I’ve been following Judy Shelton online for years. I’m also reading her new book “Good as Gold: How to Unleash the Power of Sound Money.” For decades she’s been articulating a perfectly reasonable monetary policy that works for everyone who works. Here’s her latest interview in Gold Telegraph: The Authentic Judy Shelton: A Maverick Economist Takes on Washington. It’s one of the better interviews recently so I figured I’d do a quick writeup. The content below is drawn from the interview itself, and I also weave in my own comments as well.
Judy Shelton is a serious economic thinker. She’s been arguing forever that money should actually mean something and that it should hold its value over time. In that sense, the average American on the street would surely agree. And she thinks that governments should not be free to just print money at will, which only destroys the property of anyone who must work for a living. It’s utterly immoral what’s been done to us in the name of colonialist policies implemented intentionally like free trade, deindustrialization, outsourcing, endless rehypothecation, constant price inflation, and much more. For the last few decades, official Washington thought Shelton was eccentric at best, but it’s also clear that she’s been a threat to them all long. So, what do we have now? Economic confidence has collapsed throughout the Western world while stable monetary collateral assets like gold, silver, and Bitcoin have hit record highs denominated in every major currency globally. More and more people are finally starting to realize Shelton has been right from the beginning.
How It Started: The Soviet Union
Although she talks about gold constantly, Shelton’s path to sound monetary policy didn’t began with gold but instead started with the collapse of the Soviet Union. Back then she was a post-doctoral fellow at the Hoover Institution studying the internal monetary and financial condition of the USSR. She noticed something that others had missed. The Soviet Communists were running a massive internal budget deficit, financing losing enterprises, and printing money to cover the gap. But because prices were fixed, the inflation didn’t show up as rising costs. The problem, however, was visible as empty shelves, lack of growth and prosperity, and long lines to purchase necessary daily goods.
“I ended up thinking with like a green eyeshade accountant,” she said, “that the country was going bankrupt.” Some of her colleagues at Hoover, disagreed, such as Condoleezza Rice, who was focused on Soviet military capabilities and felt that it would be militarization that would take down the government. Shelton and Rice used to argue about the issue. Shelton stuck to her view that economics would destroy the Soviet Union. She was right. Over time her book at the time, The Coming Soviet Crash, caught the attention of former President Richard Nixon, who reportedly kept rereading it after 1991. He even began sending her handwritten letters, which she displays in her home and showed the audience during the interview with Gold Telegraph. In one letter, Nixon described her as “a star being blessed with both beauty and brain.” Sounds like Nixon.
But what mattered more than Nixon’s flattery was his candor about the monetary system itself. When Shelton told him her next book would be about Bretton Woods, the economic agreement that tied the dollar to gold after World War II until Nixon ended the policy in 1971, he wrote back: “I know very little about monetary policy.” She found that extraordinary because he was the man who ended the system and said so himself. Although a well known expert in foreign policy and geopolitics, Nixon was never skilled in financial matters. What’s interesting is that he felt confident enough to state that directly.
What Was Lost in 1971
Nixon’s August 1971 speech in which he directed the Treasury to “suspend temporarily the convertibility of the dollar into gold” was supposed to be a short-term fix. Others outside the power elite at the time knew differently. However, years later Shelton met former Fed Chair Paul Volcker in 1994 at a conference marking the 50th anniversary of the Bretton Woods agreements, and he largely supported Nixon’s policy. Volcker said he thought they might need to reprice gold from $35 to perhaps $38 or $40 an ounce, and then reinstate the old system. That’s obviously not what happened.
“Did we essentially trade discipline for flexibility when we ended the gold standard?” Shelton was asked. Her answer was careful and pointed. “Flexibility is kind of a weasel word that can sound good,” she said. “What it really means is the flexibility to not be disciplined, and then that translates into the flexibility to reduce purchasing power, to incur inflation, to debase the currency.” In other words, it was intentional. She invoked James Madison, who argued in the early years of the country’s founding that depreciating the currency is the same as stealing property and that’s unconstitutional. The founders, she said, would be appalled. “Madison was so clear on that. He said a depreciating currency is just like stealing property.” She didn’t mention Hamilton, but you have to think that he would have been equally outraged about how the system he largely created eroded over the generations.
The early republic, she pointed out, treated the mint as the first priority. Jefferson saw a common currency as something that would bind the new country together, strengthen its commerce, and honor the work of its people. When citizens earn money, she argued, that money is property. Inflation expropriates it without due process. It’s theft, basically. They’ve stolen our money. They’ve destroyed our future.
The Nomination Fight: Pundits and the Washington Machine
In 2020, Shelton was nominated by President Trump to the Federal Reserve’s Board of Governors. The confirmation hearing in the Senate that followed was unlike anything she had expected, she said. I remember watching the hearings myself. It was clear that it was a hit job from both Democrats and Republicans to make sure that Shelton didn’t end up on the Federal Reserve. Given the politics in 2020, that result was expected. But I was struck by the obvious ignorance being articulated by the Senators. They just don’t know very much at all and certainly don’t deserve to be seen as leaders of anything.
Things weren’t much better in the financial or general media, though. “I was amazed at the power of pundits who I knew didn’t know as much as I knew about monetary systems and history,” she said. The attacks were personal and ideological. She was called a “gold bug” among other things. Her advocacy for sound money was described as a “dog whistle” to right-wing extremists, a common attack that represents nothing more than idiocy. Senator John Kennedy called her ideas “nutty,” which for him only serves as self reflection. Several other Republicans announced they were concerned. The nomination failed in November 2020 and the broken system continued.
“I had a hard time understanding that the Washington machine, built explicitly to protect politicians’ ever-growing spending demands, quickly closed ranks,” she said. Her family was in the chamber for the hearings. Her mother came from Los Angeles in her nineties. Her husband was quiet and supportive. Everyone knew what was going on.
But she draws a direct line between the failure of her nomination and what followed. The Federal Reserve then unleashed a level of money printing that contributed to the worst inflation in a generation. She didn’t mention COVID during the interview, but that was “scary virus” time as you may recall. Seems shutting down the world and gutting millions of jobs may have had some consequences, eh? By the summer of 2022, inflation was running at 9.3 percent. Federal Reserve Chairman Jerome Powell called it transitory. It wasn’t. And nobody was fired. Nobody resigned. That’s the way it always works for people who hold power.
“Not only did Powell not apologize,” she said, “but he refuses to resign. I think that’s outrageous, and it’s cheap grace to say you take responsibility when nobody gets fired.” Price stability, she noted, is the stated mandate of the Federal Reserve. “We didn’t get price stability. We still don’t have it.”
The Fed’s Footprint and the Case for Reform
Calls for Federal Reserve reform are now coming from the highest levels of the Trump administration, including from Treasury Secretary Scott Bessent. Shelton understands why, although she would go further than most reformers.
“Inflation continues to be a lead issue for people,” she said. But her objection runs deeper than the inflation numbers. She’s troubled by the sheer size of the Fed’s presence in economic life and the way every financial decision is now made in reference to what the Fed might do next with respect to interest rate manipulation.
“We’d have a healthier economic system if people could just take for granted that the money is not going to depreciate, that a unit of account can figure into your planning for your whole future, and that you’re not just trying to keep up constantly with inflation and forced to put your money at risk.” She paused. “I think that would be a much better world.” Of course, she’s right. Her position is supported by people who need to make ends meet on a weekly basis, but certainly not the oligarchs hell bent on using the masses as their own little wage slaves.
As for who owns the Federal Reserve, she was way too careful. The legal structure is genuinely hybrid. There are twelve district reserve banks that are close to the private institutions in their regions. There are seven members of the Board of Governors, appointed by the president and confirmed by the Senate. Together they make up the 19-member Federal Open Market Committee. “It’s a quasi-public, quasi-private institution,” she said. “And that’s the arrangement that’s being tested now” under this second Trump Administration. It’s clear she knows more. It would have been nice to see her cut loose on the ownership issues like others regularly do.
Fort Knox, Treasury Trust Bonds, and a Live Video
One proposal that has attracted growing attention involves the gold held at Fort Knox. The last full audit was conducted in 1953. Shelton thinks an audit is long overdue, and not merely for symbolic reasons.
“There are a lot of Americans who don’t even trust the government to accept that the gold is there,” she said. “I think it’s needed.” But the audit would need to go beyond confirming the physical presence of the gold. It would also need to address whether any of it is encumbered, an issue no one ever talks about.
When asked whether she would support Elon Musk’s idea of a live video tour of Fort Knox, she didn’t hesitate. “I would love it!” she said. Can you imagine such a real time demonstration of reality? What if the vaults are empty? But what if they are overflowing with more gold than previously expected? Either way, it could be shocking to markets around the world and especially to Americans who have watched their life savings evaporate over the last few decades. We’ll never know, though.
But Shelton’s larger goal is to establish that whatever gold is actually in Fort Knox be held as official collateral for what she calls Treasury Trust Bonds, which she describes as long-term government obligations with a gold convertibility feature. The bonds would give holders the option at maturity to redeem the asset either at the nominal dollar value or in a pre-established amount of gold. She believes this kind of financial instrument would be massively popular. She also wants to prevent any future administration from simply selling the gold to capture a temporary windfall profit. Locking the gold reserves in as long term collateral, she argues, prevents exactly that.
The bonds, she believes, could inspire other sovereign nations to act accordingly as well. And the bonds could also become a condition of trade arrangements and a way to address currency manipulation without relying exclusively on tariffs. Shelton, says: “What does your currency do relative to gold, and what does our currency do relative to gold?” If one country depreciates more, that gap should be quantifiable. That, she argues, helps level the global playing field.
The Battle Never Ends
Toward the end of the interview, Shelton was asked about the risks of ongoing poor monetary policy. “I think what’s at risk is this sense of people increasingly [feeling] that they are victims of monetary favoritism, that the Fed maintains policies that increase the inequality of wealth and income, that they reward people who are already wealthy enough to have financial assets.” The people who cannot protect themselves are the people who work for wages, who save in dollars, whose property is quietly depreciated every year through pervasive inflation.
“I think we need a revolution of valuing honest work, honest government, and honest money,” she said. “And by that I mean celebrate people who actually make goods, who produce goods and services, not just people who arbitrage the anomalies of financial markets.” That’s an interesting comment. It clearly reflects the intention of the current Trump government as they implement policies to re-industrialize the United States after so many decades of willful decline.
She was then asked whether she would potentially join Trump’s new Board of Peace, which is focused on economic development as a tool of diplomacy to build global stability. She said she would join if she were invited. And that’s possible under the current administration given their similar positions.
And then, as the interview ended, she offered one last thought. It wasn’t a summary. It was a reminder of what we’re really facing. “The battle itself,” she said, “it never ends.” That’s sobering. It’s a battle. It’s a war. Instead of being passive, we have to actually get active and fight our own leaders to save our lives and build a future for our children. Just saying that feels reprehensible on every level. But that’s reality.
Imagine a world where Shelton’s simple, practical, sound monetary policies had been fully implemented? We’d all be thriving now. Perhaps that’s the problem. We’re not supposed to.
First, some context. Johnson’s Dollar Milkshake Theory says that despite the concerns about US deficits and debt, capital will flow into the United States during times of financial crisis. The world has borrowed enormous amounts of dollars through what’s called the Eurodollar system. When serious geopolitical or monetary conflicts emerge globally, everyone needs dollars to service their debts, which creates a massive sucking sound as liquidity flows to America. “The United States would suck up all the money that gets printed as a result of responding to the crisis,” Johnson says.
The “milkshake” metaphor is interesting. Think of global dollar liquidity as a milkshake sitting in a glass. The world is full of dollars created through lending, which represents all that debt denominated in US dollars sitting outside America. The United States has the straw. So, when a crisis strikes and everyone desperately needs dollars to settle their debts, the US essentially sucks up all that liquidity, like drinking a milkshake through a straw. Thus, capital flows into the United States, which makes the dollar stronger while other currencies weaken.
Johnson traces how he arrived at this theory: “The thesis was based on the fact that I think the world has borrowed an incredible amount of money. The debt has gotten to a level where I think we’re going to start having the consequences of borrowing all that money.” Despite believing the US has created many problems through its monetary policies, Johnson concluded that “the capital of the world would flow into the United States and the United States would suck up all the money that gets printed as a result of responding to the crisis.”
A Transformative Event in Monetary History
In his report “Empire by Code: The Rise of USD Stablecoins,” Johnson frames the emergence of USD stablecoins as potentially “a transformative event in monetary history, one as consequential as the day the United States severed its link to gold and as powerful in shaping the world’s financial order as the moment it abandoned Bretton Woods.” These are serious moves taking place.
The report opens with a warning from Carl von Clausewitz’s “On War”: “I shall proceed from the simple to the complex. But in war more than in any other subject we must begin by looking at the nature of the whole; for here more than elsewhere the part and the whole must always be thought of together.”
Johnson applies this principle to money. As he writes in the executive summary: “Money, like strategy, is an ecosystem of power. Every instrument, market, and institution serves a purpose within a larger design, and none can be truly understood in isolation. This is why money and power are inseparable. Each reinforces the other, and together they shape the hierarchy of nations.”
