America was in practice running an empire that collected tribute from the rest of planet earth in exchange for entries in a database denominated in a currency they controlled and that was accepted everywhere. Really the only way it could go wrong is putting it under the control of someone who doesn't understand the kayfabe...
While we're at it, when did central banks start to buy lots of gold and under which POTUS? Could it have something to do with the freezing of hundreds of billions of some sovereign assets?
There is something awfully bad happening to the internet, including Hacker News.
It seems like rage-baiting, polarizing titles and vibe based comments are being upvoted, with no interest in the facts. For example, in this case:
1. The growth of the gold reserve in comparison to US Treasuries have very little to do with growth in gold acquisition, and has everything to do with gold more than doubling in price in a year.
2. To make it even worse, gold has since fluctuated in value, and treasuries overtook gold momentarily just a week ago. These price fluctuations has nothing to do with geopolitics.
3. Central bank buying of gold has been trending down in the last year, down 21% from 2024. So far in 2026 it's been going even lower.
4. Gold owned by central banks was higher than US treasuries in the 90s (this is mentioned in the article at least).
This is a little meta - but the thing that bothers me is that this low quality discussion like in this thread is spreading everywhere with the same mechanism - bring politics and polarization into every place, no matter how tangentially related it is.
One less conspiratorial but more pernicious angle, is that attacking things that are good but complex is a great strategy for troll politicians who don't care about the success of their country but just like the attention.
See Brexit, and free trade in general.
It's a good way to get "the establishment" to gang up on you and defend something complicated while you present simple but wrong alternatives and promise the world.
I also think he's up for sale (as are all the other similar politicians) to a multitude of buyers, foreign and domestic.
For Brexit in particular, it seems clear to me that EU politicians, but the UK ones in particular, used EU as a scapegoat for unpopular economic policy that they themselves actually want, but can't justify effectively to their constituents. "We can't help it, it's an EU requirement" when leaving out that in the EU, their guys totally supported it.
That was bound to backfire at some point or another.
I think you're right that politicians prefer not to defend complicated (and possibly good) policy to the public. But if they choose easy ways out to avoid it (and they do!) then they're to blame too when it collapses. To blame the public for not blindly trusting them won't do.
The public is almost fully to blame, and gets the government it deserves. I only hedge a little because education is in control of the state, so to some degree people don't choose whether to be educated on the relevant matters.
It may be familiarity breeding contempt but I find members of the British public in particular very myopic in obtaining benefits for 'their group'. There's very little interest in society as a whole.
Politicians simply bend in order not to upset any of the key voting blocs. But you understand that's a selection bias: you wouldn't exist as a successful politician if you didn't do this. All those who go another path are doomed to obscurity.
The alternative is everything falling apart at home and our manufacturing industries declining dramatically. Maybe the "unpopular economic policy" wasn't such a bad idea after all.
"For every complex problem there is an answer that is clear, simple, and wrong."
The issue is that the stupider the politician, the more likely they are unable to understand why their clear, simple answer to the ills of the world is also wrong.
Brexit, whatever is happening in the US, is caused by narcissism (a common trait among politicians) paired with a great deal of stupidity and ineptitude, not only among politicians, but among the populace as well.
Being a reserve currency puts a gun to your economy's head. It creates an asymmetry where domestic production of material goods has to jump a gap created by favorable exchange rates in PPP terms. Its great for the day to day life style of your citizens, as other economy's do indeed pay tribute, in a sense, to their consumption of goods produced overseas. However, being paid to do nothing becomes a real problem when the checks stop coming. We're basically the national equivalent of a middle manager who's forgotten all the skills that got him there, and we can voluntarily move back down and start to work in earnest again, or wait to get laid off with no severance.
It's as much a gun to adversaries' heads if they hold lots of your bonds (China used to hold over $1T in USTs) so they would have an interest in not having that blow up by not annoying the US so much they refuse to pay foreign bonds.
It's also kind of neat as a financial MAD instrument, because China obviously can't just get everyone to go into their brokerage and market sell a trillion in USTs so they get a lever to pressure the US with but they can't go nuclear without also vaporising their own value. So it works as a melting ice block on which diplomacy is forced on both sides.
The death of the UST as a reserve instrument would be a catastrophically bad loss, the only silver lining is that the melting ice block might still be enough by the end of this admin that the new admin might have enough to stand on to rebuild it should they realise the value of it.
Luke's key point lands at about 1:08:27–1:08:33, where he says that instead of selling treasuries outright (which would draw attention from the American embassy), China can use them as collateral — and the American banks are happy to take it. He then lists what China gets in return: "I'll take Pereus. I'll take that oil field. I'll take that copper mine. I'll take all that gold."
He then adds that this works because the incentives align on both sides — the Chinese want to understate their strength, the Americans want to overstate theirs, and the American banks are happy to accept dollar collateral without asking too many questions.
> It's as much a gun to adversaries' heads if they hold lots of your bonds (China used to hold over $1T in USTs)
There is a complicated dynamic at play to consider there. Treasuries and the strength of the dollar only matter to wrt international trade, for both China and the US. You have to ask yourself if the value of the dollar went to 0 for that use case, who would be in a worse position, the one that sells dollars to support consumption, or the one that buys them as a tool for trade with 3rd parties?
> by not annoying the US so much they refuse to pay foreign bonds.
The problem with this is that a country can only refuse to pay their foreign bonds once. But the buyer can always dump them and scoop them up later for cheap when shit hits the fan.
As someone who lives a day to day life, I’m pretty happy for things that are good for my day to day life. Some abstract quasi moralistic reason that things should be tougher so we compete harder feels a little out of touch. I’d note that it’s not the case the US produces nothing, or that it’s lost its capacity to innovate. Effectively most technology, especially software, but hardware as well, is concentrated in the US. Some aspects of the heavy manufacturing and assembly line happens elsewhere but I’d level the middle manager more at the EU.
No, we are taking our advantages and lighting them on fire for no obvious reason. Backing into a rationale doesn’t make it rational. Its Christian nationalism fueling raging narcissism made malignant due to senility. Theres no experts, no adults, no experienced people - they’ve all be fired and replaced with sycophantic photogenic personalities. This is not good, there is no upside, it’s Nero hosting UFC while the empire burns.
