The ongoing conflict and economic turmoil, including the closure of the Strait of Hormuz and rising US debt, are creating a crisis that may accelerate a shift in the global monetary system. Central planners might use this crisis to implement a digital currency system that privatizes US debt and centralizes financial control, impacting global economies and individual freedoms.
Recently, the President of the United States delivered a speech that many hoped would signal the end of a war, but instead, it highlighted escalating tensions and threats, particularly towards Iran. The speech included stark warnings about potential destruction in Iran, which caused immediate reactions in global markets: stock futures dropped, oil prices surged, and Bitcoin prices fell. This turmoil is closely linked to the closure of the Strait of Hormuz, a critical oil transit chokepoint responsible for 20 million barrels per day.
The Strait of Hormuz remains closed, severely disrupting tanker transit calls and oil supply. Experts suggest that if this closure persists for another two to three weeks, the global economy could reach a breaking point, potentially triggering a worldwide crisis even if the war ends thereafter.
Historically, crises have often been leveraged as opportunities to centralize wealth and power. For example:
Klaus Schwab, founder of the World Economic Forum, described the pandemic as a rare opportunity to "reflect, reimagine, and reset" the world.
This pattern suggests that current and future crises may be used by central planners to reshape global systems in ways that increase their control.
Economist Luke Groman highlights the US's net international investment position, which measures how much foreign entities own US assets versus how much the US owns abroad. Currently, foreigners own about 87% of US GDP in assets, a stark increase from previous crises.
Foreign ownership includes approximately $70 trillion in US dollar assets, with $9.4 trillion in US Treasury bonds alone. Many of these foreign holders are countries dependent on oil passing through the Strait of Hormuz, which is currently closed.
When these countries need dollars quickly, they sell US assets, causing Treasury holdings by foreign central banks to drop to the lowest levels since 2012. This selling drives up Treasury yields, increasing the cost of financing the US's nearly $40 trillion debt.
Research indicates that Treasury yields between 4.6% and 4.8% could trigger a "debt death spiral," where rising borrowing costs lead to larger deficits, more borrowing, and even higher rates, creating a vicious cycle that could rapidly destabilize the economy.
There are three potential paths the US might take:
Allow Yields to Rise: This would likely crush the stock market, reduce tax revenues, increase deficits, weaken housing and consumer spending, and trigger a recession that could spread globally.
Print Money Amid Rising Oil Prices: The Federal Reserve could engage in quantitative easing (QE) and yield curve control to cap yields. However, injecting liquidity during an oil shock could cause severe inflation, potentially worse than the double-digit inflation seen post-2020.
Withdraw from the Conflict: If the US retreats, it risks losing global influence, leading other countries to abandon the dollar for oil pricing and trade, weakening the dollar and increasing inflation.
The most likely scenario is option two, involving increased money printing and QE.
Type One QE (2008): The Fed bought toxic assets from banks, cleaning their balance sheets without injecting new money into the broader economy, thus avoiding significant inflation.
Type Two QE (2020): The Fed bought assets from non-banks and corporations, injecting new money into the economy, which eventually led to high inflation.
The upcoming QE is expected to be type two, potentially causing severe inflation and stagflation (slow growth with high inflation).
Central planners face two major problems:
AI and Automation: These technologies will displace many jobs, potentially necessitating universal basic income (UBI). However, UBI could empower people politically, which central planners want to avoid.
Unsustainable US Debt: With rising yields increasing debt servicing costs, the US needs to distribute its debt globally in a sustainable way.
The proposed solution is a digital currency system where US debt is privatized and distributed globally through major corporations and apps acting as digital wallets. Every smartphone user could unknowingly become a creditor to the US government.
For example, Tesla could launch a digital wallet backed by US Treasury bonds, offering users rewards and yields. This model could extend to Apple, Amazon, Google, airlines, retailers, and more, creating a vast distribution network for US debt.
This concept aligns with current legislation like the Genius Act, which requires companies issuing stablecoins to back them dollar-for-dollar with US Treasuries.
While this system may seem convenient and beneficial, it also represents an unprecedented financial control grid. Companies like Tether have already demonstrated the ability to freeze wallets, sanction addresses, and restrict transactions via code.
Scaled globally, this system could allow US regulation to control financial transactions worldwide, surpassing the power of existing systems like SWIFT.
Countries opposing this system might respond by restricting internet access or app stores.
Financial expert Katherine Austin Fitz suggests three protective measures:
Additionally, self-custody of assets like Bitcoin and physical precious metals can provide security against digital control and asset freezing.
The ongoing war and economic crisis are not just isolated events but part of a larger pattern where crises lead to centralization of power. The next phase may involve a digital currency system that privatizes US debt and centralizes financial control globally.
Understanding these dynamics is crucial for making informed decisions and protecting personal wealth in an increasingly complex and controlled financial landscape.
Stay informed, diversify your assets, and consider self-custody to safeguard your financial future.