The report examines several interconnected components: the Eurodollar market, SWIFT, the GENIUS Act (recent US legislation governing stablecoins), and the rise of stablecoins. But Johnson emphasizes they must be understood as “expressions of a single whole” through which the United States projects, maintains, or adapts its influence.
His conclusion is stark: “What is emerging is not just a new currency system, but a new form of control.”
The Eurodollar System: Dollars Outside America
To understand why stablecoins matter, we need to understand the Eurodollar market first, which very few people know even exists. This is not about euros or Europe specifically. Instead, it’s the market for US dollars that exist outside the United States. And it’s massive!
Johnson traces its origins: “Post World War II we had the Bretton Woods agreement where the dollar was the global reserve currency.” The Soviet Union was receiving dollars from trade but “didn’t want to put them in a US bank because they could be confiscated.” So they placed these dollars in European banks, which then used them as collateral to make new US dollar loans. That process enabled the creation of new US dollars — but outside the American regulatory authorities.
This created what Johnson calls a critical dynamic: “Most of the money printing that everybody likes to say ‘money printer go burr,’ it’s actually done by the commercial banks and the global commercial banks and even non-financial entities and non-bank institutions. It’s not so much the governments themselves printing the money.”
The system exploded after Nixon ended the gold standard and the United States convinced Saudi Arabia to price oil in dollars. “That turbocharged the need for dollars and that made this Eurodollar market grow even more,” Johnson says. Today, “the size of the Eurodollar market, which is the market for dollars outside the domestic United States, is orders of magnitude larger than the market for dollars inside the United States.”
Johnson emphasizes a truly unimaginable scale: “It’s at least a hundred trillion and probably 700 trillion if you started adding up derivatives and off-balance sheet items and non-bank entities and non-bank financial institutions. It’s just this monster out there that has grown on its own.”
Stop. Go back and read the last paragraph again. Unreal.
The catch? The US doesn’t fully control this system. Transactions run through SWIFT, essentially “the central nervous system for the global financial system,” but it’s a European system. “The US has more control than any other country. But they don’t have full control. They don’t have full visibility,” Johnson says.
What Are Stablecoins?
Johnson defines a stablecoin as a digital token issued by either a financial firm or a company that remains stable against a certain asset. Unlike Bitcoin, which has been highly volatile, stablecoins maintain price stability by being backed with US Treasuries.
The key feature is that stablecoins represent “a way to have a digital dollar that you can send, spend, and transact with that settles instantly anywhere in the world.” And crucially, “you don’t even need a bank to do it.”
Johnson admits he initially missed the significance: “Stablecoins have been around for six or seven years, right? And I was very skeptical of them initially.” Part of his skepticism came from questionable practices by early issuers like Tether, which “didn’t want to be audited” and had “some very shady practices to say the least.”
But as the system developed, Johnson came to realize “not only did I miss it, but everybody else who I think is continuing to miss it. And even those who are big advocates for them, I think are missing the real play.”
Beyond Treasury Demand
The narrative around stablecoins focuses on a straightforward benefit, which is that they create new demand for US Treasury debt. Here’s how it works. To maintain their dollar peg, stablecoin issuers must hold US Treasury bills as backing. As stablecoin adoption grows, so does the need to purchase Treasuries. With the US facing high debt service costs and massive refinancing needs, this new marginal buyer seems like a convenient solution.
While the Trump administration has promoted stablecoins primarily for this Treasury demand feature, Johnson says that this misses a bigger picture. “I think that’s really a secondary benefit,” he says. “I actually am of the belief that the US would not have that much trouble selling Treasury bills if stablecoins didn’t exist.”
Johnson says that the real strategic advantage is control and redollarization. The Treasury demand story, while true, is almost a distraction from what stablecoins actually enable. They don’t just help finance US debt. They fundamentally restructure how dollars flow around the world and who controls those flows, especially in geographies where hundreds of millions of people aren’t even banked. Again, the scale of those potentially new markets for the US dollar is unimaginable.
Even geopolitical rivals recognize this threat. Johnson says that “you’ve seen Putin make comments about the US dollar stablecoin” and other countries making comments “in some kind of a negative sense because they’re scared of it and they should be.”
But the real story could be much bigger. It’s about actually replacing the Eurodollar system with something the US can fully control, and dollarizing populations that were previously out of reach. If the US is successful implementing this strategy, it will represent a remarkable achievement and a reassertion of American monetary policy globally, which in recent decades has been eroded by the massive growth of the Eurodollar post World War II.
Money as a Tool of Control
To understand the strategic implications, Johnson emphasizes a fundamental truth about money: “Money is used as a tool or as a means of control that governments use against its own citizens or to marshal its citizens in a certain way. Really powerful countries can use money to get other countries to do what they want to do.”
This isn’t theoretical. As Johnson says, “Money as a weapon, this isn’t some idea that I just came up with. This is military doctrine. The United States Army, Marines, they know how to use money as a weapon. It’s taught at their colleges. It’s implemented in their actions when they’ve been in foreign theaters.”
The power of the dollar stems from its role as global reserve currency. “By the fact that the global reserve currency is the US dollar, the US has more control over the global monetary system than any other one government.” But that control has been incomplete because of the Eurodollar system’s opacity outside the United States.
The Empire Strikes Back
Johnson uses a Star Wars analogy to explain the coming financial war. “At the end of the first movie they blow up the Death Star, right? That’s a huge victory and we created Bitcoin and it’s achieved escape velocity or whatever. But the next eight movies aren’t about peace and love in the galaxy. The battle continues.”
Johnson says the idea that the US would simply accept displacement is naive. “A lot of people tell me the US is the great evil in the world or it’s the global bully or it’s designed the system that enslaves the world through taxation and theft via inflation. And then they also tell me that [the US] can’t possibly win the next round. I’m like, they just enslaved the whole world by your own admission, but they’re just going to roll over and the next round’s going to go to the next guy?”
Cryptocurrency was designed to escape government control. Now that same technology is being co-opted to extend control. “The dollar is already the ring of power, in my opinion, and this is a way to just entrench it even more,” Johnson says. “And the craziest thing, in the same way that the Eurodollar market built the Eurodollar prison that the world is now in, stablecoins is a way to turbocharge that and not only turbocharge it but give the US more control over it.”
Johnson is not clear who does actually control the Eurodollar system. But some analysts have speculated that it’s primarily European banks, which may help explain the current stress between Trump and Europe as the US make clear moves to reassert control over its own monetary policy — see LIBOR vs SOFR here and here.
In “Empire by Code,” Johnson describes how “quiet code and public ledgers are no longer just symbols of rebellion against the state. They are becoming extensions of it.” The tools once imagined to escape central authority are being absorbed by what he calls “the most powerful monetary authority the world has ever known.”
Johnson sees this as the US co-opting private market innovation: “The US is co-opting the innovation that was designed to escape the prison. And so I think initially that is why these stablecoins and digital assets and crypto, however you want to describe this whole ecosystem was developed.”
Unlocking Global Dollar Demand
The scale of opportunity is staggering. Johnson estimates that “easily 50 and probably 70” percent of people globally would prefer to earn and transact in dollars over their local currencies if given the choice. Currently, international capital controls and banking restrictions create enormous friction to transfer money. Stablecoins remove those barriers entirely.
“If you live in, let’s just say Turkey, and you want to hold a US dollar balance, you have to open a bank account and then it has to be with a bank that allows you to hold dollars,” Johnson says. The Turkish government can then limit how much you can hold and restrict when you can withdraw it, especially during a currency crisis.
With stablecoins, “anybody who doesn’t even have a bank” can hold dollar balances on their phone. “As long as there’s an internet connection they can connect to the internet, open, download a wallet and they can transact or they can hold these US dollar stablecoins.”
This creates an existential threat to national sovereignty for some countries. “The ability for citizens to exit the local currency” becomes dramatically easier. “If the Turkish government loses control of the monetary system within Turkey and citizens now start to hold dollar balances rather than lira balances, the Turkish government starts to lose control. They don’t like that.”
Johnson emphasizes the pattern: “If you look back through history, any country that has had a currency crisis or whose currency has failed, the government typically fails shortly thereafter. And again, it goes back to control. It’s because money is a means of control. And if you can’t control the money, then you can’t control the society.”
Why People Choose Dollars
Johnson pushes back against the idea that dollar demand is artificial or coerced. On a fiat versus fiat basis, the choice is clear. “Most global trade for the most part takes place in dollars, especially commodity based. They’re invoiced in dollars. They’re transacted in dollars.” As an aside, it seems ironic that this is what happened in recent decades with the Eurodollar surpassing the value and control of the domestic American dollar. Could that be why the US is making these moves under Trump now?
Importantly, “that was not the United States going around and telling a manufacturer in Turkey that they had to do business in dollars with a trade partner in India. Those two entities chose to do that because it was the most liquid and it was the safest and it was the most convenient out of all the fiat options.”
Even when Bitcoin advocates argue that unbanked populations could use Bitcoin, Johnson notes that “if given the choice to do it in dollars, a huge chunk of them, maybe the vast majority, would pick dollars for the reasons we mentioned.” This is the network effect on display. The dollar has the network. Bitcoin doesn’t.
“The dollar is kind of like Twitter. Everybody loves to hate Twitter. Everybody says they’re going to leave. Everybody says they’re going to go use a different one, but everybody ends up coming back to Twitter because that’s where everybody is. And the dollar is kind of the same way.”
A CBDC By Another Name?
This raises some uncomfortable questions. Are stablecoins just Central Bank Digital Currencies in disguise? The EU has been openly developing a digital euro, which Christine Lagarde continues to promote as Europe tries to maintain monetary control over disparate EU nations and perhaps even assert more control globally.
Johnson acknowledges the concern directly. When asked if all the fears people had about CBDCs are now back on the table, he responds: “I think they’re back on the table.” The government would know exactly what citizens are spending money on, there would be no cash for anonymous transactions, and authorities could shut down accounts at will.
The political workaround is elegant. “Trump said we’re never going to have a central bank digital currency. And there was always push back against that because the United States was founded on individual freedom and individual rights. A central bank digital currency is in many ways un-American.”
But Johnson sees through the semantics. “The way they’ll get around that is they’ll just make it a treasury coin rather than a central bank coin. But at the end of the day, it is a digital, it is a CBDC. It’s just called something differently.”
The distinction matters politically but perhaps not practically for regular Americans. Whether issued by the Treasury or the Federal Reserve, the result is the same. Stablecoins are programmable money that can be monitored and controlled.
Johnson even suggests this could reshape the relationship between Treasury and the Fed. “I think this is also one of the ways in which Treasury gets control over the Fed.” The ability to issue digital currency directly could circumvent the traditional banking system entirely. “If the treasury issues a stablecoin, it is a way to circumvent the banks because everybody could just open an account directly with the treasury.”
Domestic Implications: Do We Still Need Banks?
The implications extend far beyond international markets. “If you have a US dollar stablecoin that’s issued by the Treasury, you don’t really need the banks, right?”
The current banking system exists partly because of infrastructure requirements. But stablecoins change that calculus. “You certainly don’t need 14,000 banks. Maybe you need 10 or 20.”
Johnson admits uncertainty about the exact implementation: “I don’t know if they’re going to issue an official US dollar stablecoin, if they’re going to grant licenses to 20 different entities and then they create their own stablecoins, or maybe they’ll just let anybody issue their own stablecoin so long as they follow the rules that are outlined in the GENIUS Act.”
Regardless of the specific path, “new battle lines are drawn and people are going to compete for that territory.”
A New Form of Control
This creates what Johnson calls “financial battlefields” everywhere. Money is fundamentally about control, and when governments lose control of their currency, they lose sovereignty itself. “If you are subservient to a form of money that you cannot control, you are no longer sovereign,” he says.
The programmable nature of stablecoins gives the US unprecedented visibility and control compared to the opaque Eurodollar system. Unlike SWIFT, the stablecoin rail infrastructure is “very elegant and very controllable and highly transparent for whoever is programming.”
Johnson elaborates on the difference: “These stablecoins via code, these channels are not only visible, but they’re programmable. And so it gives the US complete visibility or potentially gives the US complete visibility and control. They can shut it down. They can open it up. They can turn somebody’s money off. They can turn it back on.”
As Johnson writes in his report: “What happens when the private innovation that once sought to liberate markets instead becomes the instrument through which a superpower consolidates them? What if the next great disruption does not weaken the empire, but strengthens it?”
Johnson’s conclusion is sobering: “This is about as an elegant way to invade another country without even people realizing it that I’ve ever seen.”
Can Countries Resist?
Johnson expects resistance but doubts its effectiveness. “Without question, there’s going to be a battle. And I don’t know exactly how this is going to play out. And the other countries will without question fight back because they have to. If they don’t fight back, they will cease to exist.”
The challenge is that resistance requires heavy-handed tactics: “The reason governments exist is because they have a monopoly on violence. And I hate to bring that up, but that’s the truth. And so if they throw people in prison or if they take their businesses or confiscate their assets, that will deter people from breaking the law, quote unquote, in that country, but it won’t stop everybody.”
