The United States of America is in big trouble, short term and long term. In 2022, the stock market is crashing, bond market is down the most in 40 years, housing bubble is bursting, inflation is skyrocketing, debt is exploding, and GDP is shrinking. These are not temporary crises. Instead, they reveal systemic flaws in the American economy that is propped up by a rigged global financial system. However, that system is starting to crumble and the primacy of US dollar is in serious trouble, thanks to an emerging multipolar world. (Don’t believe the nonsense that the US can keep printing infinite amount of dollars).

US central government’s debt is now $31 trillion, amounting to 130% of GDP. Soon, the interest payments on the debt alone will be $1 trillion per year. Of course, the principal amount will never get paid off. Then, add in the unfunded liabilities — like future payments for social security — the debt is staggering over $200 trillion.

Furthermore, there are not enough buyers of US treasuries. Thus, since the 2008 financial crisis, the Federal Reserve Bank has been creating trillions of dollars literally out of thin air and buying the US debt (treasury bonds). This is voodoo economics and not sustainable.

What’s the end game? The US needs to default on its debt and start new. The goal is to declare bankruptcy and … yet remain the #1 country. This will be the “Bretton Woods III” agreement.

Sounds ridiculous? Well, it’s possible if all the other countries are weak and nobody is strong enough to challenge the US.

This is why the US must not only crush Russia and China — the two biggest geopolitical rivals — but also weaken Europe, and establish the new global order to prolong the American Century.

Dollar Hegemony

America’s extraordinary power comes from the power of US dollar, which is the preferred global currency for trade. This also means that countries around the world must accumulate US dollars in their foreign exchange reserves. But the US has been abusing its power by printing money, and by weaponizing the dollar through sanctions and confiscations of hard-earned reserves.

No wonder that China, Russia and others are finding ways to circumvent the dollar in trade. The share of US dollar in global reserves is only 59% now. When that number falls below 50%, the tectonic shifts in global finance will become more apparent to Americans.

To fully grasp the nature of the current world order, let’s see how the US established the dollar as the world currency, performed the biggest gold heist in human history, then defaulted on its obligations, but revived the moribund dollar with a clever deal. Those are the stories of Bretton Woods I and II.

Bretton Woods I — Gold-backed Dollar

WW2 was a wonderful thing for the US. First, it took the US economy out of the Great Depression. The US played the role of arms supplier and gladly watched European empires destroy themselves. Even before the war was over, the US brought in all the allies to Bretton Woods, New Hampshire, in 1944 and said, “When the war is over, you will all be weak and broke. I will be the new empire, and my dollar will be the global currency. But don’t worry, it will be as good as gold — at a guaranteed rate of $35 per ounce of gold.”

This meant that if you have $35, you can go to a US bank and get an ounce of gold!

The world agreed. When the war was over, everyone bought US dollar with gold and used it for trade. Huge amounts of gold were also physically transferred from Japan, Germany and other parts of the world into the vaults of the Federal Reserve Bank in New York.

This system worked until 1971 when the US suddenly declared, “Oops, the dollar is not backed by gold anymore. If you have US dollars, they are just pieces of paper now. You cannot get your gold back!” People called it the “Nixon Shock.”

1970s – When Fiat Dollar almost died

This was also the biggest gold theft in human history. But what could the world do? America had nuclear weapons and the mightiest military.

Of course, the switch to a fiat currency wreaked havoc. The value of US dollar fell precipitously and inflation skyrocketed. Oil price quickly doubled and grew five-fold by 1979. The oil shock and gas shortage rocked American politics.

The US economy was in deep trouble. That’s when the US elites came up with a clever idea to rescue the dollar and restore its primacy.

Bretton Woods II — The Birth of Petrodollar

How to make the dollar relevant? Hmm…What if everyone needed US dollar to buy something essential?

Like … OIL. Brilliant!

This was the birth of Petrodollar.

Basically, the U.S. used Saudi Arabia’s oil to save the dollar. That is, Saudi Arabia (and other smaller producers) would sell oil only for US dollars. And to make sure that the Saudis don’t get too powerful, they will be forced to recycle most of their profits back into the US economy. It was also a protection racket, which meant the US military would occupy Saudi Arabia and protect it from enemies.

But why would the Saudis agree to this? Because the U.S. would make Saudi Arabia the new king of oil and the most influential Middle East power … after crippling Iran.

Win-win.

Thus, the U.S. armed and funded Saddam Hussein of Iraq to wage a decade-long war on Iran. US provided arms/intelligence. Germany and France provided deadly chemical/biological weapons to Iraq. Here’s Donald Rumsfeld with Saddam in 1983.

Of course, the same Rumsfeld would bomb Iraq and kill Saddam twenty years later.

Thus, the Petrodollar deal with Saudi Arabia could be called Bretton Woods II. It extended the life of the American Empire by a few more decades.

Bretton Woods III

For the last four decades, countries around the world have been foolishly working hard for US dollars, buying US treasuries, and funding the American Empire. But within the next decade, those U.S. treasury bills and bonds might be worthless. Deja vu all over again.

The U.S. needs Bretton Woods, Version 3. Somehow, the world needs to write off all American debt and start new. But … with America still as #1 How the hell could this happen?? This is how:

If the world is full of weak countries, they will accept the new rules — just like they did in 1944 and 1974. Imagine a world where Russia and Europe destroy one another. Imagine a world where Japan and India attack China … and they all get destroyed. A world on fire, destroyed by passion and bombs.

In that world, America will come in as the savior at the last moment, stop the war, and make everyone a happy vassal.

Great Reset. Bretton Woods III. New World Order. Call it what you will.

Conclusion

The wheels are in motion. After eight years of provocation, the US successfully forced Russia to invade Ukraine. And the US also brilliantly pulled Europe into the mess. Europe’s economy is now being decimated and de-industrialized.

As for China, the U.S. is trying its best to start a war using Taiwan as the pawn. Japan is being asked to re-militarize and procure 1000 long-range missiles. The US needs a few more years to manufacture this mother of all wars. A lot depends on India, since Japan wouldn’t want to be the only Asian country to attack China.

Four years ago, I predicted all this in the article “The Most Dangerous Decade.” However, much of the world is still happy to be mesmerized and led into the slaughterhouse.

Only Russia and China can change how this story evolves. If Putin can quickly and decisively win the Ukraine war, he can force a peace settlement with Europe.

And China needs to accelerate the internationalization of Yuan. Also, the BRICS members and other developing nations can create a basket of currencies that would be more democratic. Bottom line: There is no de-dollarization without a robust alternative financial system.

China also needs to muster the greatest diplomatic efforts to make peace with India as well as with Japan, which would blindly follow US orders. China should also make a deal with Taiwan to reduce tensions — perhaps something like “We won’t invade you and, in return, you won’t buy weapons from the US or declare independence.”

In the most optimistic scenario, the Global South — people of the developing nations — can bring into fruition a new fair world without catastrophic wars or financial devastation. As Sun Tzu said, “The supreme art of war is to subdue the enemy without fighting.”