tends to go up when people are concerned about risky assets because it’s a safe haven. It performed poorly as an inflation hedge in 2021–2022 when the economy seemed to recover and policymakers seemed to have hit the right policy mix. Now, with conditions leaning toward an economic downturn and “Nvidia AI stocks” looking bubbly, gold has revived as a safe haven. The last two months reflect the factors I’ve cited being priced into the gold market. Mario: People talk about the death of the US dollar. Is gold not tied to that? Jeff: They’ve been talking about de-dollarization for twenty years. The dollar remains dominant because there is no replacement for its functions; replacing it would be like recreating the Internet from scratch. The Eurodollar system grew because it could meet many needs in a flexible way, including for asset-holders who want to keep things in US-dollar terms. If you’re trying to hide assets, you keep them in US-dollar terms, and there are places to do so. Mario: The dollar’s share of foreign reserves has fallen from 72% to 58% in recent years. Doesn’t that show a shift away from the dollar? Jeff: That drop isn’t necessarily meaningful for reserve mechanics. What matters is the level of settlement and payments, which are still 90% in US dollars. The yuan is rising in FX settlements, but it’s not replacing the dollar; it’s competing with other currencies on the other side of the dollar. The dollar is as dominant as ever, and there’s no easy replacement because you’d have to replace all its functions. Replacing the dollar network would be like recreating the Internet—massive, complex, and gradual. Mario: What about the Eurodollar market itself? How big is it? Jeff: Nobody knows. It’s offshore, regulatory offshore, with little reporting; it’s a black hole. Eurodollars are “numbers on a screen,” ledger money, not physical dollars. The Eurodollar system lets money move quickly worldwide through bank-ledger networks, integrating various ledgers. It’s the global settlement mechanism, and its size is effectively unknowable, yet it’s the currency the world uses. Mario: Why do central banks buy gold now, especially China? Jeff: Gold is a portfolio asset, a diversification tool. Central banks must diversify reserves; they still need some US Treasuries for the eurodollar system, but gold helps balance risk. In China’s case, gold supports yuan stability and diversifies reserves beyond US assets. Mario: What happens if a conflict with China disrupts the system? What replaces the dollar or the eurodollar plumbing? Jeff: It’s the great unknown. If there’s a real shooting war, China could be cut off by many, and the dollar system would shrink to those willing to participate. The eurodollar would strengthen as a settlement medium, though with a smaller global footprint. The idea of replacing the eurodollar with a Chinese-led system is unlikely; gold’s role in cross-border settlement remains limited, and gold alone isn’t a reliable settlement instrument. Mario: Is China building a “gold corridor” to decouple from the dollar? Jeff: The gold corridor theory reflects ongoing speculation. There have been many schemes—Petro-dollar, digital currencies, Belt and Road—that have not proven game-changing in defeating the dollar system. Gold in that context is not a robust settlement mechanism across geographies; the eurodollar system arose to move away from gold settlement. Mario: Why are people hoarding gold? How does the US debt situation affect the dollar’s safety? Jeff: US debt is a concern, but safety and liquidity demand still drives demand for government debt, not gold. Gold is safe but illiquid as collateral; liquidity is why Treasuries remain central. The debt grows, but the treasury market has remained robust because it’s the deepest market and the safest liquid asset. The larger risk lies in the federal government's expanding footprint and the potential debt trap, where stimulus doesn’t spur growth and leads to rising debt. Mario: What about Bitcoin as a store of value? And how about Russia? Jeff: Bitcoin behaves like a Nasdaq stock—more of a store of value tied to tech equities than a broad currency. It’s not likely to become a widespread medium of exchange. Russia remains connected to the US system; it’s less about the Russian economy collapsing and more about how energy and sanctions interact. The eurodollar system has kept Russia afloat through channels like the UAE, and it’s unlikely that Russia’s fate hinges on a single currency shift. Mario: Will the US empire fall or evolve into a multipolar world? Jeff: Likely a multipolar world, not a complete fall of the US empire. I’m long-term optimistic on the US and global economy. The eurodollar system could slowly be replaced by private digital currencies, with stablecoins evolving toward independence. The transition would be gradual, with multiple private digital currencies emerging, while the eurodollar would persist in a rump form if needed.