Stronger countries like China have better defenses. China can “probably introduce their own CBDC or whatever it is. And internally that probably is better at defending against the dollar stablecoin than perhaps Turkey or Egypt or Afghanistan or Venezuela would be.” But even there, “I don’t think it will be perfect and I think it will still seep in, right? It’s like water. It just seeps in. It’s hard to keep it completely out.”
Europe faces particular challenges. “Europe is just in so much trouble. I just don’t know how else to say it.” Christine Lagarde talking about the digital euro shows “they’re trying as hard as they can to maintain control,” but their position is weak and growing more so over time.
A broader question looms. “What does this do over time to everybody who chose team America?” in the recent reshuffling of global trade. Johnson’s answer? “I think they’re going to get dollarized.”
Understanding Reality, Not Celebrating It
It’s important to note that Johnson takes a deliberately analytical stance on stablecoins rather than advocating for a specific outcome. When Taggart points this out in the interview, saying “You’re not a dollar lover,” Johnson responds, “This scares me to be honest.”
Taggart clarifies: “You are just trying to help people understand the world as it is and as it is likely to be.” Johnson isn’t cheerleading for dollar dominance through stablecoins. He’s describing what he sees as inevitable given the incentive structures of nation-states and the dynamics of power.
Throughout both interviews, Johnson emphasizes uncertainty. “I don’t have this completely figured out,” he says. “I don’t know exactly how this is going to play out. Again, I’m sure there will be some unintended consequences.”
He wrestles with the implications openly. “I think of a country like a farm or a ranch, it makes a lot more sense. Some ranches are free range and they let you roam around and eat whatever you want, but at the end of the day, you’re still staying within those confines. Other ranchers have you locked up in a really tight pin and you get outside for one hour a day and they give you not very good food to eat. But at the end of the day, it’s livestock. It’s management of livestock.”
Despite predicting that stablecoins will strengthen dollar dominance, Johnson’s investment advice reflects genuine concern about the outcome. He recommends owning gold and hard assets as “a put on the whole system” because “I don’t know that this is going to go well. I don’t know that it’s going to go perfectly. It may very well cause chaos. And gold probably does well in a world where there is chaos.”
His reasoning is that “there’s nothing more bullish for gold than a strong dollar because a strong dollar kind of wrecks the system and causes chaos. And gold does pretty well in chaos.”
For people who say the US cannot possibly win the next round of global monetary competition, Johnson offers a realistically stark reminder: “If that is your belief, you are betting against immeasurable power.” He’s not celebrating that power, though. He’s warning people to understand it so they can attempt to position themselves accordingly.
As he writes in “Empire by Code”: “This paper does not offer reassurance of the status quo. It confronts a reality that few seem to have yet recognized and even fewer truly understand.”
Martin Armstrong has spent decades tracking economic cycles and predicting major turning points in markets and geopolitics. In some of his predictions, he’s hit the mark down to the day. In a recent interview — Empires Always Fall — he warns that the unrelenting push toward war with Russia stems from desperation and will eventually lead to the economic collapse of Europe and the break up of the European Union. And, eventually, the United States.
Armstrong’s forecasting model centers on an 8.6-year cycle he stumbled on while studying financial panics dating back to 1683. The cycle, which works out to exactly 3,145 days, kept appearing everywhere he looked. “It was like oh, that’s pi,” he says, “which is the perfect cycle.” This mathematical constant shows up in ancient coins, the procession of the equinoxes, and across the universe itself. More importantly, it tracks the movement of capital around the world with remarkable precision. Always watch the capital flows.
Armstrong’s approach stands in contrast to how most analysis gets done these days. “The vast majority of analysis out there is linear, which comes from the classic physics side,” he says. “And it’s always wrong.” He uses climate change as an example. “Went up one degree this year, so it’s going to do that forever, and we’re all going to die in 50 years. There’s a cycle to everything. Nothing goes up forever.” Anyone who trades the markets understands this instinctively based on history and years of experience. You don’t assume that because the Dow went up a thousand points this month it will do that forever.
Armstrong’s insight came from understanding how money actually behaves in real life. “Capital moves like a herd of wild animals,” he says. “I developed a model to track this.” The breakthrough for him came when he realized the model wasn’t just predicting financial crises. It was also predicting wars as well. “What I’ve learned over the years is that with capital, somebody always knows,” Armstrong says. War comes when you see the money start to move in advance. And we never see these conversations reflected in the media.
Armstrong’s model has predicted wars before they happened because someone always knows what’s coming and starts moving their money. Before the Lebanese Civil War in the 1980s, his computer warned that the country would “fall apart in 8 days.” Eight days later, the war began. A shipping magnate in the Gulf called and told him Iraq would start attacking ships the next day. Listening to Armstrong, it’s clear he has a vast network of highly capitalized people in his circle of clients and friends.
By 1998, Armstrong understood the pattern completely. He stood up in London in June of that year and announced his computer said Russia was going to collapse. “I said I give it a little more than 30 days,” he says. What Armstrong didn’t realize was that the London Financial Times happened to be in the back of the room. They put it on the front page. “Armstrong says that Russia is going to collapse and we’re going to have a bunch of nukes running around.” Russia collapsed. The Long-Term Capital Management crisis followed. That’s when the CIA called. “They said, ‘All right, fine. We’ve been monitoring you guys for quite some time.'” They wanted Armstrong to build the model for them. He offered to run studies for them from his own office. “They said no, they had to own it and I said well it’s not for sale. So that started my whole nightmare with government.” Armstrong didn’t say in this interview that he ended up in jail for years over this, but he talks about the experience at length elsewhere. Cross the Deep State at your own risk.
When Hamas attacked Israel in October of last year, defense stocks started moving a week in advance. “It’s always the same thing,” Armstrong says. “It doesn’t matter what country we’re looking at. Somebody always knows.” At the top of the market where serious capital lives, the markets are objective, not emotional, and they show you what’s happening if you know how to read them.
These days Armstrong’s model is flashing red for Europe. Germany, which represents 25% of the EU’s GDP, has seen its economy actually shrink by 3 to 5 percent. That’s not a recession, Armstrong says, but instead it’s a permanent reduction in the number of available jobs. COVID lockdowns, climate change policies, and sanctions against Russia have devastated small businesses and the industrial base throughout the country. “The EU is doomed. It cannot recover,” he says. “They’re still running around with the climate change nonsense. And this is why they need war with Russia. No matter what government you look at, when they’re in trouble, they need an external enemy.”
Armstrong’s model doesn’t just predict that war is coming. It predicts the outcome as well. “I can tell you our computer warns that Europe will lose,” he says. “It’s in too much of a weak state economically.” Britain already spends over 3% of GDP on interest payments. Now NATO wants 5% on top of that for defense. At least 10% of GDP would be going to something that has nothing to do with improving the economy. You can’t win a war when your economic foundation is crumbling.
But Armstrong sees another motivation behind the war push, one that’s purely mercenary. “Russia is the richest country in the world from natural resources,” he says. “Even Maggie Thatcher said they had everything from platinum, gold, oil, timber. It’s estimated their natural resources were 75 trillion. That’s double the US national debt.” Some Europeans hold delusional fantasies about conquering Russia and seizing those resources. “If we can conquer Russia then we’ll have the 75 trillion, the US will be back to this vassal state and we will rise again like the Roman Empire,” Armstrong says. He also says he’s heard this thinking process firsthand. “I’ve heard this complete deranged nonsense. Oh, if we go into Russia and we remove Putin, they’ll give us like a ticker tape parade and cheer. I said, no, they’re not. They’re going to shoot your ass.” The problem is that neocons “demonize the opposition to the point that they just believe their own BS.”
In Germany, which is the economic engine for the EU, the fundamental problem runs even deeper than the current crises. The country has followed what Armstrong calls the mercantile model: “We build stuff, we sell it to you, we get rich.” But the wealth never reaches the people. Germans have the highest tax rates in Europe, and the net worth of an average German is less than that of an Italian. They’re selling the house to stay afloat. Meanwhile, “China has looked at both models,” Armstrong says. “It’s trying to copy the United States. It’s trying to create a consumer-based economy” with government controls over industry. The contrast is stark. “The capitalization of the New York Stock Exchange — just one exchange — is worth more than all of Europe combined. Home Depot, the IPO, when that was launched, was worth more than all the IPOs of Europe.”
The reason for Europe’s failure is ideological, Armstrong says. “They’re against capitalism. They’re against just about everything.” During World War I, European governments shut down all the stock markets. Now they’re pursuing digital currency as the ultimate control mechanism. “They go to a digital currency and that’s it. You can’t get it out.” Spain recently announced that people can’t withdraw more than $3,000 in cash from their accounts without government permission. “This is freedom? Oh, Putin’s a dictator. It’s beginning to look the other way around. Everything that they accuse Putin of, they’re doing. Denying free speech. It’s becoming much more like a socialistic communist state and it’s not sustainable.”
The European establishment is losing control, and the political landscape reflects this, Armstrong says. “Look at the AfD in Germany. They wanted to ban it at first. Then they called them all Nazis. Now it’s the number one party.” Similar shifts are happening across the continent. Portugal has moved right. Poland too. Nigel Farage’s Reform party in the UK is now number one in Britain. Kaja Kallas, the former prime minister of Estonia who now heads foreign policy in the EU, has come out and said Russia’s too big and needs to be broken up. Boris Johnson made the front pages of Norwegian newspapers saying that Britain is at war with Russia. This is all an openly declared proxy war, Armstrong says, where the old guard is desperate to hold on, and that desperation manifests as increasingly authoritarian control and the drumbeat for war. He doesn’t pull his punches. He’s emphatic.
Armstrong is particularly critical of NATO’s role in all of this. “NATO is, its sole purpose is war,” he says. He’s seen the internal memos. When climate change funding threatened NATO budgets, officials panicked about losing their salaries and pensions for doing nothing. Their solution was to manufacture a threat. “They have to keep saying, ‘Oh, Putin wants to invade Europe.'” The absurdity is obvious to Armstrong. “Putin’s been there since 1999. Why hasn’t he? Because there’s nothing there.” Europe has tried to invade Russia three times throughout history. Russia has never tried to invade Europe.
Now NATO via the Trump Administration wants EU member states to spend 5% of GDP on defense. Britain already spends too much of its GDP on interest payments alone. “What are we talking about here?” Armstrong asks. “At least 10% of GDP is now going for something that totally has nothing to do with improving the economy.” This is economic suicide dressed up as security policy. The establishment is trying to retain power through oppression and military spending while the actual economy crumbles beneath them.
Moving to Ukraine, Armstrong is blunt about where the responsibility lies for the current conflict. “We created the whole Ukrainian war,” he says. Victoria Nuland was in Maidan handing out sandwiches. John McCain stood on there on stage saying we’re behind you, overthrow your government, America’s behind you. “Can you imagine if Lavrov from Russia stood on the steps of the capital building in the US saying to overthrow your government? We’re with you.” There was a peace deal in Ukraine early in the war. Boris Johnson hopped on a plane, went over there, and told them no, you’re not allowed to sign a peace deal, Armstrong says. We want war. “The death toll was basically 130,000 at that point. It’s now over a million. Do they care if any Ukrainian is still standing at the end of the day? No, they don’t.”
In the US Armstrong has heard neocon lunatic Lindsey Graham saying this is the best money we’ve ever spent to kill Russians. But what Armstrong heard from Europe is even worse. “They could care less about the Eastern Europeans. They were all basically communists anyhow. So send them in first. Let them be the vanguard. Let them die first. Take down as many Russians as you can.” The cynicism is complete. “They could care less if we live or die. There’s too damn many of us anyhow from their perspective.”
This pattern holds across history and geography. “War does not take place when everybody’s fat and happy,” Armstrong says. “Turn the economy down and that’s when you get war. People are aggravated.” Biden blamed inflation on Putin. Canadian leaders campaigned against Trump rather than addressing domestic issues. When governments face domestic crises, they reach for the oldest playbook.
One problem with governments, he says, is their lack of institutional memory. “When you’re a kid, your parent will say, ‘Don’t stick your finger in that candle. It’s going to hurt.’ We all still do it.” But while individuals learn from pain, governments constantly change administrations. “There’s no collective memory. They don’t learn from past mistakes.” It doesn’t even seem they care about previous mistakes as well.
Armstrong reserves particular criticism for the neoconservatives and their obviously limited thinking, which relies on linear analysis and regime change fantasies. “The neocons wage endless wars,” he says, “and they use linear analysis.” The pattern is always the same. “Oh, we’re going to take out Saddam. Does anybody ask, okay, if you’re successful, what comes next? They never ask that question.” Vietnam, Afghanistan, Iraq. None of them had a clear objective beyond the initial regime change. Afghanistan lasted 20 years. Iraq cost $3 trillion, and when you factor in the interest payments, “we’ll be paying $10 trillion for Iraq by the time you get to the 2030s.” The US is still paying interest on World War I debt. It never ends. “There’s no intention of ever paying off any debt,” Armstrong says.