The only out I see is nature helping end this or a total seismic change in Congress and removal from office. Then rebuilding can start and maybe there’s something to salvage. But I doubt it, and I expect the next generations will exist in the rubble of the colosseum.
I'm not going to take a side in the broader discussion here, however your response fails to engage with what was previously written.
> Some abstract quasi moralistic reason
What was presented was neither abstract nor moralistic. The argument was one of driving towards a cliff and taking preemptive action before reaching it.
No, it was driving towards a cliff and deciding to jump out of the car instead of pressing the breaks. If you're costing at work, worried about being laid off some day, the last thing you do is just quit; you job hunt and try to change habits. Pretending like we have to feel immense pain to strengthen the economy is the quasi moralistic reasoning of a moron
> Some abstract quasi moralistic reason that things should be tougher so we compete harder feels a little out of touch.
I don't see how any of those descriptions fit what I've said. Also, note, things should indeed not be tougher. A consequence of our economy being so focused on financialization of overseas productivity is that the wealth created from that activity tends to be much more concentrated than that produced from manufacturing, at least historically. Though, who knows if that would hold if onshoring took off in earnest.
> I’d note that it’s not the case the US produces nothing, or that it’s lost its capacity to innovate
Never said either of those things. I only stated that it makes domestic production harder/less profitable. Though, I'd also like to point out that that the largest companies in our economy are wholly dependent on the output of an island with grave geopolitical risks hanging over its head. China could collapse our economy overnight due to unchecked offshoring. That's not quasi, abstract, or moralistic, just a state we've created.
> No, we are taking our advantages and lighting them on fire for no obvious reason. Backing into a rationale doesn’t make it rational. Its Christian nationalism fueling raging narcissism made malignant due to senility.
I mean, I have named several, and all of which were put forth prior to Trump's term starting. I'm not a fan of Trump, but it would seem to me you are creating a narrative for yourself that doesn't fit history.
> Theres no experts, no adults, no experienced people - they’ve all be fired and replaced with sycophantic photogenic personalities.
I think Bessent is pretty good.
> This is not good, there is no upside, it’s Nero hosting UFC while the empire burns. The only out I see is nature helping end this or a total seismic change in Congress and removal from office. Then rebuilding can start and maybe there’s something to salvage. But I doubt it, and I expect the next generations will exist in the rubble of the colosseum.
Idk about rubble, but corruption does need to be curbed IMO. The current administration has not been good for the rule of law, in spirit. I do think some level of that is unavoidable however, as the judicial branch and executive branches have been sucking power from the legislature for going on 50 years, which also needs correcting.
The fact that he has done countless things that are harmful to the US and not a single thing that is in the country's best interests tells me all I need to know. Either he's aligned with an enemy or he just hates the country and wants to destroy it.
Yeah I think the most obvious explanation is looting and ego (to explain the ballroom and putting his name everywhere). I also think there's an awful lot of foreign influence around him and his family and friends before and during his term(s). I mean if I'm a foreign actor seeing your leader's keen interest in looting, I'll probably make him an offer or two...
I disagree with probably the majority of Trump's main policy ideas, but I think a strong case can be made that his immigration policies are in the country's best interests. Not all of them, but as a whole.
Illegal immigration brings masses of people from more corrupt, disordered, and perhaps lower average intelligence societies into the US in conditions that make it hard for even the ones who are capable of assimilation to assimilate. It also constitutes a massive flouting of the law for the benefit of business, which sets a bad precedent and lowers public trust in institutions. It also contributes to rising racial tensions that encourage the growth of ethnic tribalism and weaken trust in liberalism.
If you really want to get rid of illegal immigrants, you don't need ICE doing sweeps.
Just make them unemployable. Setup an effective employment eligibility system, and require that employers verify the workers in the system before any payment over $100. Collect biometrics from workers and verify against IRS records. Employers that flout this get fines of 10x wages paid, up to N% of revenue, and maybe jailtime for owners and managers that knowingly violate.
What we have in the U.S. is a bunch of people and politicians loudly decrying illegal immigration and illegal employment, but enjoying the fruits of that illegal employment while paying a fraction of what legal workers would have to be paid.
There's huge appetite for a police state against the little guy, and no appetite for that same police state against business owners and managers.
There's a better way than that. The way the US tax system actually works is incredibly misleading:
1) We pretend to have an income tax but then make it work like a consumption tax in practice. Ordinary people put earnings in excess of spending in a 401k and defer the tax until they want to spend the money. Rich people defer capital gains indefinitely until they want to spend the money. It's an income tax on paper but a consumption tax in practice, and doing it that way is much more complicated than just using a consumption tax.
2) We pretend to have a progressive income tax, but then impose benefits phase outs that fully cancel out the difference in marginal rates between the poor and the rich. Convert the benefits to cash and eliminate the phase outs and you get something which is equally if not more progressive, significantly more efficient and dramatically less complicated.
So, you can throw all of that out and replace it with a flat rate consumption tax and a UBI and it would be as close to a Pareto optimal improvement as anything in politics ever is.
Which also makes a huge amount of headway against the illegal immigration problem, because another disadvantage of pretending to have an income tax is that it effectively subsidizes anyone paying people under the table since then they're not paying the tax. Whereas if people working under the table still have to pay the consumption tax on everything they buy, and they also don't receive the UBI because they're not lawful residents, they'd be at a disadvantage relative to ordinary citizens, instead of the existing system where breaking the rules makes you better off.
I agree that your idea would be better. That said, it is still quite possible that even Trump's immigration approach is overall more good than bad for the country.
It's really not. They're deporting less people than Biden did during the same time[1]. They're spending record amounts of money per person deported as well.
I don't disagree that we should be deporting people faster, but this is not the way to accomplish that goal at all. Nor should we be building huge detention facilities. We should be making the process go smoother and faster, not holding people.
Even if Trump's approach is worse than Biden's, which I'm not sure of, that still does not mean it is bad for the country.
Counting deportations alone does not count people who decide not to come at all.