Professor Zhang argues that geopolitics is a game where players maximize their self-interest, with predictions built on game theory rather than ideology. For 2026, the central event is Trump’s state visit to China in April, and the US–China relationship is identified as the key uncertain variable, while Russia–Ukraine is considered settled and Europe–NATO–Russia largely forecastable. Zhang outlines the grand strategy behind current tensions: Trump supposedly aims to force a grand bargain with China by leveraging the destabilization of the Middle East and Western Hemisphere to push China into continuing to buy US dollars. He contends that since Nixon’s 1971 decision to float the dollar, the US has relied on two pillars—the petrodollar system and opening China to American technology and markets. As the US then ran deficits and engaged in Middle East wars, China sought to internationalize the yuan and reduce dependence on the dollar via instruments like the Shanghai gold exchange. This, in his view, destabilizes the dollar, prompting Trump to push China to maintain dollar demand by destabilizing oil supply routes and minerals for China’s EV, AI, and other sectors. By invading Venezuela and potentially destabilizing Iran, Trump allegedly aims to force China to rely more on Western Hemisphere oil, silver, gold, lithium, copper, etc., and thus buy more US Treasuries to support the dollar. The discussion then shifts to possible bifurcations: if the United States truly wants China to use the dollar, it would create trust and a predictable, rules-based order; yet current actions—such as cutting China off from semiconductors or “crushing its tech industry”—could push China away, making it more independent and less dependent on the dollar. The Venezuelan case is cited as evidence that the aim is to obstruct China rather than claim oil directly; it would rather block rival powers than simply seize resources. The two powers are described as codependent: China imports about three-quarters of its oil, with roughly 50% from the Middle East and 20% from Russia; China would face a long and costly transition to replace Russian oil entirely, including pipelines. China also has tools to push back, such as triggering instability in silver markets (where China dominates) or other commodities used for manufacturing, a dynamic described as mutually assured economic destruction if either side overplays. When asked how the US could simultaneously pursue trust and coercion, Zhang asserts it cannot have both; the US is described as a global hegemon that should treat China as an equal, but instead presses to subordinate China. This creates a “ladder over an abyss” metaphor: both sides must climb together, or both fall; overt coercion could push China toward a different strategic alignment, possibly toward Russia or a diversified energy portfolio. Zhang emphasizes the role of hubris and racism in US policy, rather than pure ideology, and says the US dollar’s strength is also its vulnerability. Looking at US domestic dynamics, Zhang predicts a potential US economic crisis could magnify political instability. He identifies three US fragilities: (1) AI-driven GDP components that may not generate enduring profits, as data centers consume vast resources and job loss looms; (2) over-financialization, including a speculative silver market and leverage in commodities; and (3) cryptocurrency de-coupled from real utility, with quantum easing allowing continued money printing. He argues these weaknesses could precipitate a fiscal crisis and civil conflict if not contained, potentially catalyzing a broader crisis of state legitimacy. In Europe, Zhang foresees militarization and a misguided pro-war stance despite domestic discontent, predicting irrational policies and a possible collapse of NATO’s existing framework. He forecasts intensified Europe–Russia tensions, including a possible endgame around Odessa, with NATO likely to be overwhelmed militarily, leading to civil unrest and a “slow death” for European cohesion over five to ten years. He contends Europe’s strategic autonomy is eroding under multiculturalist policies and internal polarization, undermining willingness to fight. Regarding the United States’ global posture, Zhang argues Washington is moving toward transactional empire-building—exploiting its vassals when advantageous and abandoning them when not—while projecting power from the Western Hemisphere as a core strategy. He argues that this approach will erode Europe’s relevance and provoke global backlash. Finally, Zhang returns to Iran: Trump’s push for regime change there is linked to leveraging support from Israel and influential backers, such as Adelson and Elon Musk, with the likely aim of a ground invasion. Yet the plausibility of a successful invasion is questionable, given Iran’s size and power, and Trump’s emphasis on optics over sustained policy. The main unknown is China’s response; factions within China differ on dependence on Russia versus diversified oil sources, and the April meeting will shape whether a grand bargain reduces conflict or merely preserves the empire’s decline. To conclude, the April China meeting is pivotal, with four scheduled meetings in 2026; a China–US deal could stabilize some tensions, but the underlying imperial collapse is expected to persist, fueling wars and confrontations worldwide regardless of occasional bargains.

The Iraq war was seen by many as an attempt to control the region's oil resources and maintain Washington's influence in global energy policies. In 2000, Saddam Hussein planned to switch Iraq's oil trade from the dollar to the euro, but the US invasion in 2003 ensured that Iraq's oil industry continued to be denominated in dollars.