And they’ve been at it for decades with Iran too. The biggest problem with pursuing war with Iran is that sanctions never work. “Sanctions never worked even once in history,” Armstrong says. The thinking process he’s heard is that sanctions will hurt the people, which is their objective, and then the people will rise up and overthrow their government. “Hasn’t worked once.” China just built a railway right into Iran and now gets 80% of Iran’s oil. Sanctions just push countries together and harm powerless populations, not the governments. Iran now has the backing of Russia and China. When we took out Iraq, “I can tell you they were like, wow, we got away with it. Russia, China, nobody stepped in. Okay, we’re all powerful. That’s not going to work with Iran.”
There are some common and obvious tactics governments use to start their wars to distract from economic collapse. False flag operations are the standard operating procedure, Armstrong says. “Usually what they do is they create a false flag. That’s very very common.” World War I and the Lusitania. The US said they were neutral and would never transport weapons. Germany said they were using passengers as a shield. In 1987 they discovered the Lusitania and suddenly the government admitted the hall was full of ammunition. “They lie about everything.” Project Northwoods proposed killing Americans and blaming Cuba. Kennedy said no and didn’t want to go into Vietnam. “So they took him out.” Richard Nixon had the head of the CIA in his office and said on tape, “I know who killed JFK.” Next thing you know, Watergate happens. Nixon later gave up his Secret Service protection. Why? Because he didn’t trust them. Hitler burned the Reichstag to blame the communists. Weapons of mass destruction in Iraq never existed. And the Gulf of Tonkin in Vietnam? “We were never attacked. Even Johnson had said for all he knew they were shooting at whales that night.” Churchill admitted that “the truth is so precious in war, it needs a bodyguard of lies to protect it.” And it goes on and on. Armstrong is clear about this pattern. “I don’t care what side you’re talking about, left, right, whatever, they all do it. This is standard.”
But there are backchannel communications constantly. The Iranian press recently said Iran called the United States to warn that they assumed Israel would create a false flag attack involving America to blame Iran and get the US engaged. “They said it’s not us and we’re telling you in advance of what they’re trying to do.” Armstrong believes Trump told Israel not to take out the supreme leader because regime change in the Middle East is particularly dangerous. “When you have just a dispute that’s economic, all right, fine. I’ll give you this territory. You give me this back. But this is religious. There is no compromise here.” The problem is that the West drew the borders after carving up the Ottoman Empire. “We didn’t do it ethnically or religiously.” They need dictators to hold these artificial countries together.
Armstrong sees all of these moves leading to the political destruction of the European Union. “We’re looking at, basically, the political destruction of Europe. They never designed the Euro correctly from the beginning” because they never consolidated the debt. The US faces similar risks but over a longer time period. “We’ve always seen the political divide. If Trump says the sky is blue, they have to say it’s red. They just have to take the opposite. So the country is basically screwed that way. We’re too polarized to survive.” The computer shows the US will break up just as Europe will. “I live in Florida and it’s like Florida is a completely different country from California.”
The uncontrolled mass migration crisis in the US and the EU adds another layer of constant instability. Armstrong references the Roman emperor Valens. When Attila the Hun marched toward the Roman Empire, Valens allowed the Goths fleeing the Huns to come in. He thought he could rebuild the Roman army. “So he trained them in Roman tactics and they said, thank you very much. They turned around and waged war on him and killed him in battle.” Migrants also bring disease. “Most of the [American] Indians died from the diseases that we [Europeans] brought.” The Black Plague came from Asia. The Tartars in Crimea started catapulting plague-infected bodies into Italian forts. The Italians fled, took it back to Europe, and a third of the population died. “Plagues always come from wars.” The Spanish flu started with World War I soldiers. “Plagues come largely with migrations and migrations are also correlated with wars.”
Armstrong’s verdict is pretty damning. But he’s been talking this way for some time, and he’s not backing down at all. “This is like a giant chess board to these neocons and they could care less if we live or die. We’ve got to wake the hell up. Who’s it benefiting? It’s not benefiting anybody.” And we can’t look to the media. “The press just gets paid to put out the standard BS as if this is moral, we have to save humanity when you’re really destroying it.”
His conclusion echoes an ancient well known warning. “Sun Tzu said that no country has ever benefited from a prolonged war.” Armstrong talks about one of the first famous examples. King Croesus of Lydia went to the Oracle at Delphi to ask about waging war against Cyrus the Great from Persia. The Oracle said a great empire will be destroyed. Croesus naturally assumed he would win. “The empire that was destroyed was his.”
I’ve been following Martin Armstrong recently for his financial and geopolitical analysis. You won’t find his positions reflected in the media anywhere in the world. However, pretty much everyone who knows how the capital plumbing really works across global financial networks knows full well how where Martin sits. His knowledge is precise beyond measure. He can be hyperbolic at times so fair warning if you’ve never heard of him. He’s well worth a listen, though. He’ll expand your mind for sure.
Armstrong goes to Washington
Anyway, in October 2025, Martin was called in by the Trump White House for a briefing on Russia. They wanted him to use his backchannel resources and experience and develop a peace proposal that Putin would accept. Note that the request was not to satisfy the Europeans or the Ukrainians. Trump’s goal is Putin exclusively at this point. That’s important. So, Martin spent four days writing a 200-page report called “US & Russia: Reestablishing Peace.” I read the report. It’s a nice backgrounder. It fills in many interesting details to support the interviews Martin has given where he’s talking about Russia, Ukraine, Europe, and the United States.
After the initial White House meeting, however, he said he was disappointed and he’s expressed this view emphatically on multiple podcasts recently. Martin is prolific online so you can check any of them recorded after the White House meeting. What concerns him most is that Trump appears to be listening to the wrong people — specifically the Neocons and Europeans who he says are the greatest adversaries of the United States.
For example, Trump’s recent sanctions on Russia’s two largest oil companies (Rosneft and Lukoil) represent what Russian officials have called “an act of war.” And Martin agrees. He says that throughout history, economic sanctions have been recognized as acts of war. Britain counterfeited American currency during the Revolutionary War. Hitler counterfeited British pounds. Napoleon did the same. These actions undermined enemy economies to achieve military victory.
Europe: The Real Adversary
Martin is always clear: “Our greatest adversary is NOT Russia, but NATO and the European Union.” Europe is collapsing economically — Germany has shrunk for two consecutive years, bankruptcies in Europe are rising faster than since 2008, and both the United Kingdom and France have warned they may need IMF bailouts. Yet desperate European leaders believe they can conquer Russia and access its $75 trillion in natural resources, which would allow Europe to “rise again like the Roman Empire.” Well, that’s quite an ambitious goal, eh?
Macron in France apparently thinks Russia is weak enough to defeat. British Defense Secretary John Healey is preparing multinational forces for Ukraine and emphasizes deterrence and confrontation rather than peace. Europe needs an enemy for distraction from impending economic failures, Martin says strongly.
Also, the Neocons in the United States driving this agenda appear to have personal vendettas. Madeleine Albright, Victoria Nuland, and Merrick Garland all claim their families were persecuted by Russians. This isn’t geopolitical strategy. Instead, it’s personal hatred dressed up as foreign policy. And what about NATO? Well, Martin says that NATO lost its purpose when the Soviet Union collapsed, so it needs to present Putin as the next Khrushchev to maintain funding, power, and its reason for existence.
Trump’s Mistake
What bothers Martin is that Trump appears to be listening to these Neocons rather than pursuing the peace framework that makes the most strategic and economic sense. Martin’s Socrates computer model, which accurately predicted the 1987 stock market crash, the 1998 Russian default, and many other global events over nearly 50 years, targets 2026 as a Panic Cycle for war. The model shows zero chance for peace as long as Trump refuses to deal with warmongering Neocons and the inevitable economic collapse of the European Union.
The Peace Framework Armstrong Proposed
Martin’s peace proposal focuses on economic integration and not confrontation. Russia would end the Ukrainian war in exchange for honoring the original Minsk Agreement and allow Donbas self-determination through voting. The United States and Europe would lift sanctions in stages. Russia would commit to independent oversight, offer contracts for rare earths and critical metals, create special economic zones with investment guarantees, and pledge reforms including anti-corruption measures and transparency.
Putin has actually proposed cooperation in trade, technology, space, and Arctic development. He even suggested at the Trump-Putin summit in Alaska an $8 billion tunnel connecting Russia and the United States through the Bering Strait. These proposals reflect Putin’s understanding that free trade creates stronger peace incentives than continued confrontation. Joint ventures would remove the never-ending propaganda narrative that Russia intends to invade Europe and create real deterrents to war through economic interdependence. Trump generally supports the view of economic cooperation over warfare, but there are too many others in the administration pushing back.
Why Sanctions Always Fail
Martin emphasizes that sanctions have never worked historically. Cuba’s sanctions were imposed in 1960 and remain in place decades after Castro’s death, never achieving regime change. The same applies to Iran. Western think tanks and NGOs continue forecasting Russian economic collapse, but unemployment in Russia has declined for 26 years during Putin’s administration.
The Stark Reality
If Putin is forced to capitulate through economic and potential military destruction, Martin predicts this would trigger a coup by Russian hardliners, just like the coups that removed Khrushchev and Gorbachev. This would replace moderate Russian leadership with aggressive nationalism and make genuine peace impossible. The current situation mirrors post-WWI reparations on Germany that led to Hitler’s rise.
Martin’s message to Trump is stark. If you think you can destroy the Russian economy and force Putin to his knees, understand the reality of geopolitics. If someone comes into your house with a gun wanting to kill you, you shoot back. Russia views sanctions as preparation for destruction. Putin will push the button rather than watch Russia collapse. Martin’s been saying this for years, but I doubt the Russians would seriously start a nuclear war. There are simply too many other military alternatives, all of which are seriously destructive.
Nevertheless, the escalation begins now, Martin says, with the worst period coming in the first quarter of 2026. Trump must stop listening to Neocons and European warmongers before it’s too late. The only path to peace is economic integration, not the destruction they continually pursue. Martin’s computer model has proven him right many times in the past and he argues that this time the stakes are much higher — World War III.
Martin made his peace proposal freely available to the public on October 23, 2025, for anyone to freely distribute. In mid-November, Trump’s team called Martin back for a second meeting and told him that his proposals remain under consideration. Whether the administration will ultimately adopt his framework over the objections of the Neocons and Europeans remains to be seen. It also remains to be seen if Martin’s proposal had any influence in Trump’s latest peace plan to end the war.
I read The 2025 National Security Strategy. It’s well worth a look. There’s nothing that surprising in the document if you’re familiar with Trump’s positions. However, as an official American foreign policy strategy document, it’s an obvious break from decades of old and failed post-Cold War policies.
The document rejects the pursuit of global hegemony that dominated American elite thinking for decades and says that leaders sacrificed the nation’s industrial base and middle class while pursuing an impossible dream of worldwide dominance. The document also says that globalism hollowed out the foundations of American power and allowed allies to ride freely on American defense spending and entangled the nation in institutions that are hostile to sovereignty. For many Americans who have struggled economically, what’s getting rejected in the document should represent a welcome change for the future.
The document’s economic vision centers on reindustrialization. It also directly declares that “the future belongs to makers.” The strategy elevates industrial and manufacturing strength to the highest priority. The country must control critical supply chains, generate energy independence, and revive a sustainable industrial defense base. These changes are massive and will take time. They require strategic use of tariffs, reshoring entire production lines, and ensuring the nation never depends on adversaries for critical products. Most of this rhetoric is typical Trump, but to see it articulated in an official national security document from a White House intent on implementing the strategy seems new. When has an American president set a strategy based on a future of makers? That’s simply not the language of the elites we’ve been living under for what seems like forever. As someone who grew up in the construction industry and who now regularly mixes with engineers and scientists of all types, I like the makers reference a lot.
The reference to makers expands to all workers as well: “American policy will be pro-worker, not merely pro-growth, and it will prioritize our own workers. We must rebuild an economy in which prosperity is broadly based and widely shared, not concentrated at the top or localized in certain industries or a few parts of our country.” So, it’s not just the broad economy that’s being highlighted here. The strategy gets right down to making workers part of the country’s national security policy. That’s the middle class. That’s individualism.
Also interesting is that the only Founding Father cited in the document is Alexander Hamilton, who was known as an early architect of American industrial policy and pushing manufacturing over agrarianism. He said in the nation’s earliest days that America must never depend on outside powers for components necessary to defense or economy. By invoking Hamilton alone, the strategy signals a clear paradigm shift back to Hamilton’s view of economic nationalism, protective tariffs, and government support for domestic industry as the foundation of national power.
The strategy articulates core principles including peace through strength, a predisposition to non-interventionism, flexible realism, primacy of nations over international institutions (those would be the NGOs, of course), and insistence on fairness in alliances and trade. Border security becomes “the primary element of national security,” with the document declaring emphatically that the era of mass migration is over. Trump’s “Hague Commitment” requires NATO allies to spend 5 percent of GDP on defense, which most of those nations likely can’t afford given their social spending and likely won’t even attempt to fulfill. But we’ll see.
