The evolution of money is driven more by technological advancements than by political decisions. From the telegraph enabling global ledgers to digital assets allowing permissionless value transfer, technology fundamentally shapes what can serve as money and how it is used on a global, permanent scale.
The US dollar's role as the world's reserve currency requires the US to run persistent trade deficits to supply dollars globally. This dynamic gives the US immense import power but hollows out its domestic manufacturing base, leading to economic imbalances, wealth concentration, and political polarization.
With a national debt-to-GDP ratio exceeding 130%, the US is in a 'fiscal spiral' where raising interest rates to fight inflation significantly worsens the deficit. This mathematical reality suggests that the path of least resistance is persistent inflation to devalue the real value of the debt over time.
Actions like the freezing of Russia's central bank reserves have accelerated a move by nations to reduce their reliance on the US dollar. Countries like China are shifting from buying US Treasuries to investing in hard assets and building alternative payment rails, leading to a more multipolar financial world.
Keep pulling the thread on Lyn Alden.