Also, note that I did not say that we should necessarily be deporting more people. I am actually pretty neutral on illegal immigration. But I am trying to address the question of what is good for the country, which is a different thing from what my personal preferences are.
Trump's immigration approach is not an approach - it's just an excuse for him to create his own Gestapo.
What was the point of sending ICE, a "domestic" agency, to the Winter Olympics, or letting them take over duties from the TSA? What does an "Immigration and Customs Enforcement" agency have anything to do at a foreign country? What's the point of the Secret Service then?
What blows my mind is how liberals and progressives (of which I count myself a member) don't see to care that this is the policy that pushed Trump into office. Without it he would have flopped with just his MAGA core.
All you need to do to fix illegal immigration is to go after the employers. You know, actually enforce the laws. Streamline it. Declare it a national emergency and put more onerous requirements on businesses to verify legal status. Send ICE to businesses to investigate them instead of kidnapping people.
You'll probably find out pretty quickly that agriculture is extremely dependent on illegal labour, but so be it. Bring it into the light and have an actual debate. The current approach is all for show, or at worst, intimidation.
I think pinning this on one guy is a gross oversimplification driven by personal dislike for that guy. In my opinion larger forces are at play. I don't mean it in a conspiratorial way; simply put, the structure of global trade, economy, military power, etc. have shifted to such a degree, that this process has become inevitable.
Because such a system isn't just sunshine and rainbows like OP mentions and has real costs like ever increasing debt burdens and wealth and social inequality which naturally create political instability as lower classes and institutions become increasingly stressed. Trump is just a symptom of sentiment created by these consequences.
There is nothing inevitable about strategically moronic war, a super power supporting an ethno-religious genocide, and an orange dildo ripping up international order.
You insist on making it about this administration and your dislike for it, when I am talking about wider shifts like China's ascent, America's de-industralization, Europe's stagnation, drone revolution, shale revolution...
This admin's shortcomings don't need to be listed, anyone with eyes can see. I will just remind you about Biden's "minor incursions" comment, that opened to the door to invasion of Ukraine...
> More importantly, in the context of this discussion, every president since Bush's first term has had larger deficits than any previous president, regardless of party.
Taking on long term debt at or below the risk free rate _is the point._ It didn't devalue the currency because the global economy was structured around buying that debt. You just need to not jeopardize that second point.
It's a snowball rolling downhill that's reached the point where it is out of control. We cannot stop taking on more debt, which is, let's face it, just printing money electronically. At some point everything will blow up. I just hope it doesn't happen until I'm gone.
The "previous guy" was constrained by a once-in-a-lifetime Congress that was serious about deficits, and he also benefited by another once-in-a-lifetime spurt of economic growth that dramatically increased tax revenue.
As soon as Congress realized they'd been handed a deficit-free budget they went about spending with wild abandon.
And anyway, since that guy we've had two presidents over three terms where the other party controlled the presidency and they didn't and they certainly didn't break the pattern.
Let me ask you this: If you wanted to vote for a guy (or gal) who was serious about reducing the deficit instead of someone who doesn't care as long as the wheels don't come off during his term, who would you vote for?
Here's the better question: If you were serious about reducing the deficit, what would you cut?
It should be possible to reduce Medicare costs significantly by going after healthcare costs in general, i.e. create a ton of new medical residency slots and train a lot of new doctors, and make the healthcare companies actually compete with each other. The AMA and healthcare companies are going to fight you hard.
We currently make large social security payments to affluent retirees who paid in less than we're paying them out. We could reform the system to cost less, i.e. not pay out as much to people who don't need the money. The AARP isn't going to like it.
The DoD budget is pretty big and a lot of it is waste or corruption. But to do this well you have to be good at identifying which parts, you still can't eliminate all of it because some of it is pretty important, and this one is the smallest of the three. And the defense contractors will try to stop you.
To make a meaningful dent in the deficit you would have to do at least two of those but no one is willing to do any of them.
Agreed. This should have been addressed decades ago, and every year that goes buy it will get harder to deal with.
Me, I'd cut everything. Right now, when interest rates are relatively low, we're spending more to service the debt than we're spending on defense. This isn't a problem we can address with half measures.
US will have to refinance $ 10T of debt next year. That's a gargantuan amount of money and I see no scenario in which this won't have quite higher yields than the expiring one, remnant of the low rate decade.
With foreigners and hedge funds less prone to buy US debt right now it's going to be quite interesting to see what will happen.
And yet the current administration is fixated with trade balance (which conveniently ignores the most important US export that's not accounted: services).
Look at them countries sending food, cars, machinery for pieces of paper. They taking advantage of us!
The events of the last year certainly have a role to play, but the overall effect is just the result of trendlines that have been in play for quite a while.
> Gold has always been stable, because it is physically limited.
Incorrect. Physical scarcity matters, but it’s not the main driver. Gold’s price is far more sensitive to interest rates, dollar strength, sentiment and fear, speculative flows.
The stability it’s historically shown was mostly the result of fixed monetary systems, and those are long gone.
its because you are measuring stable Gold in volatile fiat which is being printed every day depending on the factors you mentioned (interest rates, expectations of future growth, sentiment etc).
because you are getting paycheck in fiat, you are psychologically programmed to think of fiat as something stable, and Gold as volatile.
You're wrong; the prices of precious metals have never been stable, which is why bimetallic systems have always had a lot of problems papering over the notionally fixed exchange rate between coins of different metals.
That said, I agree that e.g. gold under a regime where most things for sale are priced in gold is more stable than gold as a novelty investment under a fiat currency regime.
When things are priced in gold, most of the demand for gold comes from the fact that it's useful as currency. All of the phenomena we have now still exist, and they disturb the price, but they're small effects compared to the demand for currency.
In the fiat regime, that source of demand is gone. All of the same random effects still push the price of gold around, but because the price is so much lower (due to much lower demand), the price swings are wilder.
>Incorrect. Physical scarcity matters, but it’s not the main driver. Gold’s price is far more sensitive to interest rates, dollar strength, sentiment and fear, speculative flows.