Trump’s agenda to push NATO countries to contribute more to military spending also comes within the context that the United States is now intent on “Ending the perception, and preventing the reality, of NATO as a perpetually expanding alliance.” That one sentence jumps right off the page in this document because the entire history of NATO has been based on never-ending expansion, which is one of the main points argued by Russia. Many people in the West have argued that NATO should have dissolved after the collapse of the Soviet Union. Perhaps Trump is building momentum for the United States to exit NATO in a phased process?
Regionally, the strategy announces what it calls a “Trump Corollary” to the Monroe Doctrine. This concept reasserts American preeminence in the Western Hemisphere through military readjustment, border security operations including lethal force against cartels, and commercial diplomacy to push out foreign competitors. In the Indo-Pacific, the focus is winning the economic future while deterring military conflict, rebalancing trade with China, and maintaining conventional military advantages particularly regarding Taiwan. Although this focus on the Western Hemisphere may seem new to most people, I can remember at least a decade ago similar discussions taking place in various geopolitical communities I follow. But back then the concern was an economic collapse of the American Empire much like the collapse of the old British Empire. Yet today, it seems like these moves aren’t forced from economic depression or a foreign enemy. The United States seems to be choosing to disengage from the globalist empire building strategies of the past.
Europe gets a lot of criticism in the document and the media is covering this issue way more than anything else in the strategy. But again, the information isn’t necessarily new given Trump’s pervasive rhetoric on Europe for many years. But I guess just embedding it into the nation’s official strategy position seems jarring to countries in the European Union and their supporters in the United States. The document strongly warns of “civilizational erasure” through migration, censorship, collapsing birthrates, and loss of national identity. The document also says that Europe has lost significant market share of global GDP in recent years, dropping from 25 percent in 1990 to 14 percent today. This trend down has been discussed for at least five years now so that’s not new either. However, to see it emphasized so heavily is surprising. The strategy calls for ending the Ukraine war to reestablish strategic stability with Russia, and it also encourages the growth of patriotic European parties seeking to restore civilizational self-confidence.
The Middle East is downgraded from a previously dominant focus of the globalists to a partnership and investment region for business deals. With America again a net energy exporter and Iran weakened by recent attacks, the historic rationale for previous strategy positions in the region has receded. The strategy also supports expanding Trump’s Abraham Accords while avoiding forever wars. Given the region’s conflicts in recent years, it’ll be interesting to see if this new collaborative focus can be maintained.
This document represents intentional triage, and the change is dramatic over previous administrative strategies. It elevates the Western Hemisphere and Indo-Pacific region, while at the same time it seems to reduce emphasis on Europe and the Middle East. It insists American policy must serve American interests first, that allies must contribute proportionally to defense spending, and that the era of America underwriting global order at the expense of its industrial base has ended. The strategy leverages Hamilton’s early economics, the Monroe Doctrine’s hemispheric focus, and Reagan’s peace through strength to reassert and restore traditional American principles previously abandoned in pursuit of globalist ambitions that weakened rather than strengthened American sovereignty.
Martin Armstrong has spent decades tracking patterns that most analysts miss. His approach reveals an obvious problem in that the world operates on quantum mechanics principles whereas decision makers rely on linear models. “The average person just looks at classical physics,” Armstrong says. “The difference is in classical physics they reduce everything to a single cause and effect: this happened because of this. Whereas in quantum mechanics, it’s a complexity, not a single cause and effect. Everything’s interconnected.”
Armstrong stumbled on his now-famous 8.6-year cycle while researching financial panics dating back to 1683. What began as economic modeling evolved into something more profound: a system that predicts not just market crashes but wars, revolutions, and the collapse of civilizations. When he broke down the cycle, it revealed itself as 3,145 days. “It was like oh, that’s pi,” Armstrong says. The pattern proved fractal, appearing throughout nature and history.
“The vast majority of analysis out there is linear, which comes from the classic physics side. And it’s always wrong,” Armstrong says. He uses climate change predictions as an example: “Went up one degree this year, so it’s going to do that forever, and we’re all going to die in 50 years. There’s a cycle to everything. Nothing goes up forever.”
Europe’s Economic Death Spiral
The pattern emerges with brutal clarity when you look at Europe’s current predicament. Germany, which represents 25% of the EU’s GDP, has suffered devastating economic contraction through a triple blow: COVID lockdowns, aggressive climate policies, and sanctions against Russia. Armstrong estimates that the German economy has actually shrunk by a minimum of 3%, possibly up to 5%. “By that I mean not a recession. I’m talking about the number of possible jobs has declined.”
“The EU is doomed. It cannot recover,” Armstrong says. “They’re still running around with the climate change nonsense. And this is why they need war with Russia, because no matter what government you look at, when they’re in trouble, they need an external enemy.”
Armstrong says that Biden’s response to rising gasoline prices as a perfect example. After imposing sanctions on Russia that drove up fuel costs, Biden blamed “Putin’s inflation, not his.” Canadian Prime Minister Trudeau ran against Trump rather than focusing on domestic issues. “You need an external enemy when you have nothing else to offer.”
The fundamental problem traces back to the EU’s flawed structure. “Whenever you create a centralized government, they will always exercise everything in their own possible power,” Armstrong says. He points to Russia’s history as a cautionary tale. Lenin originally proposed that each Soviet republic retain its sovereignty, even writing a letter warning against letting Stalin succeed him. “It’s widely assumed in Russia that Stalin may have even poisoned Lenin.” Once Stalin seized power, he grabbed everything for Moscow. “Once it grabs that power, it’s not going to give it back.”
Europe is following the same trajectory. The AfD in Germany faced calls for banning, then blanket accusations of Nazism. Now it stands as the number one party in the country. Populations across Europe are rejecting centralized control, but Brussels refuses to give up power.
The Mercantile Model’s Fatal Flaw
Germany’s economic approach reveals another critical failure. “Germany has followed the mercantile model,” Armstrong says. “We build stuff, we sell it to you, we get rich.” The problem is that wealth never reaches the people. Germans face the highest tax rates in Europe. “If you can Google it, you’ll see the net worth of an average German is less than that of an Italian.”
Armstrong contrasts this with the American model that China now attempts to emulate. “China has looked at both models. It’s trying to copy the United States. It’s trying to create a consumer-based economy.” The numbers tell a stark story. “The capitalization of the New York Stock Exchange, just one exchange, is worth more than all of Europe combined.” When Home Depot launched its IPO, it was worth more than all the IPOs of Europe combined. Those valuations are difficult to image especially if you are consume CNN all day every day.
Europe’s hostility to capitalism hamstrings its own economy. Armstrong says that during World War I, European governments shut down all stock markets, and this impulse toward central control continues today. “This is the push for the digital currency in Europe. They go to a digital currency and that’s it. You can’t get it out.” Spain recently announced that citizens cannot withdraw more than $3,000 in cash without government permission, Armstrong says.
“This is freedom? Oh, Putin’s a dictator. It’s beginning to look the other way around. Everything that they accuse Putin of, they are doing. Denying free speech. It’s becoming much more like a socialistic communist state and it’s not sustainable.”
The Debt Trap and NATO’s Survival Instinct
The numbers paint a grim picture. Britain spends over 3.5% of GDP on interest payments alone. Now NATO demands an additional 5% for military spending. “What are we talking about here? We’re talking about at least 10% of GDP is now going for something that totally has nothing to do with improving the economy.”
NATO itself operates as a self-perpetuating bureaucracy searching for justification. “NATO’s sole purpose is war,” Armstrong states flatly. “I’ve seen the internal memo stuff. When all the money was going to climate change, they were afraid that they’re losing money. That’s their salaries for doing nothing. That’s their pensions for doing nothing. So what do they do? They have to keep saying, ‘Oh, Putin wants to invade Europe.’” But what does Europe have that Russia wants? No one asks that question when everyone knows from history that countries invade each other to acquire natural resources. What’s Europe’s natural resource valuation?
Armstrong finds this narrative absurd. “Putin’s been there since 1999. Why hasn’t he? Because there’s nothing there. Europe has tried to invade Russia three times.”
The Linear Thinking That Drives War
The neoconservative approach particularly troubles Armstrong because it exemplifies dangerous and limited linear thinking. Their strategy reduces complex geopolitical situations to simple formulas: remove this leader, impose these sanctions, achieve that goal. “Does anybody ask, okay, if you’re successful, what comes next? They never ask that question.”
Armstrong met neocon and warmonger Bill Kristol in the 1990s. “He told me if we take out Saddam Hussein, Assad out of Syria and Gaddafi, will bring peace to the Middle East. I said you’re out of your mind.” The problem stems from how borders were drawn after World War I. “We drew the borders carving up the Ottoman Empire. We didn’t do it ethnically or religiously.”
Iraq cost $3 trillion directly, but when factoring in ongoing interest payments, the true cost will exceed $10 trillion by the 2030s. “There’s no intention of ever paying off any debt,” Armstrong says. Afghanistan consumed 20 years. Vietnam had no stated goal. “There is never an objective.”
Armstrong traces the debt burden even further back. “We’re still paying interest on World War I. They never pay anything off.” The national debts of Europe and the United States don’t fund domestic programs or help citizens. “It goes to interest to keep the debt rolling and to war projects constantly.” The wars are always for them. Never for us.
How Markets Predict War
Armstrong’s computer model tracks capital flows, revealing that someone always knows before conflict erupts and this is never revealed on the evening news. “When I put all this together, I basically correlated it. And what comes out of it is very interesting. War does not take place when everybody’s fat and happy. Turn the economy down and that’s when you get war.”
Before the Hamas attack in October, defense stocks began rising a week earlier. Before Lebanon’s civil war in the 1970s, his computer model detected the instability eight days out by tracking massive currency movements. “By 1998, I had understood that somebody always knows.”
The London Financial Times published Armstrong’s 1998 forecast that Russia would collapse within 30 days. Then Russia collapsed right on schedule, triggering a long-term capital management crisis. “That’s when the CIA came in and said, ‘All right, fine. We’ve been monitoring you guys for quite some time.’ And they wanted me to go down and build the model for them.” Armstrong refused to sell his system or reveal the source code, beginning what he calls his “nightmare with government” where he spent years in prison.
“When you look at the markets they are objective. They’re not emotional and they show you what’s happening,” Armstrong says. “And I can tell you our computer warns that Europe will lose. It’s too much in a weak state economically.”
The Resource War Hidden in Plain Sight
Behind the propaganda about democracy and never ending rhetoric about external threats, Armstrong identifies the real motivation for targeting Russia. “Russia is the richest country in the world from natural resources. Even Maggie Thatcher said they’ve got everything from platinum, gold, oil, timber.” Estimates place Russia’s natural resources at $75 trillion, which is double the entire US national debt! Some analysts point out, however, that the US also has massive natural resources, but they are not monetized at present. But Europe? That remains unclear given current EU policy.
“There are some of these people, just like the crazy ones in Israel, thinking that this can be the Armageddon and we get the second coming,” Armstrong says. “In Europe you have the same kind of delusional ideas and it’s like if we can conquer Russia then we’ll have the 75 trillion, the US will be back to this vassal state, and we will rise again like the Roman Empire.” Perhaps that’s why they hate Trump so much? Time will tell.
China built a railway directly into Iran and now receives 80% of Iran’s oil. Sanctions that were supposed to collapse the Iranian economy instead drove it into deeper partnership with China and Russia. “They think they put on these sanctions, it will hurt the people, which is their objective. The people then rise up and overthrow their government. Hasn’t worked once.” How many sanction packages have the Europeans implemented since the start of the Russia-Ukraine war? I think it’s up to 18 at this point. The result? A much stronger Russia and a much weaker EU.
The Proxy War Strategy
Armstrong pulls no punches about NATO’s approach to Ukraine. Boris Johnson made the front pages of Norwegian newspapers by stating bluntly “that Britain is at war with Russia. This is a proxy war with Russia.” Multiple neocons in the US have said similar statements.
The Ukrainian conflict itself emerged from Western intervention. “We created the whole Ukrainian war. Victoria Nuland was over there handing out sandwiches in Maidan. You had John McCain on the stage over there. ‘We’re behind you. Overthrow your government. America’s behind you.’” Armstrong asks people to imagine the reverse scenario: “Can you imagine if Lavrov from Russia stood on the steps of the capital building in US, ‘Overthrow your government. We’re with you.’?”
When Ukraine nearly reached a peace agreement, Boris Johnson personally intervened. “There was a peace deal in Ukraine. He hops on a plane, goes over there, and this made the front page of the press in Ukraine. ‘No, you’re not allowed to sign a peace deal. We want war.’ The death toll was basically 130,000 at that point. It’s now over a million.” Yet the propaganda continues daily.
Armstrong’s assessment is brutal: “Do they care if any Ukrainian is still standing at the end of the day? No, they don’t.”
US Senator Lindsey Graham inadvertently revealed the strategy on tape: “This is the best money we ever spent to kill Russians.”
The False Flag Playbook
Armstrong says that governments routinely lie to justify wars, often creating incidents designed to manipulate public opinion. “Usually what they do is they create a false flag. That’s very, very common.”
