To The Moon

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We are living through a remarkable moment in history — one defined by geopolitical upheaval, economic contradictions, and a profound transformation in how the world trades, invests, and saves. While headlines continue to focus on near-term market movements or election-year rhetoric, a far bigger shift is brewing beneath the surface: the weakening grip of the U.S. dollar as the world’s preeminent reserve currency.

Today, the global financial system is being pulled in multiple directions at once. Two physical wars are actively reshaping supply chains and diplomatic alliances. The U.S. is escalating a trade war under the leadership of former President Donald Trump, and the economy is showing signs of fragility in real time. On top of all this, Washington now appears ready to open a new geopolitical front with Iran, potentially dragging the U.S. into another costly military entanglement.

When a system is pushed to its limits, something has to give. And increasingly, that pressure valve looks like the U.S. dollar.

The Dollar’s Safe Haven Status Is Eroding

Historically, geopolitical chaos and conflict have served to strengthen the U.S. dollar. As the world’s reserve currency, the dollar benefits from its role as a global safe haven. But this time, something is different. Despite escalating tensions in the Middle East, surging debt, and inflationary risks, the dollar isn’t rallying the way it traditionally has.

Even as the U.S. remains the world’s largest oil producer and controls the dominant global currency system, the greenback is struggling to assert strength. Instead of spiking on war news — as it did in previous decades — the dollar is drifting downward. This tells us something critical: the foundations of dollar dominance are beginning to shift.

The Trade Deficit Trap: Why Trump's Tariff Agenda Could Backfire

One of the most underappreciated risks to the dollar's long-term value lies in Trump’s campaign to eliminate the U.S. trade deficit through aggressive tariff policies. While the former president frames this as a move to “restore American industry,” the economic reality is more complicated — and potentially dangerous for the dollar.

For decades, the U.S. has run persistent current account deficits — buying more from the world than it exports. While this has been politically unpopular, it has played a vital role in cementing the dollar’s status as the world’s reserve currency. Here’s how it works:

• The U.S. imports goods, paying with dollars.

• Those dollars accumulate in foreign central banks and corporations.

• That dollar surplus is recycled back into U.S. capital markets — buying Treasury bonds, equities, and real estate.

This arrangement has created a self-reinforcing cycle of demand for U.S. financial assets and, by extension, the dollar itself.

But if Trump succeeds in sharply narrowing the trade deficit, that flow of dollars into global hands will shrink. With fewer dollars circulating globally, there will be less foreign capital returning to U.S. assets, weakening demand for the dollar and potentially destabilizing U.S. bond markets.

The irony? The very policy designed to strengthen American industry may end up undermining the dollar’s global standing.

China Sees an Opening — and Is Pushing a New Currency Regime

While Washington tightens its grip on tariffs and threatens military action, Beijing is playing the long game.

Recently, the People’s Bank of China (PBOC) unveiled a vision for a new global monetary framework — one in which multiple reserve currencies coexist, rather than the dollar reigning supreme. According to the PBOC’s governor, Pan Gongsheng, the next era of the global monetary system will involve a multipolar reserve regime, where countries issuing reserve currencies are subject to both incentives and constraints.

This includes proposed mechanisms like:

• Deficit-to-GDP limits for sovereign issuers

• Capital discipline to prevent overuse of monetary power

• A shift away from overreliance on U.S. debt as a global savings vehicle

China’s push for this system is not purely academic. It’s a strategic response to U.S. sanctions, financial weaponization, and trade hostility. Since 2018, China has been actively reducing its reliance on the dollar in cross-border trade — a process known as de-dollarization. Today, over 30% of global trade involving China is settled in renminbi (RMB), and that number is steadily rising.

A Multipolar Currency World: USD, EUR, RMB, and More

We are rapidly moving toward a global currency system divided along regional or political lines:

• The U.S. dollar remains dominant in the Western Hemisphere and in commodity markets.

• The euro continues to serve as a regional reserve for Europe and parts of Africa.

• The renminbi is gaining ground in Asia, the Middle East, and across BRICS nations.

This doesn’t mean the dollar disappears — far from it. But it does mean that its exclusivity is fading. In this new environment, investors will increasingly seek exposure to multiple currencies and hedge their dollar risk more proactively.

Higher Tariffs, Higher Inflation, and the Fed’s Dilemma

The Federal Reserve is now caught between a rock and a hard place.

The latest guidance from the Fed suggests that interest rates will remain elevated for longer — not because the economy is booming, but because inflation risks remain. And much of that risk is policy-induced. Trump’s tariffs are making goods more expensive. Companies like Walmart, Target, and Amazon have already signaled they will raise prices as new tariffs take effect.

This is a classic recipe for stagflation: slowing growth, rising inflation, and higher unemployment. And we’re already seeing signs of it:

• GDP growth estimates have been revised downward (1.4% vs. 1.7%)

• Unemployment is rising slowly but steadily

• Inflation expectations are creeping up — both core and headline measures are higher than they were just months ago

This makes it harder for the Fed to cut rates, even if the economy stalls. The result? Prolonged high interest rates that hurt U.S. competitiveness and borrowing capacity, while doing little to reignite growth.

Trump vs. Powell: Monetary Policy Meets Political Pressure

Former President Trump has made his frustration with Fed Chairman Jerome Powell abundantly clear. In recent speeches, he’s attacked Powell for refusing to cut interest rates aggressively and has signaled he plans to replace him with someone more dovish — a Fed Chair who will “do what’s needed” to stimulate the economy.

But this creates a dangerous dynamic. If the Fed bows to political pressure and slashes rates into an inflationary environment, trust in the Fed’s independence will erode — and so will the dollar’s credibility.

In fact, markets are already pricing in long-term risks. U.S. bond yields remain elevated, and foreign demand for Treasuries is softening. If global investors no longer view the dollar as a safe haven, capital will seek shelter elsewhere — most likely in hard assets, foreign currencies, and emerging market debt.

The Middle East Risk: A Strategic Gift to China

Let’s not forget the geopolitical chessboard. If the U.S. engages in a full-blown military conflict with Iran, the cost will be staggering — not just in lives or dollars spent, but in the dollar’s global reputation.

Meanwhile, China stands to benefit. Already the world’s largest exporter and a key energy player, Beijing can leverage U.S. distraction to deepen trade relationships, boost RMB-denominated transactions, and expand its reserve status — all while maintaining internal stability.

While the U.S. bleeds money into another Middle Eastern conflict, China is hoarding oil, strengthening reserves (now estimated at 1.2 billion barrels), and investing in its domestic production and green energy infrastructure. It is also quietly building the institutions of a post-dollar financial world.

Conclusion: Can Dollar Dominance Be Saved?

The short answer: yes, but not without major structural reform.

To preserve the dollar’s status, the U.S. must address its unsustainable fiscal deficits, rethink its use of financial sanctions, and move toward a more stable, predictable trade policy. It must also defend the independence of its central bank — even in the face of political pressure.

But here’s the reality: the policy direction today is heading in the opposite way. If tariffs escalate, war breaks out, and deficits widen further, the long-term trajectory is clear: a weaker dollar, slower growth, and greater financial multipolarity.

Investors should begin preparing now — by diversifying into non-dollar assets, hedging currency exposure, and allocating capital toward regions poised to benefit from the new order.

The dollar may not collapse overnight. But its age of unquestioned dominance is fading — and what replaces it will be one of the defining stories of our lifetime.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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