Those are only relevant on a shorter timescale; on a long timescale gold's held its value extremely well. The price of a loaf of bread in gold now is still similar to what it was in the Roman Empire 2000 years ago.
The real price of gold has been deflated by paper gold/futures trading, which has the effect of multiplying the perceived amount of gold in circulation without a necessary counterpart in physical gold. Financial institutions can within limits manipulate the price of gold so that it remains lower than it should be if the physical material had to be delivered.
You're seeing the result of something that's been decades in the making. You can see a simple table of dollar reserves here. [1] They've been consistently falling year over year for the past 27 years. And it's not like 1999 was anything particular. Rather the uptake leading up to 1999 as a peak was a result of shenanigans that happened in 1971 [2]. That's when the USD became completely unbacked by anything, enabling the government to start going arbitrarily far into debt. That had short to mid-term positive impacts and long-term catastrophic ones, as is the typical strategy in modern times.
People always exaggerate the impact of geopolitical things, because it feels like the biggest thing ever, especially when you're relatively young. But in reality we're always onto nonsense after nonsense. Countries have the wisdom and view to appreciate this, and so respond to geopolitical stuff (in action, not rhetoric) far more gradually than people do. They're certainly not going to just dump all their dollar reserves because of a single misguided war or even misguided president, or they'd have been gone long ago.
I hear you, the world is always ending. But, I am well past mid-life, I am a huge beneficiary of Pax Americana, and 47 feels like something truly different. Maybe it's just the end of a long pattern, but it is still the end. US-led NATO is dead, and the stability of the USA is dead, therefore the dollar's dominance is weakening.
Don't take my word for it. Listen to Mark Carney at Davos.
I think there is a realization that (1) US' checks and balances do not work, (2) Trump is not a "mistake" of voters and can repeat again.
This is the main reason that things are different. Most presidents were reasonable in their hegemony, and Trump's naked aggression makes everyone to hedge against US.
I think that people also see that government in all its ministries is becoming less competent, because of deliberate actions, firings, and flight of competent people. Uninspiring, uninterested, loyalists as leaders of each department doesn't exactly help.
And the competence of departments is crucial for the well functioning of the country, services high and low. (Diplomacy, war, and education to electricity and roads).
In my view it's both that the State Department, for example, is less competent than before, and that the administration is less likely to listen to the experts and Department officers than before.
How can you reconcile the rest of your comment with:
> That had short to mid-term positive impacts and long-term catastrophic ones, as is the typical strategy in modern times.
Is the catastrophe still coming from the 70s to now? 50 years later? This is the most repeated quip that makes no sense. Same with companies, everyone just repeats "omg they only care about short term" and then years after years the company trots on.
But I guess it's easy to say since the defense is "oh just wait". As if the online commenter is able to see N+1 moves more than whoever they comment about, but that person just simply cannot. Like come on.
It’s not a self decapitation exactly. I think Trump, his family, his corporate donors, and other friends are all willing to sacrifice everyone else - including the lead America had - to make themselves rich and powerful. Every single decision to spend - defense, ICE contracts, AI, approvals of anticompetitive acquisitions, changes to regulations, etc - is making that circle richer at our expense.
They don’t care if American supremacy is lost or if the dollar crashes or if the national debt becomes a crisis. As long as they have their wealth. The public is being decapitated, not them.
True. In that sense the voters have self decapitated. I can’t understand how the Trump administration still has support from 40% of the country (per polls). I could understand voting for him due to some issue a voter has strong feelings about. But now we have seen it all play out and it’s a disaster leading to national ruin. And there is no talk of impeachment, trials, and accountability for everyone in his circle. So I guess that 40% DOES choose to self decapitate.
Media that is never critical towards one side is what started all of this. A politician's kryptonite is when their voters find out that they lied or were hypocrites. That is a universal truth.
Single party media outlets like News Corp, Sinclair, Euronews, and so many others have broken that system entirely.
My test to see if someone is a shill/moron is to simply ask them to say one obvious bad thing about "their side." If they cannot, it becomes clear that they are not worth listening to.
> and all the conservative news tells them what to believe
And most traditional news is conservative now.
The idea that the mainstream media was ever leftest was always wrong, but these days its absolutely laughable and yet a lot of people still parrot this like it is the truth.
Weakening your own domain to get powerful sounds clearly contradictory, yet there are so many examples of elites doing exactly that despite the fact that doing so must've required foresight and planning elaborate enough to not blind them from the consequences.
The US lead over the EU in per capita productivity has massively grown over the last 20 years. There's no indication of waning American power.
America has produced 70 times more stock market wealth if you look only at companies created within the last 50 years than the EU. And this is not all paper wealth. If you look at technological sophistication, whether that's frontier AI models, leading-edge pharmaceutical drugs, total amount of compute, or the space industry, the U.S. has grown its lead over the EU over the last 50 years.
It's because the EU has largely fixated itself on reducing wealth inequality by punishing those who succeed. It's safety-maximalist approach to private industrial action has also hamstringed industry — see Germany closing all 17 of its nuclear power plants. The US doesn't really need to do much except not sabotage itself to maintain its lead. Like in all nations, laissez-faire (French for "leave it alone") allows the private sector to do the rest.
> It's because the EU has largely fixated itself on reducing wealth inequality by punishing those who succeed.
It's actually because America pivoted[1] from manufacturing to higher-margin services (financial, tech[2]), and generations of American Diplomats had negotiated trade deals that ensure American services are never shut-out or hobbled in most countries. American companies won't look so special,or be nearly as profitable, once they lose their default status that allow them to siphon money from all over the globe -including Europe
2. Silicon valley caught lightning in a bottle. Other American locales repeatedly tried and failed to replicate it - so it rules out American legislative attitudes as the vital ingredient.
If you're familiar with American capital markets and global venture capital, you'd know that it had almost nothing to do with these trade deals. They had a marginal impact. The amount of capital available to startups and established companies at all stages of their development was the main difference. And the difference between the US and EU in that regard came mostly from the US simply not sabotaging itself the way the EU did with extremely high taxes on the top income earners, as part of an agenda to reduce wealth inequality.