The Lusitania provides a textbook case. The United States claimed neutrality while insisting the passenger liner carried no military cargo. “Germany said they are using passengers as a shield to get arms to Europe. US said no way are we doing that.” When divers discovered the wreck in 1987, “suddenly the government says well be careful, the hull was full of ammunition.”
Project Northwoods revealed how far governments will go. Declassified documents showed the US Joint Chiefs of Staff “actually proposing to kill Americans, blame it on Cuba” to justify invasion. “Kennedy said no and didn’t want to go into Vietnam. So they took him out.”
Hitler used the Reichstag fire to consolidate power. The Gulf of Tonkin incident that launched full American involvement in Vietnam never happened as reported and that was documented in detail in congressional testimony . “We were never attacked. Even Johnson had said for all he knew they were shooting at whales that night.”
Iraq demonstrated the pattern’s continuation into modern times. “Weapons of mass destruction never took place.” The entire justification for invasion rested on claims later proven false. “There isn’t a single war that has taken place that they haven’t lied about.” Remember, wars are for them, not us. We just have to fight them, that’s all.
Armstrong quotes Churchill’s famous observation: “The truth is so precious in war, it needs a bodyguard of lies to protect it.” Recently, the Iranian press reported contacting the United States with a warning about Israeli intentions. “They assumed that they had information that Israel would create a false flag attack to do with America to blame Iran to get us fully engaged there and they said it’s not us and we’re telling you in advance of what they’re trying to do.”
“This is standard,” Armstrong says. “I don’t care what side you’re talking about, left, right, whatever, they all do it.”
The Coming Fracture
Armstrong’s model predicts political fragmentation for both Europe and America. “The computer shows the US will break up just as Europe will because it’s not sustainable.” He notes the vast differences between American regions. “I live in Florida and it’s like Florida is a completely different country from California.”
The root cause traces to debt accumulated through warfare. “The vast majority of it is nothing but the accumulation of war debts, period. It does not benefit us. Then they have to keep raising taxes. ‘Oh, let’s tax the rich.’ For what? We’re doing this because you went to war. No country has ever benefited from a prolonged war.” Yet modern governments ignore this ancient and practical truth and instead pursue never ending conflicts that drain treasuries and populations.
Maybe the most instructive example comes from King Croesus of Lydia, among the wealthiest monarchs of the ancient world. “He went to the oracle at Delphi to ask advice about waging war against Cyrus the Great from Persia.” The oracle famously predicted that “a great empire will be destroyed.” Croesus naturally assumed this meant his enemy would fall. “The empire that was destroyed was his.”
The oracle’s ambiguous prophecy captures something essential about warfare’s uncertainty. Linear thinking assumed a straightforward interpretation and outcome. Complex reality delivered the opposite result. And analysts cited endlessly in the media miss it every time.
Armstrong’s final assessment carries the weight of decades spent watching governments repeat identical mistakes. “You’re going to be manipulated. You’re going to be listening to the press and they just get paid to put out the standard BS.” Understanding the cycles doesn’t stop them but allows individuals to prepare and respond accordingly. The 8.6-year cycle continues whether acknowledged or not. Wars emerge from economic decline whether populations understand the mechanism or not. False flags will be created because they always are. They work every time and these cycles will continue.
Empires will fall. The question is whether people will recognize the patterns before or after suffering through them again.
In two wide-ranging podcast conversations, financial analyst Tom Luongo and precious metals trader Vince Lanci map out a massive shift in how global markets work. Their discussions move way beyond the trivialities of daily price action. Instead, they’re looking at structural changes that upend everything we’ve assumed about money, power, and trade. Just listening to a few minutes of these guys going at it and you realize that we’ve already moved into a different world. Nothing they talk about ends up on the news. That’s how you know.
The picture Luongo and Lanci paint can be unsettling for those who just follow surface level headlines from talking heads in the media and independent analysts who know nothing. The comfortable postwar financial order in the West that governed the world for decades is breaking down. In its place, a murkier and more fractionalized system is emerging. For example, gold and silver matter more than most people realize, as this podcast reviews. And the battle lines have already been drawn, even if most observers haven’t noticed yet because they are stuck arguing old narratives.
One wonders what it’ll take for people to wake up.
Lanci gets straight to the point when discussing what’s happening in commodity markets. “The right price is the exchange that has the most volume,” he explains. For decades, that’s been the COMEX in New York and, for gold specifically, the London Bullion Market Association (LBMA). But something has now fundamental shifted.
China opened the Shanghai Futures Exchange with physical settlement only. The gold that arrives there stays there. And increasingly, that’s where the real action is. Over the past several years, the pricing arbitrage between Shanghai and the COMEX has grown wider and more persistent—something that rarely happened before.
“Over the last say six months or eight months with Trump,” Lanci notes, “with the tariff thing, the vaults are being built, the network vaults are being built, the internationalization of the yuan.” What he’s describing is a wholesale repositioning of where gold actually sits and where trading happens. This isn’t accidental. China and Russia have been quietly executing a de-dollarization strategies for years—moving away from dependency on Western financial systems and building parallel structures.
Luongo connects this to a larger geopolitical shift. He suggests the Trump administration finally woke up to what’s been happening. For years, China and India quietly bought precious metals while the West wasn’t paying attention. But now the strategy has become explicit. “The US finally woke up and started paying attention to these facts,” Luongo says. “China has been taking our copper and silver scrap out of the US for the last ten years under the radar.”
But Trump’s election changed the calculus. Between his victory and his January inauguration, Luongo believes China and India accelerated their positioning. They knew tariffs were coming. They knew the geopolitical relationship with America was about to shift dramatically. So they moved faster. “Trump’s going to be in office. He did tariffs last time, he might do it this time. Let’s start to dedollarize a little faster,” Luongo suggests was China’s calculation.
What’s notable is that Treasury Secretary Scott Bessent appears to understand this game. Bessent has a front-row seat to how financial systems actually work. He traded with George Soros. He knows how currencies get manipulated, how gold markets work, where the bodies are buried in the global financial system. “Bessent understands these things because he’s had a front row seat to how to manipulate currency, bond, gold and silver markets,” Luongo explains. When Trump brought Bessent in over other candidates, it signaled that serious financial restructuring was planned.
The response has been calculated and multifaceted. The U.S. is finally protecting its metals the way other countries protect theirs. It’s just doing it quietly. JP Morgan, for instance, recently became the sole custodian for the GLD and SLV ETFs—the largest gold and silver funds in the world. “We’re doing the same thing they’re doing,” Lanci explains. “We’re just wrapping it in different paper.”
But here’s what makes this significant: GLD and SLV operate fundamentally differently than the Shanghai Exchange. You can trade these funds all day long and get settled in dollars. But you cannot take physical delivery. The only people who can access the underlying metal are authorized bullion banks and government primary dealers. It’s the inverse of Shanghai’s model—a trading vehicle for price discovery with no physical exit for retail investors.
“This is the money shot,” Lanci says. “Folks understand that the end of globalization is happening. And it’s far more than just chips, solar panels, oil. This is the fundamentals of the global monetary system are changing.”
Understanding Backwardation and Market Structure
To understand what’s truly happening, you need to grasp a concept that confuses some investors: backwardation. Lanci is careful to define it precisely because “people are throwing it around like it’s something that you can just use like a term of art.”
Here’s the basic idea: In a normal commodity market, a futures contract that expires thirty days from now costs more than the spot price (the price to buy it right now). This is called contango. The price difference reflects carrying costs—storage, insurance, the interest you pay to finance holding the commodity.
Backwardation is the opposite. The spot price trades higher than the futures price. You’re paying a premium to get the commodity now rather than waiting for delivery later. This signals scarcity or urgent demand. Someone needs it right now, not in the future. They’re willing to pay extra for immediate access.
In normal markets, futures contracts trade at a premium to spot prices. This premium reflects the cost of carrying the commodity forward—essentially the interest you pay to hold it. Gold should trade this way because gold doesn’t decay or get consumed. “The difference between the price of gold now and the price of gold a year from now is interest rates only,” Lanci explains.
This is exactly what’s happening in silver. “Silver is trading forty cents over spot,” he says. And more strikingly, this isn’t just a near-term phenomenon. The entire silver curve is backwardated out months. December futures, which should be cheaper than front-month contracts, are actually more expensive when you account for the full term structure.
“So silver’s trading $48 in spot. It should be roughly, let’s call it every month should add $0.20 to it. Okay, so $48 in spot means $48.20, $48.60, $48.80 for the December futures. That’s a $0.60 spread,” Lanci explains. “Not only is silver backwardated from spot to futures, it’s backward dating from spot to 90-day futures.”
This matters enormously because it exposes a structural shortage. The difference between gold and silver is that gold isn’t consumed. All the gold ever mined still exists somewhere. Silver, by contrast, is industrially critical. It’s used in solar panels, electronics, batteries. When you use it in a phone and that phone ends up in a landfill, retrieving that silver is expensive and complicated.
“Silver production has been in deficit for the last x amount of years and that deficit is still there,” Lanci notes. The supply isn’t coming from new mining—it’s coming from above-ground stocks and, increasingly, scrap. But here’s the problem: there’s a shortage of accessible scrap at current prices.
How China Is Reshaping the Silver Market
China isn’t waiting around hoping prices will rise to encourage recycling or new production. Instead, they’re going directly to the source. Lanci has been tracking this closely, and what he’s found is interesting.
“China is importing silver before it’s refined. They’re going down the supply chain,” he explains. “They’re importing raw silver ore, and they’re doing the refining now.” This is a major shift. Historically, mining companies handled refining themselves. But China is bypassing that entirely, importing ore directly from producers in Latin America—particularly Mexico—and handling the processing in-house.
The evidence of this appears in Mexican lease rates. When lease rates go negative, it signals that silver is scarce enough that people are literally paying to lend it out. This happened in Mexico recently. “The lease rates in Mexican silver go negative when there’s less silver available,” Lanci says. Mexican producers would normally lease out their silver for a fee and get paid to lend their metal. But when China shows up ready to buy the metal directly at current spot prices, producers sell rather than lease.
This creates a particular problem for base metal producers and refiners. Because silver isn’t a primary product for most mining operations—it’s a byproduct of copper, zinc, and nickel mining—the availability of silver is tied to the production of these other metals. When base metal miners need to finance operations or hedge future production, they typically sell silver futures to raise capital or lock in prices.
“If you pull up certain bank reports, they will throw the silver in with the base metals. They won’t even put it in the precious metal side,” Lanci notes. This classification matters because it means the banks managing silver positions think about it in commodity terms, not monetary terms. They’re focused on near-term supply and demand rather than long-term value storage.
The COMEX will likely continue functioning, but its role will shift. Gold can move off futures markets because it doesn’t get industrially consumed—you don’t need price discovery mechanisms for something that just sits in vaults. But silver is different. “You cannot run a modern supply chain for base commodities that matter in second, third, fourth, and fifth order goods if you don’t have a working future,” Lanci insists. The COMEX will survive as a price discovery mechanism for industrial metals, even if the physical silver passing through its vaults decreases. The metal flows through but doesn’t accumulate.
The Dollar Splits in Two: Recapitalizing America
One of the most provocative ideas to emerge from the these conversations between Luongo and Lanci is the notion of a bifurcated dollar. The offshore dollar and the onshore dollar are becoming separate currencies with different values and different rules. And the ultimate goal, Luongo argues, for the Trump Administration is to recapitalize the American middle class. And that scares the globalists to death because they’ve been draining it for decades.
As usual, Luongo is especially blunt about what needs to change: “We want the FED to stop being the fucking Bank of England! We need to get back to something closer to the original conception of the FED.” For decades, the Federal Reserve has operated as an offshore financial tool, managing the global dollar system and supporting Wall Street rather than Main Street. That era is ending.
The strategy is deceptively simple. Make capital cheap onshore and expensive offshore. “The United States seeks to keep liquidity deep in the US, which will mean a weaker dollar,” Luongo explains. “That’s all very inflationary, I know that, but that’s what we’re talking about here.” A weaker dollar at home means cheaper borrowing costs for American businesses and consumers. It means small companies can borrow to expand. It means families can buy homes. It means capital stays in America rather than fleeing to offshore havens.
Meanwhile, an expensive offshore dollar restricts capital flight and forces foreign actors to either invest in American assets or pay premium rates. This two-tier system rewards those who play ball with America and punishes those who don’t.
Luongo lays out the mechanics clearly. “We want a dollar to be strong for trade purposes, not for parking lot purposes,” he says. The problem has been that anyone could park money in dollars cheaply, making the currency artificially strong for decades. This hurts American manufacturing and competitiveness. It’s why so much manufacturing left the United States—you couldn’t compete when the dollar was overvalued due to it being the world’s parking lot.
The solution he believes being implemented is a market access charge. Think of it like ATM fees. If you want access to American markets and the dollar, there’s a price. “So you say you can no longer convert your euros into dollars free of charge,” Luongo describes. “There’s a contract with us if you want free access to our nightclub beyond the velvet ropes, you have to be a member. And to be a member you have to cut a trade deal and you have to invest money in foreign direct investment, and we’re going to give you carte blanche dollars in dollars out.”
