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Ryszard's avatar

"None of this is reversible." - Probably this is true, but look at Russia. It took over two decades under president Putin, for the country to recover. And perhaps more importantly, where in the corrupt US administration circles to find a person fit for the job? It was a sort of a miracle in Russia - to replace Yeltsin with Putin. Will US be able to pull it throuth as well?

Another point I'd like to comment on is ref. to "Federal debt has ballooned to 122 percent of GDP".

Many economists suggest US GDP is very much inflated mainly by including financial services in it, which do not provide wealth increase but possibly reduce the wealth instead, eg. credit card penalties. Should this be the case, and if the real US GDP could be as low as 50% or less of the current number the US would be facing a turmoil of an unpredictable scale.

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Einar Tangen's avatar

Unfortunately GDP doesn't reflect the reality of a country's economics, as it was created at a time when a product exported from a country was from that country. Modern supply chain economics and logistics have changed all of that, leaving GDP a hollow gage of activity rather than value.

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Seeker's avatar

There are plans in place to deregulate US banks to allow them to purchase more government treasuries. This creates a medium by which the government can access debt to finance itself if international demand for US debt declines. The issue is more debt is going to be held within the US added to the huge amount of debt already held globally. The dirivitives market is said to be between 700 trillion to 1.2 quadrillion dollars with the whole system assumed to be as high as 3 quadrillion dollars. The issue with that level of money creation is like walking through a desert needing water. The first bottle of water is valuable but every other bottle becomes less valuable until it is taken for granted. The more money accumulated, eventually the money loses value and price becomes merely a sign of currency devaluation rather than a reflection of value.

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Einar Tangen's avatar

Between derivatives, leverage, and money printing, the financial system system is on a hair trigger.

Any major shift to foreign asset would bring down the curtain on Washington's ponzi scheme. The dollar would go into free fall with nothing to backstop it with.

Ironically while it would plunge the world into a depression, the last laugh would be by those holding dollar denominated loans.

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Seeker's avatar

Money not repayed is basically money that remains in circulation further diminishing the value of that currency. The abstract figures of billions, trillions and quadrillions are so large the vast majority, don't understand how unimaginably huge these figures are and how valueless these figures make the things that are truly of value. Humanity has a choice, either break the debt based financial system or that system will break humanity. Or maybe it's just too late, as we have been convicted in the belief that we have evolved to eat, drink, and breath paper/debt to sustain life.

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Alexander Fernandez's avatar

This post delivers a stark, well-argued indictment of the current trajectory of U.S. dollar dominance, highlighting how Washington’s own policies are accelerating its decline.

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Sammit's avatar

Yuan pegged to gold now. Fiat currency is done. Bummer.

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David Lentz's avatar

Gold is a tier one asset now

Central banks are loading up

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Alexander Fernandez's avatar

Reckless U.S. policies, unpredictable tariffs, and weaponized sanctions have shaken global confidence, pushing countries to look elsewhere—like China’s CIPS system and gold reserves. With soaring debt and rising borrowing costs, America’s financial future looks increasingly shaky.

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Einar Tangen's avatar

Agree! The hard part is the solution. Perhaps using our existing educational strengths and resources to develop high margin Digital products and services, including an e-currency that taxes at point of transaction and gives government a real-time dashboard that allows them to see what's happening in the economy, revamp government services, create and apply digital solutions that make our industries and services, like Healthcare more competitive. Apply a fixed percentage of taxes to retire the national debt, return competition to the market place by preventing industry players from having more than 15% of the markets, etc...

This as opposed to the tired victimization narrative, pursuing low margin high investment reindustrialization, attacking our educational institutions, pitting classes against each other, protecting the dominent industry players who tax us for providing goods and services rather than competing for them, while trying to hobble our competition rather than competing against them.

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