The fact that the tech industry concentrated in Silicon Valley is simply due to network effects. Regardless of which locale became the Schelling point for U.S.-based technology companies, that locale would have succeeded, because of the national economic policy it operated inside of.
basically make decisions that make no sense but benefit you financially. Sample. you run a printing business. you dont own it just run it. you sell your main printer and assign a performance bonus to your self. next month your business is closed because you dont have equipment to print, but you also have your bonus in pocket.
Not really. It has more to do with gold is now worth almost 3x what it was 2 years ago.
And before you get too excited, this "news" from the World Gold Council. A consortium of gold mining corporations. Clearly it's a pump article "have you bought gold yet? everyone else is! why not you!?!?"
Not really. It has more to do with gold is now worth almost 3x what it was 2 years ago.
It's not like we've suddenly found new and exciting uses for gold though. The reason the price has gone up is because the demand for it has gone up, and the reason why demand has gone up is because people want an alternative to U.S bonds. A bunch of pump articles wouldn't be enough to lead to a 3x price increase.
For the first time in history we are seeing multiple signals of USD losing its #1 position to EUR, all within the last year :
1. Euro-denominated interest rate derivatives (IRD) overtook US dollar-denominated contracts in the over-the-counter (OTC) market for the first time in history and the scale of the crossover is staggering.
2. EUR Real Effective Exchange Rate (REER) which measures actual purchasing power (not nominal price) is going in the opposite direction of USD real purchasing power (RTWEXBGS). 2025/2026 is the largest divergence in history: 10 percentage points in a year.
3. US treasuries is no longer a number 1 foreign reserve asset. EUR reserves grew 2.5x faster than USD reserves when measured in its own absolute terms.
Unlike the Eurozone which maintains a fiscally responsible budget with reasonable debt and a trade surplus, there is simply no foreseeable fix to the problem of ballooning US debt and trade deficits. Nothing can fix the US budget mess.
Anyone who is paying attention to the numbers would certainly have more confidence in EUR over USD.
I am actually convinced that the last year started the descent of the U.S. as the world’s super power. No wonder U.S. treasuries lost trust. It’s only going to get worse. It doesn’t matter what some billionaires do/get from their ability to manipulate some powers be. The rest of the investment community understands that free markets are strengthened by rule of law and adherence to the law and deploying a self styled socialistic distribution of economic capital is not signaling strength but weakness to the world.
My parents refused to digitize their precious memories stored in VHS tapes. We’ve watched them every few years, and whenever I’be tried to convince them to digitize the tapes, my dad says “oh we’ve been hearing about vhs tapes degrading forever now, it still works”
Meanwhile the video fades more and more every few years, you can barely even make out faces and objects in the frames now. But it’s happened so slowly that he never really realized that it was happening all along
Dreaming of the day where the average non-American doesn't know who the US attorney general is, the name of their secretary of war, and the details of every internal political machination.
Of course they can. You're pointing out that federal law currently prohibits it? I already understood that to be the case when I made my point.
> they're all going wherever the nation goes on this one.
Unless they all collectively decide on a different course of action. The constitution was left amendable. It has been done several times already. A simple option is to repeal the 17th and to return to a state assembly controlled federal senate.
The core feature of the senate that makes it so indefensible is how it assigns power to states, not people. That relationship cannot be amended, per article 5 of the us constitution.
It's far easier to change a state government than it is the federal government. The states used to be able to recall Senators if they failed to do their jobs correctly; as determined by the elected body within the state. It's simply a single level indirection of Democracy. The House of Representatives is direct. This was intentional.
What's "indefensible" about this?
And you can amend how the body is elected; hell, you can amend how the president is elected. Also Article V provides for a state "constitutional convention" as a process for initiating changes, bypassing both the Senate and the House.
For that matter, you could amend the Constitution to change the process for amending the Constitution, even to eliminate the possibility of future amendments altogether.
That’s interesting. Hadn’t thought of it that way. I can’t for the life of me figure out why more blue states aren’t taxing their wealthy occupants to cover the gap in lost federal funding from DOGE. If they were smart they would start stretching that muscle.
The union of states arrangement has the side effect of putting the states in competition with each other for things like new/expanding businesses and residents. It's relatively easy to relocate (or even remain in a state while legally "residing" elsewhere). So there are diminishing returns to raising the tax rates significantly on the upper brackets at the state level. I'm not a believer in the trickle down theory but beyond a certain marginal rate many people would just move to a state with a lower rate.
this somehow excludes such human concept as sense of belonging. might be in usa it has atrophied already but sense of home is really important in some places. place where you spend most of your life, where you have you real social network, neighbors and childhood friends. sometimes its lower tax is not worth loosing it all. its not everything about money (for some)
ps im talking about real persons here, not corporations
You're talking about people who aren't ultra wealthy there. Once the tax bill gets high enough relative to elsewhere it doesn't make sense not to jump through the hoops to change your place of residence.
Too tired to write a novel like I usually would here, but we control the printing and, in large part, the distribution of USD. We don't control anything about gold. Then the USD was king, it entailed tremendous power and control in many ways beyond the obvious like the ability to try to kick people out of the 'global' economy. This is the not-so-secret purpose behind BRICS and dates back to issues starting in 1971.
That's only true if he's actually "your guy". There's an alternative where it's not stupidity that I think more people should be mulling over.
It seems like rage-baiting, polarizing titles and vibe based comments are being upvoted, with no interest in the facts. For example, in this case:
1. The growth of the gold reserve in comparison to US Treasuries have very little to do with growth in gold acquisition, and has everything to do with gold more than doubling in price in a year.
2. To make it even worse, gold has since fluctuated in value, and treasuries overtook gold momentarily just a week ago. These price fluctuations has nothing to do with geopolitics.
3. Central bank buying of gold has been trending down in the last year, down 21% from 2024. So far in 2026 it's been going even lower.
4. Gold owned by central banks was higher than US treasuries in the 90s (this is mentioned in the article at least).
This is a little meta - but the thing that bothers me is that this low quality discussion like in this thread is spreading everywhere with the same mechanism - bring politics and polarization into every place, no matter how tangentially related it is.
See Brexit, and free trade in general.
