They're Using This War To 'Replace The Dollar'

The President of the United States recently gave a speech, and while many hoped for an announcement regarding the end of a war, President Trump instead issued a warning to Iran, stating the entire country could be "taken out" if a deal isn't made, threatening "complete demolition" of its infrastructure. This speech caused a drop in stock market futures, an increase in oil prices, and a decrease in Bitcoin, primarily due to the continued closure of the Strait of Hormuz, a critical oil choke point responsible for 20 million barrels a day. The closure is confirmed by a chart showing consistently low tanker transit calls. Some believe that if the Strait remains closed for another 2-3 weeks, a global economic breaking point will be reached, potentially leading to a worldwide crisis even if the war ceases. A theory suggests this crisis might be a planned opportunity for a significant change to the world and its monetary system, as every crisis throughout history has presented such an opportunity. Historical examples include the 2008 financial crisis, which led to the Fed's invention of quantitative easing (QE) and the bailout of institutions, and the 2020 pandemic, which saw global governments discussing a "Great Reset." Klaus Schwab, founder of the World Economic Forum, publicly stated the pandemic offered a "rare but narrow window of opportunity to reflect, reimagine, and reset our world," suggesting the crisis provided an opportunity for global economic and governmental coordination. The speaker emphasizes a historical pattern: crises often lead to increased centralization of wealth and power. This isn't necessarily a conspiracy by a small group, but rather an observation that those close to power utilize crises to upgrade systems in a way that centralizes control. The video aims to explore the nature of the next crisis and the subsequent opportunity for further power centralization. Economist Luke Groman discusses the net international investment position, which measures a country's financial balance sheet with the rest of the world. For the U.S., this number is currently negative 87% of GDP, a significant increase from negative 7% after the First Gulf War, negative 12% after the Second Gulf War, and negative 15% after the 2008 financial crisis. This means foreigners own a substantial amount of U.S. assets, totaling about $70 trillion in U.S. dollar assets, with $9.4 trillion in U.S. Treasury bonds alone. These foreign entities, particularly Europe, Japan, China, and Southeast Asia, are also heavily dependent on oil flowing through the Strait of Hormuz, which is currently closed. As oil is priced in dollars, these countries need dollars to purchase it. They acquire these dollars by selling their U.S. dollar assets, such as stocks, bonds, and treasuries. This selling is already occurring, with foreign central bank holdings of U.S. Treasuries at the New York Fed reaching their lowest level since 2012, with tens of billions of dollars gone in four weeks. This trend is expected to worsen because when countries sell treasuries, treasury yields rise. Higher yields increase the cost of financing America's nearly $40 trillion debt. The 10-year treasury yield, which was in the 3% range when the war began, has increased in the last four weeks. Research suggests a danger zone for bond yields between 4.6% and 4.8%, beyond which the economy could enter a "debt death spiral." This spiral involves borrowing becoming more expensive, leading to larger deficits, requiring more borrowing, which in turn drives rates even higher, creating a continuous loop. With almost $40 trillion in debt, this spiral could accelerate rapidly, as Jerome Powell alluded to when discussing the unsustainable U.S. debt growth rate. Three possible outcomes are presented for the U.S. to address this situation: 1. **Let yields go up:** Allowing market forces to drive treasury yields to 5%, 6%, or higher would crush the U.S. stock market. Investors would favor guaranteed bond returns over risky stocks. A declining stock market would lead to reduced tax revenues, exploding deficits, a weaker housing market, collapsing consumer spending, bank losses, and a recession. Due to the negative 87% net international investment position, this recession could trigger a debt-death spiral affecting the global economy. 2. **Print money into rising oil prices:** The Federal Reserve could intervene with quantitative easing (QE), buying treasuries, capping yields, and implementing yield curve control to save the bond market. However, injecting liquidity into an economy experiencing an oil shock would cause significant inflation, potentially exceeding the levels seen in 2021, possibly reaching double digits or worse. 3. **Walk away from Iran:** The U.S. could declare victory and withdraw. This option, while seemingly appealing, would have severe consequences. The world would witness the U.S. initiating a war, failing to reopen a major shipping lane, and then retreating. This would signal a decline in U.S. power and influence, potentially accelerating other countries' decisions to price oil in currencies other than the dollar. This scenario, likened to Britain's Suez Canal moment in 1956, could mark the end of the U.S. empire and lead to a weaker dollar and inflation. All three outcomes lead to inflation and a weaker dollar. Based on current information, the U.S. is most likely to choose option number two: printing money into rising oil prices, causing the Fed's balance sheet to expand again. This would involve "Type 2 QE," as seen in 2020, where the Fed buys assets from non-banks, corporations, and pension funds. This influx of money into the broader economy increases buying power without a corresponding increase in supply, leading to inflation after a lag of 12-18 months. This type of QE caused 9% inflation in 2020 and could lead to even higher inflation in the future, resulting in stagflation (slow economic growth with high inflation). The next phase, or "opportunity to centralize power," is theorized to address two core problems: 1. **AI and automation:** The widespread adoption of AI will displace many jobs, leading to pain for those unable to adapt. Even in an optimistic scenario of abundance where work is unnecessary, universal basic income (UBI) would likely be required. This would give society too much free time, potentially leading to increased public engagement and organization, which central planners might view as a loss of control. 2. **U.S. debt:** The nearly $40 trillion U.S. debt is growing faster than the economy, and rising yields are increasing its cost. The solution proposed is to privatize and distribute this debt globally, not through traditional inflation (which relies on other countries wanting U.S. assets), but directly to individuals. The proposed new monetary system involves every major corporation becoming a bank, every major app a wallet, and every smartphone user an unwitting creditor to the U.S. government. For example, a digital wallet from Tesla could allow users to load dollars, which Tesla would then invest in U.S. Treasury bonds, earning a yield. Tesla would keep a portion and pass some back to the user as rewards or discounts. This system would be replicated across all major corporations (Apple, Amazon, McDonald's, Google Pay, airlines, retailers), all holding U.S. Treasuries as backing for their digital assets or reward programs. This system is not merely a theory; it is aligned with legislation currently moving through Congress, such as the Genius Act, which requires any company issuing a stablecoin (a dollar-pegged digital asset) to hold U.S. Treasuries or equivalent safe assets as backing. This has already been successfully tested by Tether, which holds over $120 billion in U.S. Treasuries, making it one of the largest holders of U.S. government debt globally. This system, while offering convenience, yields, and protection for savings, also represents a sophisticated financial control grid. Tether has already demonstrated the ability to freeze wallets, sanction addresses, and flag accounts based on regulatory requests. Scaling this capability to a system where every major corporation's digital wallet is subject to U.S. regulation, backed by U.S. Treasuries, and governed by U.S. law would create a level of financial control far exceeding the current SWIFT banking system. While SWIFT can cut off entire countries, this new system could target individuals anywhere, regardless of their country's laws. Resistance from countries might involve disabling app stores and turning off the internet. The speaker notes that no one is forced into this system, as people have already signed up to it through their use of brands and digital platforms. Regardless of the next crisis (stagflation, hyperinflation, nuclear war, etc.), this digital financial control grid with Central Bank Digital Currencies (CBDCs) is seen as "their opportunity." To protect oneself, advice includes securing real assets, using cash, building local networks, and acquiring skills. The speaker personally advocates for self-custody of assets, preferring physical versions of gold or silver over ETFs, as these are harder to track, freeze, or digitally disable. The same principle applies to Bitcoin, where self-custody is preferred over ETF versions. Staying informed is crucial, as the complexity of this system means many may not understand its implications, while those who do can make better choices and hold assets outside the grid.