The effect of this strategy could be substantial. “By draining the world of the silver and gold and then collateralizing it some way for domestic purposes,” Luongo suggests, “that’s your path to a lower cost of capital dollars for US domestics and US corporates versus anybody who needs to borrow dollars who still short them and they’re going to borrow them at higher rates.”
The mechanics work through what Luongo calls a “market access charge,” similar to how the federal government might charge differently for domestic versus foreign access to resources. Countries that cut deals with the United States—like Saudi Arabia’s recent $600 billion investment—get favorable dollar access. Others don’t.
Tariffs serve a similar function. “The tariffs are the lever by which to turn that crank,” Luongo explains, “to keep that arbitrage, that wall up.” The goal is to make importing into the U.S. expensive enough that companies either accept higher prices or set up production domestically. Either way, dollars stay domestic rather than flowing out to pay for imports.
But there’s another piece: the shift away from the euro-dollar system toward SOFR (Secured Overnight Financing Rate). Both Luongo and Lanci view this as foundational. The euro-dollar market—offshore dollar lending outside Fed control—has been a mechanism for financial manipulation for decades. It allowed London and EU branches of one New York bank to create essentially unlimited dollar credit without direct Fed oversight via LIBOR (London Inter-bank Offered Rate).
“The two most evil markets in the world in 2022 where the euro dollar futures market and the gold futures market,” Lanci says bluntly. But the euro-dollar futures market is dying. “The volume on the euro dollars contract dropped off like a rock as SOFR became the law of the land,” he notes. The Fed has essentially killed it by making SOFR the official reference rate. SOFR is transparent, secured, Fed-controlled, and domestic.
This isn’t just about interest rates or financial mechanics. It’s about who controls the flow of money around the world and who sets the rules. These questions haven’t been seriously contested since the postwar order took shape. Now they are.
The Buffett Precedent: Why Silver Futures Matter
To understand why a functioning silver futures market is critical, Lanci takes us back to 1997. Warren Buffett bought a massive position in silver and demanded physical delivery. This caused a crisis.
Silver producers had been selling futures contracts they didn’t yet have physical metal to deliver. When Buffett took delivery, the market faced a genuine shortage. Producers would have been wiped out. But because there was a functioning futures market with proper hedging mechanics, the problem could be solved.
Here’s the key thing that happened: the front-month contract (for immediate delivery) spiked from $4.50 to $7.47. But the back contracts—silver for delivery months later—barely moved. “The backs didn’t move,” Lanci recalls. This pattern reveals something crucial about how markets work.
In a normal market like gold, where the metal isn’t consumed and just sits in vaults, the entire futures curve moves together. If spot gold is $4,500, then next month’s gold might be $4,510, and the month after that $4,520. A steady upward slope across all delivery months.
But silver is different. When Buffett suddenly demanded immediate delivery, only the front month exploded in price. The market was screaming: “We need silver right now and we don’t have it.” But the back months stayed calm because that silver wasn’t needed for months. Producers could eventually mine it. So those later contracts had no urgency.
Here’s what happened next: the exchange reported to Buffett that producers would go bankrupt if he took delivery. So Buffett made them an offer. He took delivery of the entire position but then loaned it back to the producers for one year. The interest rate for this loan was determined by market prices—about forty percent per annum. Buffett got forty percent returns in cash, plus he got the silver delivered to him one year later.
“Had there not been a functioning silver market, we would not have been able to satisfy Warren Buffett,” Lanci emphasizes. “The spot market would have gone to infinity. There would have been no way to measure what it’s worth a year from now. There would have been no functioning free market.”
This is why both guys insist the COMEX must survive as a price discovery mechanism, even if most physical silver never sits in vaults there. You cannot manage future production and supply without futures contracts. You cannot secure resources for the future. You cannot guarantee that next year’s phones will have silver in them.
“If you don’t have a way to price future production, and this is key in a capitalist society, then you have no way to secure future resources,” Lanci states flatly.
The Goldman Sachs Hedging Game
Goldman Sachs provides a practical example of how banks use precious metals strategically. Lanci has been watching their behavior closely for years, and he’s noticed something important.
When Goldman gets bullish on gold, they buy gold but simultaneously short silver—an equal dollar amount of each. “You buy a million dollars in gold, you sell a million dollars in silver, and so how much money you tying up? Nothing. You’re doing a metals cash trade. You’re doing a carry trade,” he explains.
The reasoning is that gold is a precious metal—a pure monetary play. Silver is a hybrid. It has monetary value but also industrial uses. If Goldman wants pure exposure to precious metals strength, they use gold. If they want to hedge that exposure, they use silver shorts.
This pattern worked for twenty years. Every time Goldman recommended gold, silver lagged in the resulting rally. Every time they recommended copper, silver lagged again. “They recommend copper, watch silver lag. They recommend gold, watch silver lag,” Lanci says. “For the last twenty years, I have known that, and I’ve watched it, and I’ve said, okay, they recommend copper, watch silver lag in the rally, and it lacks.”
But about a year ago, something shifted. Goldman stopped the hedging game. They started getting bullish on copper without shorting silver to finance the position. Banks more broadly stopped claiming that silver tarnishes and shouldn’t be bought by central banks. The tone changed completely.
“Now, about a year and a half ago, silver started to percolate, and there was a report that came out from a bank,” Lanci recalls. The bank claimed silver should never catch up to gold because “silver’s not being bought by central banks” and “silver tarnishes.” Then, remarkably, they never said anything negative about silver again.
Why? Because the dynamics shifted. When macro-discretionary funds realized all metals were entering a new bull market, they adjusted their positions. Funds that had been long gold and short silver—a common positioning—covered their silver shorts and sold half their gold. Now they’re betting on silver outperforming in the next leg higher.
Central Banks Know Something We Don’t
Both Luongo and Lanci believe central banks (particularly the Federal Reserve) understand what’s coming. They’re quietly accumulating physical gold while also appearing to run their regular operations. Luongo is blunt about it: “If you open the Fort Knox vaults you’ll find moths and IOUs,” he jokes, but then adds seriously, “I think we probably have as much, if not more gold” than official records claim.
The key insight is that gold is being quietly repatriated. When JP Morgan was called on old loans of gold tied to derivative positions, the bank bought more than it was obligated to return. Then it used those profits to buy even more. This created a cascading effect where more gold was accumulated than was ever lent out.
“If I’m JP Morgan and my note’s getting called and I have to buy, let’s say, ten tons of gold, I’m gonna buy twenty because I’m JP Morgan,” Lanci explains. “And then when you use that other ten to buy, I’m gonna use that as the ten and then hedge it and use the profits off the heads to buy another five.”
The Basel III regulatory framework seems to have triggered this process. When Basel III requirements for gold holdings increased, JP Morgan announced it was moving its gold derivatives from the FX books to the gold books—essentially exposing previously hidden positions. Then convictions were handed down for traders involved in gold price manipulation. Then JP Morgan became the custodian for GLD.
“This is all that’s happened from here,” Lanci observes. “The US is supporting GLD. They’re not going to let it go under. GLD will become the sole way that you can invest in gold.”
Mercantilism Returns
Luongo uses a term that echoes centuries of economic history: mercantilism. This is the system of national economies protecting their resources, running trade surpluses, and accumulating precious metals as financial backing.
“Tariffs are the lever,” he explains. “Ring fencing our own natural resources, find self finished products. That’s the essence of the mercantile model.” It sounds archaic—and in many ways it is. But it also makes intuitive sense. If you control your own resources and you don’t rely on global supply chains that can be disrupted or weaponized, you have power.
Countries around the world are already doing this. Ghana requires payment for gold in gold. South American nations are demanding higher payments for silver. The BRICS nations are rejecting requests for lithium without technology transfer for battery production. The U.S. is just being quieter about it.
You cannot run a modern supply chain for base commodities that if you don’t have a working future, Lanci says. This is why the COMEX survives even if it empties. Industrial metals—copper, aluminum, nickel, lead—require futures markets to function. Supply chains depend on the ability to lock in prices months or years into the future.
China and Russia understand this perfectly. They’ve been accumulating gold for years and positioning themselves for a fragmented global economy. The U.S. is waking up to the same strategy.
The Payment Chain Is the Real Story
Here’s an insight from the conversations that ties everything together: supply chains run forward from production to consumption. Payment chains run backward. When you sell something, money flows back from the buyer to the supplier to the refiners to the miners.
“As the BRICS were protecting their physical commodities, and our supply chains were broken, and we have to repeat, we have to start digging here, we have to start getting oil domestically, silver from Latin America,” Luongo explains, “the FED was smartly repatriating our payment chains, because if the supply chain is broken, then the payment chain is vulnerable to other countries.”
This is why gold repatriation matters so much. If your supply chains are broken, you need to control the payment systems. You need to know where the money is. You need to be able to block foreign access if necessary.
“That’s why I keep watching credit spreads between” currencies, Luongo says, and that’s why SOFR replacing the euro-dollar LIBORsystem matters. The Fed regains control over dollar pricing. The U.S. regains control over its payment system. This sets the stage for an onshore dollar that’s cheaper (weaker) for domestic capital and an offshore dollar that’s more expensive (stronger) for international transactions.
London’s Shadow Still Looms
Perhaps the most controversial argument in their discussions concerns London and British influence over the American financial system. Luongo is unsparing in his critique and has come to his opinions over many years of analysis. He argues that Britain, having lost its empire, found a way to preserve its power through financial manipulation. The LBMA, the euro-dollar system, the Bank for International Settlements—all of these are tools used by what Luongo calls the “high table” to maintain dominance.
“The Crown technically owns all of these assets. The Crown Corporation, your British East India company morphed into and became the IMF (International Monetary Fund), the Bank of International Settlements, all of this stuff, it’s all the same company,” Luongo claims. It’s a bold theory, and one that requires understanding how historical institutions transformed after WWII. Britain couldn’t maintain a traditional empire, so it evolved into something more subtle—financial control through banking systems and currency manipulation.
His theory is that American neoconservatives are often proxies for British interests, pushing the U.S. into wars that benefit London’s geopolitical position. “We fought Britain’s war in World War One, we fought it in World War Two, and now they’re trying to get us to fight the same war in World War Three,” he says passionately. From his perspective, the pressure to support Ukraine, the rhetoric about “democracy” vs. authoritarian regimes, the constant focus on confronting Russia—all of it traces back to London’s centuries-old strategy of preventing any single continental power from challenging British naval and financial dominance.
George Soros, in this framework, isn’t acting independently but as an agent of London. “George Soros has been working for MI6 since the day he was recruited seventy years ago,” Luongo claims. This is where Luongo’s analysis gets into murky territory. The 1992 pound crisis that made Soros famous? According to this theory, it was designed to destabilize Britain’s currency specifically to force the country into the European Union’s orbit—and therefore under tighter control from European financial elites aligned with British interests.
What’s relevant about this framework, whether you accept it or not, is that it helps explain why Trump’s approach feels so threatening to the established order. Trump is disrupting the postwar consensus that kept America committed to supporting Britain’s financial hegemony. He’s questioning NATO, demanding European allies pay more, questioning endless military commitments abroad, and most importantly, he’s reorienting American policy toward American interests rather than maintaining the global system that benefits London and factions of Wall Street in equal measure.
Luongo sees Trump not as implementing some grand strategy but as breaking the rules of a game he finally understood was rigged against him. “Trump is an asshole, but he’s our asshole, and he knows how those assholes think,” Luongo says bluntly. Whether Trump is motivated by ego, by a genuine desire to rebuild America, or by some combination, his willingness to disrupt the system and reject the advice of the foreign policy establishment is what matters. He’s willing to do things previous presidents wouldn’t do because they were too embedded in the old system.
Lanci approaches this more cautiously. He applies his own analytical framework: “Who benefits and who suffers?” When he runs this analysis on major geopolitical events, the arrows often point toward the same conclusion—the existing financial establishment wants to maintain control. But he’s less committed to the specific historical narrative about British influence. What he cares about is whether the math checks out. And on the question of whether the West is losing financial dominance over commodities and precious metals? The math is clear.
A System Breaking Apart
What makes these conversations compelling is that both men see the same underlying process happening across multiple domains simultaneously. Financial markets are fragmenting. Supply chains are reshoring. Central banks are accumulating precious metals. The dollar is bifurcating. Mercantilism is returning. And most importantly, the postwar consensus that kept America tied to defending Western European and British interests is breaking down.
“This war is multimodal,” Luongo says. “You’ve got financial war, you’ve got cultural war, you’ve got political war, you’ve got economic war. You’ve got literal military boots on the ground.” He’s not speaking metaphorically. From his perspective, the conflicts in Venezuela, Ukraine, the Middle East, the trade war with China—these are all fronts in a larger struggle over whether the old order survives or gets replaced.
He sees this as a conflict between the old guard trying to maintain their power and a new faction—potentially including Trump, Federal Reserve Chair Jerome Powell, and Treasury Secretary Scott Bessent—trying to reshape the system in America’s favor. The Trump administration’s approach has been to treat geopolitics as transactional rather than ideological.