It's a good way to get "the establishment" to gang up on you and defend something complicated while you present simple but wrong alternatives and promise the world.
I also think he's up for sale (as are all the other similar politicians) to a multitude of buyers, foreign and domestic.
That was bound to backfire at some point or another.
I think you're right that politicians prefer not to defend complicated (and possibly good) policy to the public. But if they choose easy ways out to avoid it (and they do!) then they're to blame too when it collapses. To blame the public for not blindly trusting them won't do.
It may be familiarity breeding contempt but I find members of the British public in particular very myopic in obtaining benefits for 'their group'. There's very little interest in society as a whole.
Politicians simply bend in order not to upset any of the key voting blocs. But you understand that's a selection bias: you wouldn't exist as a successful politician if you didn't do this. All those who go another path are doomed to obscurity.
The issue is that the stupider the politician, the more likely they are unable to understand why their clear, simple answer to the ills of the world is also wrong.
Brexit, whatever is happening in the US, is caused by narcissism (a common trait among politicians) paired with a great deal of stupidity and ineptitude, not only among politicians, but among the populace as well.
It's also kind of neat as a financial MAD instrument, because China obviously can't just get everyone to go into their brokerage and market sell a trillion in USTs so they get a lever to pressure the US with but they can't go nuclear without also vaporising their own value. So it works as a melting ice block on which diplomacy is forced on both sides.
The death of the UST as a reserve instrument would be a catastrophically bad loss, the only silver lining is that the melting ice block might still be enough by the end of this admin that the new admin might have enough to stand on to rebuild it should they realise the value of it.
https://youtu.be/OOW-oSruO80?t=4072
Luke's key point lands at about 1:08:27–1:08:33, where he says that instead of selling treasuries outright (which would draw attention from the American embassy), China can use them as collateral — and the American banks are happy to take it. He then lists what China gets in return: "I'll take Pereus. I'll take that oil field. I'll take that copper mine. I'll take all that gold." He then adds that this works because the incentives align on both sides — the Chinese want to understate their strength, the Americans want to overstate theirs, and the American banks are happy to accept dollar collateral without asking too many questions.
There is a complicated dynamic at play to consider there. Treasuries and the strength of the dollar only matter to wrt international trade, for both China and the US. You have to ask yourself if the value of the dollar went to 0 for that use case, who would be in a worse position, the one that sells dollars to support consumption, or the one that buys them as a tool for trade with 3rd parties?
The problem with this is that a country can only refuse to pay their foreign bonds once. But the buyer can always dump them and scoop them up later for cheap when shit hits the fan.
No, we are taking our advantages and lighting them on fire for no obvious reason. Backing into a rationale doesn’t make it rational. Its Christian nationalism fueling raging narcissism made malignant due to senility. Theres no experts, no adults, no experienced people - they’ve all be fired and replaced with sycophantic photogenic personalities. This is not good, there is no upside, it’s Nero hosting UFC while the empire burns.
The only out I see is nature helping end this or a total seismic change in Congress and removal from office. Then rebuilding can start and maybe there’s something to salvage. But I doubt it, and I expect the next generations will exist in the rubble of the colosseum.
> Some abstract quasi moralistic reason
What was presented was neither abstract nor moralistic. The argument was one of driving towards a cliff and taking preemptive action before reaching it.
I don't see how any of those descriptions fit what I've said. Also, note, things should indeed not be tougher. A consequence of our economy being so focused on financialization of overseas productivity is that the wealth created from that activity tends to be much more concentrated than that produced from manufacturing, at least historically. Though, who knows if that would hold if onshoring took off in earnest.
> I’d note that it’s not the case the US produces nothing, or that it’s lost its capacity to innovate
Never said either of those things. I only stated that it makes domestic production harder/less profitable. Though, I'd also like to point out that that the largest companies in our economy are wholly dependent on the output of an island with grave geopolitical risks hanging over its head. China could collapse our economy overnight due to unchecked offshoring. That's not quasi, abstract, or moralistic, just a state we've created.
> No, we are taking our advantages and lighting them on fire for no obvious reason. Backing into a rationale doesn’t make it rational. Its Christian nationalism fueling raging narcissism made malignant due to senility.
I mean, I have named several, and all of which were put forth prior to Trump's term starting. I'm not a fan of Trump, but it would seem to me you are creating a narrative for yourself that doesn't fit history.
> Theres no experts, no adults, no experienced people - they’ve all be fired and replaced with sycophantic photogenic personalities.
I think Bessent is pretty good.
> This is not good, there is no upside, it’s Nero hosting UFC while the empire burns. The only out I see is nature helping end this or a total seismic change in Congress and removal from office. Then rebuilding can start and maybe there’s something to salvage. But I doubt it, and I expect the next generations will exist in the rubble of the colosseum.
Idk about rubble, but corruption does need to be curbed IMO. The current administration has not been good for the rule of law, in spirit. I do think some level of that is unavoidable however, as the judicial branch and executive branches have been sucking power from the legislature for going on 50 years, which also needs correcting.
He knows he is lying and he knows he is harming the economy and people in it. But, that does not matter to him.
Never attribute to malice that which is adequately explained by greed.
Even if you disagree, Trump's policies have not been effective at anything, apart from creating headlines.
These same headlines have secondary negative effects for the US, like hurting international tourism.
Just make them unemployable. Setup an effective employment eligibility system, and require that employers verify the workers in the system before any payment over $100. Collect biometrics from workers and verify against IRS records. Employers that flout this get fines of 10x wages paid, up to N% of revenue, and maybe jailtime for owners and managers that knowingly violate.
What we have in the U.S. is a bunch of people and politicians loudly decrying illegal immigration and illegal employment, but enjoying the fruits of that illegal employment while paying a fraction of what legal workers would have to be paid.
There's huge appetite for a police state against the little guy, and no appetite for that same police state against business owners and managers.
1) We pretend to have an income tax but then make it work like a consumption tax in practice. Ordinary people put earnings in excess of spending in a 401k and defer the tax until they want to spend the money. Rich people defer capital gains indefinitely until they want to spend the money. It's an income tax on paper but a consumption tax in practice, and doing it that way is much more complicated than just using a consumption tax.
