What the hell is happening? April 2025
GOLD STANDARD - DOLLAR STANDARD - NO STANDARD
From the Gold Standard, to the Dollar Standard… to the No Standard. This is what’s happening here — and most don’t see it.
Right now, I see four main forces shaping the landscape:
Recession risks
A shift in the American unipolarity dynamic
The limits of Keynesianism and Currency Debasement
Trade Wars + Trump 2.0 Art of the Deal type tactics
We’re four months into Trump 2.0, and things are getting messy.
We’re not at new highs and this administration isn’t shaping up to be the most pro-business and pro-growth ever.
In fact, the USA finds itself at crossroads — a crossroads that it has been fast approaching for years.
Dumbing this dynamic down extremely, see meme below for those that are more visual!
Worries about US debt sustainability and talks of the end of American exceptionalism are leading the conversation. Some are even coming out to doubt the future of the USD as the reserve currency of the world.
In fairness, all those go together. But the point is those discussions that were just recently laughed on are now part of the discourse.
Long-time readers know we’ve been on this Empire in Decline theme since the early days.
Read Peak American Empire linked below for a revision of the setup. It’s a historical-economical discussion on the US as the epicentre of the global financial system — and how that connects to everything else.
Last July I wrote Dollar Maximalism to attack the notion that the Dollar’s reserve currency status can never be threatened.
I wrote the piece in response to a podcast full of finance bros celebrating the invincibility of the USD as a reserve currency.
Note: I did not agree with their rhetoric —> The broader rhetoric has now changed!
As I was writing this I saw the USD/JPY spike up, I checked news:
Trump says he has no plans to Fire Federal Reserve Chair Powell
Trump says he is going to be very nice to China, they have to make a deal
Ok, back to writing….
Don’t worry, Trump’s back and forth antics were already planned to be a part of this.
Trade Wars and Trump’s tactics (#4 above) is only one of the four key forces, markets are definitely not out of the woods.
And so, we need to talk… 🔻
Putting it all together
We discussed in Biden’s Techno-Imperial Cycle the virtuous cycle that the US economy was benefitting from — with the caveat that it’s a boom/BUST cycle.
In my opinion, we are now going through the BUST stage.
Read the conclusion here. The piece was later removed from the paywall.
It’s obvious by now that the things I was saying then (July 21st, 2024) are happening, and that the cycle has gone into reverse.
What comes next?