Turkey is the canary in the coal mine for a $106 trillion global financial system on a headlong collision course with the Donroe Doctrine. For decades, the structural assumption of international finance has been that American sovereign debt and fiat currency were the ultimate safe harbors. But when imperial wars disrupt the global economy’s supply chains, paper promises evaporate. Pushed to the brink by the Trump administration’s miscalculations, sovereign states are being forced to abandon those promises and retreat to material bedrock.
I think this is a worthy distinction but while debt is a soft problem the shock from rapid dedollarization will not be soft. The rapid acceleration to a new paradigm is threatening genuine chaos.
Nobody wanted to dedollarize this fast, even the enemies of the US. Now nobody has any choice but to proceed as rapidly as possible towards dedollarizing and this kind of situation is bad news for global stability.
All True. But the severity of consequences, who feels them and how do we fix or replace the systems are all soft problems. They all have solutions, and aren’t any harder than we want to make them.
It’s complicated - money is fake, but debt is less fake.
The faster debt is forced to move in large shifts, the more real it is.