2) We pretend to have a progressive income tax, but then impose benefits phase outs that fully cancel out the difference in marginal rates between the poor and the rich. Convert the benefits to cash and eliminate the phase outs and you get something which is equally if not more progressive, significantly more efficient and dramatically less complicated.
So, you can throw all of that out and replace it with a flat rate consumption tax and a UBI and it would be as close to a Pareto optimal improvement as anything in politics ever is.
Which also makes a huge amount of headway against the illegal immigration problem, because another disadvantage of pretending to have an income tax is that it effectively subsidizes anyone paying people under the table since then they're not paying the tax. Whereas if people working under the table still have to pay the consumption tax on everything they buy, and they also don't receive the UBI because they're not lawful residents, they'd be at a disadvantage relative to ordinary citizens, instead of the existing system where breaking the rules makes you better off.
I don't disagree that we should be deporting people faster, but this is not the way to accomplish that goal at all. Nor should we be building huge detention facilities. We should be making the process go smoother and faster, not holding people.
[1] https://en.wikipedia.org/wiki/Deportation_in_the_second_Trum...
Counting deportations alone does not count people who decide not to come at all.
Also, note that I did not say that we should necessarily be deporting more people. I am actually pretty neutral on illegal immigration. But I am trying to address the question of what is good for the country, which is a different thing from what my personal preferences are.
What was the point of sending ICE, a "domestic" agency, to the Winter Olympics, or letting them take over duties from the TSA? What does an "Immigration and Customs Enforcement" agency have anything to do at a foreign country? What's the point of the Secret Service then?
All you need to do to fix illegal immigration is to go after the employers. You know, actually enforce the laws. Streamline it. Declare it a national emergency and put more onerous requirements on businesses to verify legal status. Send ICE to businesses to investigate them instead of kidnapping people.
You'll probably find out pretty quickly that agriculture is extremely dependent on illegal labour, but so be it. Bring it into the light and have an actual debate. The current approach is all for show, or at worst, intimidation.
This admin's shortcomings don't need to be listed, anyone with eyes can see. I will just remind you about Biden's "minor incursions" comment, that opened to the door to invasion of Ukraine...
Taking on long term debt at or below the risk free rate _is the point._ It didn't devalue the currency because the global economy was structured around buying that debt. You just need to not jeopardize that second point.
As soon as Congress realized they'd been handed a deficit-free budget they went about spending with wild abandon.
And anyway, since that guy we've had two presidents over three terms where the other party controlled the presidency and they didn't and they certainly didn't break the pattern.
Let me ask you this: If you wanted to vote for a guy (or gal) who was serious about reducing the deficit instead of someone who doesn't care as long as the wheels don't come off during his term, who would you vote for?
It should be possible to reduce Medicare costs significantly by going after healthcare costs in general, i.e. create a ton of new medical residency slots and train a lot of new doctors, and make the healthcare companies actually compete with each other. The AMA and healthcare companies are going to fight you hard.
We currently make large social security payments to affluent retirees who paid in less than we're paying them out. We could reform the system to cost less, i.e. not pay out as much to people who don't need the money. The AARP isn't going to like it.
The DoD budget is pretty big and a lot of it is waste or corruption. But to do this well you have to be good at identifying which parts, you still can't eliminate all of it because some of it is pretty important, and this one is the smallest of the three. And the defense contractors will try to stop you.
To make a meaningful dent in the deficit you would have to do at least two of those but no one is willing to do any of them.
Me, I'd cut everything. Right now, when interest rates are relatively low, we're spending more to service the debt than we're spending on defense. This isn't a problem we can address with half measures.
With foreigners and hedge funds less prone to buy US debt right now it's going to be quite interesting to see what will happen.
Look at them countries sending food, cars, machinery for pieces of paper. They taking advantage of us!
Here's a world gold council (i know...) review/survey of central banks gold holdings from mid 2025 (https://www.gold.org/goldhub/research/central-bank-gold-rese...). It notes that gold purchases (by mass) have been elevated going back to ~2023.
Gold prices have also been on an upward trajectory ever since 2023 (https://goldprice.org/gold-price-history.html)
Whatever is happening now is bigger than actions over the last year.
It is the fiat currency debasement via unlimited money printing that makes the gold chart go up.
Imagine being in Zimbabwe or Weimar Germany and watching your stock portfolio and gold going up...
Incorrect. Physical scarcity matters, but it’s not the main driver. Gold’s price is far more sensitive to interest rates, dollar strength, sentiment and fear, speculative flows.
The stability it’s historically shown was mostly the result of fixed monetary systems, and those are long gone.
because you are getting paycheck in fiat, you are psychologically programmed to think of fiat as something stable, and Gold as volatile.
while in reality prices expressed in Gold ounces remained fairly stable for example: https://i.redd.it/1b5mfrqkxxef1.jpeg
That said, I agree that e.g. gold under a regime where most things for sale are priced in gold is more stable than gold as a novelty investment under a fiat currency regime.
When things are priced in gold, most of the demand for gold comes from the fact that it's useful as currency. All of the phenomena we have now still exist, and they disturb the price, but they're small effects compared to the demand for currency.
In the fiat regime, that source of demand is gone. All of the same random effects still push the price of gold around, but because the price is so much lower (due to much lower demand), the price swings are wilder.
Those are only relevant on a shorter timescale; on a long timescale gold's held its value extremely well. The price of a loaf of bread in gold now is still similar to what it was in the Roman Empire 2000 years ago.
Barely keeping up with inflation is not the win you think it is.
It's like witnessing a self-decapitation.
People always exaggerate the impact of geopolitical things, because it feels like the biggest thing ever, especially when you're relatively young. But in reality we're always onto nonsense after nonsense. Countries have the wisdom and view to appreciate this, and so respond to geopolitical stuff (in action, not rhetoric) far more gradually than people do. They're certainly not going to just dump all their dollar reserves because of a single misguided war or even misguided president, or they'd have been gone long ago.
[1] - https://en.wikipedia.org/wiki/Reserve_currency#Global_curren...
[2] - https://en.wikipedia.org/wiki/Bretton_Woods_system#Nixon_sho...
[2] - https://wtfhappenedin1971.com/
Don't take my word for it. Listen to Mark Carney at Davos.
This is the main reason that things are different. Most presidents were reasonable in their hegemony, and Trump's naked aggression makes everyone to hedge against US.
And the competence of departments is crucial for the well functioning of the country, services high and low. (Diplomacy, war, and education to electricity and roads).
In my view it's both that the State Department, for example, is less competent than before, and that the administration is less likely to listen to the experts and Department officers than before.
(I'm not american.)
> That had short to mid-term positive impacts and long-term catastrophic ones, as is the typical strategy in modern times.
Is the catastrophe still coming from the 70s to now? 50 years later? This is the most repeated quip that makes no sense. Same with companies, everyone just repeats "omg they only care about short term" and then years after years the company trots on.
But I guess it's easy to say since the defense is "oh just wait". As if the online commenter is able to see N+1 moves more than whoever they comment about, but that person just simply cannot. Like come on.
They don’t care if American supremacy is lost or if the dollar crashes or if the national debt becomes a crisis. As long as they have their wealth. The public is being decapitated, not them.
You have to take account of warring internal factions.
Single party media outlets like News Corp, Sinclair, Euronews, and so many others have broken that system entirely.
My test to see if someone is a shill/moron is to simply ask them to say one obvious bad thing about "their side." If they cannot, it becomes clear that they are not worth listening to.
It turns out that progressives are just as easily fooled as any other group, by a slick turn of phrase. For example, "Genocide Joe."
I once thought my group was more thoughtful. But, it turns out that ALL of us are easily programmed meat machines.
Voted for Obama, he totally messed up with Russia and Crimea.
I could go on, and on. I believe that the only -ism I can believe in is fallibilism.
And most traditional news is conservative now.
The idea that the mainstream media was ever leftest was always wrong, but these days its absolutely laughable and yet a lot of people still parrot this like it is the truth.
if American political system allows President to do that and allows such President to be elected, than such system deserves to die.
America has produced 70 times more stock market wealth if you look only at companies created within the last 50 years than the EU. And this is not all paper wealth. If you look at technological sophistication, whether that's frontier AI models, leading-edge pharmaceutical drugs, total amount of compute, or the space industry, the U.S. has grown its lead over the EU over the last 50 years.
It's because the EU has largely fixated itself on reducing wealth inequality by punishing those who succeed. It's safety-maximalist approach to private industrial action has also hamstringed industry — see Germany closing all 17 of its nuclear power plants. The US doesn't really need to do much except not sabotage itself to maintain its lead. Like in all nations, laissez-faire (French for "leave it alone") allows the private sector to do the rest.
It's actually because America pivoted[1] from manufacturing to higher-margin services (financial, tech[2]), and generations of American Diplomats had negotiated trade deals that ensure American services are never shut-out or hobbled in most countries. American companies won't look so special,or be nearly as profitable, once they lose their default status that allow them to siphon money from all over the globe -including Europe
1. https://americanbusinesshistory.org/2022-updated-largest-com...
2. Silicon valley caught lightning in a bottle. Other American locales repeatedly tried and failed to replicate it - so it rules out American legislative attitudes as the vital ingredient.
The fact that the tech industry concentrated in Silicon Valley is simply due to network effects. Regardless of which locale became the Schelling point for U.S.-based technology companies, that locale would have succeeded, because of the national economic policy it operated inside of.
US voters were so worried that South America would come to them, that they have become the worst of South America.
this is what trump is doing: selling America short
And before you get too excited, this "news" from the World Gold Council. A consortium of gold mining corporations. Clearly it's a pump article "have you bought gold yet? everyone else is! why not you!?!?"
And why is it worth 3x?
But S&P500 is not?
It's not like we've suddenly found new and exciting uses for gold though. The reason the price has gone up is because the demand for it has gone up, and the reason why demand has gone up is because people want an alternative to U.S bonds. A bunch of pump articles wouldn't be enough to lead to a 3x price increase.
Are you saying that the price of gold just spontaneously went up?
From over hear it seems like the age of Pax Americana is over, and gold at ~$4,600 is one of the results.
Ofc those with an incentive of higher priced gold will tell to buy gold. Only time will tell if they were right.
1. Euro-denominated interest rate derivatives (IRD) overtook US dollar-denominated contracts in the over-the-counter (OTC) market for the first time in history and the scale of the crossover is staggering.
2. EUR Real Effective Exchange Rate (REER) which measures actual purchasing power (not nominal price) is going in the opposite direction of USD real purchasing power (RTWEXBGS). 2025/2026 is the largest divergence in history: 10 percentage points in a year.
3. US treasuries is no longer a number 1 foreign reserve asset. EUR reserves grew 2.5x faster than USD reserves when measured in its own absolute terms.
Unlike the Eurozone which maintains a fiscally responsible budget with reasonable debt and a trade surplus, there is simply no foreseeable fix to the problem of ballooning US debt and trade deficits. Nothing can fix the US budget mess.
Anyone who is paying attention to the numbers would certainly have more confidence in EUR over USD.
People in the UK still think they are the #1 superpower today
Meanwhile the video fades more and more every few years, you can barely even make out faces and objects in the frames now. But it’s happened so slowly that he never really realized that it was happening all along
States can't issue their own currency, they're all going wherever the nation goes on this one.
Of course they can. You're pointing out that federal law currently prohibits it? I already understood that to be the case when I made my point.
> they're all going wherever the nation goes on this one.
Unless they all collectively decide on a different course of action. The constitution was left amendable. It has been done several times already. A simple option is to repeal the 17th and to return to a state assembly controlled federal senate.
The core feature of the senate that makes it so indefensible is how it assigns power to states, not people. That relationship cannot be amended, per article 5 of the us constitution.
What's "indefensible" about this?
And you can amend how the body is elected; hell, you can amend how the president is elected. Also Article V provides for a state "constitutional convention" as a process for initiating changes, bypassing both the Senate and the House.
ps im talking about real persons here, not corporations
Source: https://tradingeconomics.com/country-list/gold-reserves