Luongo describes Trump’s strategy as explicitly breaking with the postwar consensus. “Trump went to London and offered terms of surrendered to the king, and the king told him politely to go fuck himself. Well, okay, now it’s on, like Donkey Kong.” From Luongo’s perspective, Trump attempted to negotiate with the British financial establishment, to work within their system. When they rejected him, he decided to dismantle it instead. There is obviously no direct evidence for this, so we’ll just have to see how the trends emerge over time.
But this explains the aggressive posture toward Europe. It explains the focus on tariffs and trade deals. It explains why the Trump administration is willing to let traditional American allies struggle while negotiating separately with countries like Saudi Arabia. Trump is treating international relations as bilateral deals between sovereign nations rather than as commitments to maintain a global order that benefits the collective West.
Luongo himself is explicit about where he stands on this divide. He’s reached a breaking point with what he sees as European parasitism. “I’m going on the warpath with these people because everybody needs to get it,” he says. He’s done with European commentators who criticize America while benefiting from American military protection and the postwar order that America built and sustained. “You speak with a European accent, and you do nothing but shit in the United States. Fucking you’re dead to me because you don’t understand the real access to the real problem here,” he states flatly. This is typical Tom. However, his outbursts are generally based on years of deep analysis. Again, we’ll just have to see.
This isn’t academic disagreement. Luongo sees European elites as having deliberately drained American wealth through the postwar financial system while simultaneously criticizing American foreign policy and American culture. They got rich off American sacrifice and American capital flows, then turned around and blamed America for the problems their own system created.
By draining the world of the silver and gold and then collateralizing it for domestic purposes, Luongo says, this administration is literally restructuring the financial foundations of American power. They’re not trying to maintain the dollar as the global reserve currency through British-style financial dominance. They’re trying to back it with physical assets in the United States and make America actually wealthy and productive again.
In Luongo’s hypothesis, the Federal Reserve is playing a role and collaborating with Trump. “Whether he’s doing that because he’s been told, I doubt it,” Luongo says of Powell. “But what he is doing is he’s saying, I want to protect our payment chains. I want to protect the dollar, and I want to protect the economy.” Powell, despite being a traditional conservative, appears to understand that protecting the American economy means sometimes breaking with what the financial establishment prefers.
Lanci reaches similar conclusions through different means. He watches the markets and asks what incentives different players have. When China and India start accumulating gold at a pace that wasn’t visible before, that signals something. When the Fed starts moving gold around and JP Morgan gets made custodian of the nation’s largest gold ETF, that signals something. When lease rates go negative on Mexican silver and it all flows to Chinese refineries, that’s not random—it’s a coordinated strategy. The math pointstoward the same place: fragmentation is coming, and those who own physical assets rather than paper claims will fare better.
Both men believe the next few years will determine whether America successfully transitions to a new model or whether it tries to cling to the old one and fails. The geopolitical stakes are high.
What This Means for Regular People
If even half of what Luongo and Lanci describe is accurate, the implications are profound. The familiar financial architecture that has defined the postwar era is being dismantled. The pricing power for commodities is moving from West to East. Central banks are hedging against currency collapse by accumulating precious metals.
Neither man claims to have perfect foresight. Lanci notes that the changes he’s observing could take decades to fully play out. But the direction is clear: toward fragmentation, protectionism, and a precious-metals-backed foundation for new regional monetary systems.
“We have to look at it from this perspective,” Luongo concludes. “All of this stuff that we’ve grown up with, these market structures, we’ve been imprinted with, based on the fact that the FED was a captured pawn. But now the global model doesn’t work, we better pull the reins in.”
For investors and ordinary people trying to preserve wealth, understanding these shifts isn’t just an academic exercise. The prices you see today for gold and silver might look prescient when viewed from the perspective of the system being built tomorrow. Both men have spent careers studying how markets work and how power flows through financial systems. Their conclusion is that we’re living through a genuine inflection point—the kind that happens once or twice per generation.
That’s the story Tom Luongo and Vince Lanci are following. Whether you believe their geopolitical analysis or not, the market structures they describe are real and measurable. And those structures are changing in ways most people haven’t noticed yet. Are you getting it yet?
Decoding the Shift from U.K. and European Control of U.S. Finance
In Episode #213 of the Gold, Goats and Guns Podcast (April 17, 2025), Tom Luongo and Caitlin Long discussed something barely anyone talks about: America is finally breaking free from financial control by London and European banks. This battle has been going on for decades, but most people don’t even know it exists.
That’s changing now. And fast.
The Invisible System That Ran America
For the past 70 years, London banks set the most important interest rate in the world. Eighteen banks in the City of London—just one of which represented American interests—decided the London Inter-Bank Offered Rate (LIBOR). This rate determined prices for mortgages, corporate debt, derivatives, and trillions in offshore dollar deposits known as eurodollars.
“The LIBOR rate is an unsecured rate decided upon by 18 City of London banks, only one of which represents American interests,” Caitlin explained. That meant London, not New York, controlled how much American borrowers paid for everything from home loans to corporate debt.
Here’s the kicker: LIBOR was unsecured. Banks didn’t need collateral to trade these contracts. They just passed them around and “rehypothecated” them—basically creating infinite copies of the same asset. You could take a security, pledge it as collateral, and then the person holding that contract could pledge 100 percent of its value against another contract. Then write another swap. Another insurance contract. Another derivative. All built on the same pile of money, but there’s an infinite tower of financial instruments stacked on top.
As long as everybody could pay, it worked. But when someone couldn’t, the whole daisy chain collapsed. This is how you get shadow banking, massive leverage, and eventually a massive financial crises like 2008.
“The London banks set the most important interest rate in U.S. dollar markets,” Tom said. “And U.S. dollar markets are the most important markets in the world.”
LIBOR touched everything. It was the rate hedge funds targeted their returns against. It was the floating rate for corporate debt. It drove the massive interest rate swap market. It determined mortgage prices. At the core of the huge fixed income markets—far bigger than the stock market in the United States—was an interest rate set by a cabal of London banks. There was even a LIBOR pricing scandal where they were caught fixing the rate. And America had zero control over it.
A Plan That Sat on a Shelf for a Decade
After 2008 collapsed everything, the Federal Reserve drafted a solution: replace LIBOR with a new system called SOFR (Secured Overnight Financing Rate). The catch? It required collateral. Real collateral. This made leverage finite and controlled.
But the plan sat untouched through the Obama administration. Nobody in the Obama years was interested in building this new system. It would have threatened the London banking establishment and the offshore dollar system that kept European banks profitable.
In 2017, Trump took office and nominated Jerome Powell as Fed chair. Powell immediately brought in John Williams, moving him from the Atlanta Fed to the New York Fed—the most important bank in the Federal Reserve system. Williams had been the champion of SOFR from the beginning. He was the one who’d written the white paper on it back after 2008.
The transition started as a pilot project in 2017 and rolled out in stages. By January 1, 2022, all new U.S. debt—credit cards, car loans, mortgages, Treasury bonds, everything—had to be priced using SOFR instead of LIBOR.
On March 31, 2025, the final step completed. The six-month synthetic LIBOR contracts that had been extending legacy agreements finally matured. America’s interest rates were now fully under American control for the first time!
Tom noticed something important about that timing: “I think Trump decided that his Liberation Day would be April 2nd for a reason.” Trump announced his tariff-heavy “Liberation Day” trade actions just two days later. The symbolism is hard to miss. LIBOR dies on March 31. Liberation Day arrives on April 2. Whether intentional or coincidental, the messaging is clear: America is taking back control of its own monetary policy from the Europeans.
When Europe Tried to Break Everything and Failed
In early April 2025, something fascinating happened. European central banks—the European Central Bank, Bank of England, and others—started dumping U.S. Treasury bonds. Lots of them.
They’d been gorging themselves on long-dated American debt during Powell’s rate increases. Over a trillion dollars, in fact—all in longer-term bonds like 5-year, 7-year, 10-year, and 30-year Treasuries. When Powell started raising rates in 2022, these long bonds got hammered. They were sitting on massive unrealized losses. Now they wanted out.
Here’s what Caitlin noticed when she looked at the markets:
“I’m looking at the market on Wednesday morning of last week… the U.S. bond market is off twenty basis points, the German market is flat, and the euro is up five percent, the Canadian dollars up five percent, the British pound is up five percent. I’m like, oh, well, clearly what’s happening here is that the selling is not coming out of China. It’s coming out of Europe.”
The pattern was unmistakable. They sell U.S. Treasuries, buy dollars, then sell those dollars to buy their local currencies so they could prop up their own bond markets. It’s a cascade designed to push up the long end of the U.S. yield curve and trigger a panic.
They were attacking at different times—the Sydney open, the London open, the New York open—trying to create panic at different market hours. One hour, SOFR futures moved 20 to 30 basis points. That’s a twelve-sigma event. Statistically, something like that should never happen. If you see a three-sigma day, that’s already significant. A twelve-sigma day suggests either the markets are fundamentally broken or someone is deliberately attacking them.
But the market didn’t crack.
“We had a stellar ten year auction that day. We had a stellar thirty year auction the next day, and by the way, we had a stellar twenty year auction on Monday,” Caitlin said.
The financial media screamed apocalypse. Reuters, Bloomberg, CNBC—they all ran stories saying the Treasury market was collapsing, that Trump was breaking the world, that we were headed for financial chaos. The stock market wobbled. But the Treasury market—the thing Europe was actually attacking—held solid. The auctions filled without a hitch. Investors kept buying.
“The real story… is that the US had no problem with the ten year bond auction, which tells you there really wasn’t underlying chaos in the market,” Tom said.
This is what a difference a system makes. Under LIBOR, unsecured and loosely regulated, this kind of shock would have triggered cascading defaults. Banks would have panicked. The Fed would have been forced to bail everyone out. Instead, SOFR’s collateral requirements kept everything stable.
For the first time, Europe couldn’t break American financial markets. The old system—the eurodollar system controlled from London—wouldn’t have survived this test. The new one did.
The Supplemental Leverage Ratio: Quietly Unleashing Capital
While everyone was focused on the market drama, something else was quietly moving. Treasury Secretary Scott Bessent and Federal Reserve officials announced that they were about to relax the supplemental leverage ratio (SLR)—a capital requirement that forced banks to hold capital against U.S. Treasury holdings.
This is huge, and here’s why: During the pandemic, the Fed flooded the financial system with money. Regional banks took that money and bought long-term Treasuries. They figured the Fed had their back, so they’d clip the coupons and make easy money. Then Powell raised rates and those bonds got crushed. Now regional and medium-sized banks are sitting on about $300 billion in unrealized losses on their Treasury portfolios.
The problem: they were being forced to hold capital against these “risk-free” assets. Caitlin’s perspective is that this never made sense in the first place. A Treasury isn’t credit risk—it’s a dollar that pays interest. The Fed can always print more dollars, so it can’t default. Forcing banks to hold capital against Treasuries was like forcing banks to hold capital against cash. It was backwards.
“I started a bank, and I come from investment banking and capital markets background,” Caitlin explained. “To me, it has never made sense that the banks had to hold capital against what is deemed to be in this current financial system, the risk free asset.”
When the SLR gets relaxed, banks suddenly have huge amounts of new balance sheet capacity. And where will they deploy that capital? Into Treasuries. This creates a new, massive buyer for the Treasury market—one that’s been artificially constrained.
“This is one of the tools that Scott Bessent has to support the U.S. treasury market,” Caitlin explained. “How he sequences this… is huge. If he does it all at once, there’s just going to be this rush to treasuries.”
It’s another piece of the puzzle. The Fed has control over the timing. They can use this as a tool to support the market whenever they need to. And Bessent clearly wants yields lower—especially on longer-term bonds—to put money back in people’s pockets on Main Street, not Wall Street.
Stablecoins: The Quiet Revolution
Now here’s where it gets interesting. While all this was happening, stablecoins like Tether were quietly building something remarkable. Tether now serves 400 million unbanked users globally. That’s bigger than the entire population of the United States.
Think about that. Tether is now one of the biggest financial companies in the world, and most people have never heard of it.
“Tether is a company that, for all the allegations around it related to money laundering, et cetera, et cetera, the Biden administration did not shut it down,” Caitlin noted. “I think there’s a foreign policy reason why Tether exists offshore.”
The U.S. government could have shut Tether down. When it was disclosed that Tether held its reserves at Cantor Fitzgerald, one of the 24 primary dealers of the U.S. Treasury market, that gave the U.S. clear jurisdiction and leverage. The Biden administration chose not to act. Why? Because Tether is doing something the traditional banking system can’t do: it’s pushing the U.S. dollar into communities that banks can’t reach profitably.
Tether is building kiosks in Africa where people don’t have reliable electricity. They’re creating distribution networks in communities that traditional banks have written off as unprofitable. And they’re recycling all of those flows back into the U.S. Treasury market. These are 400 million new users who would much rather hold U.S. dollars than their own local currency.
“They’re not going to be panic sellers,” Caitlin said. “This is increasing the resilience of the U.S. treasury market.”
But Congress is about to change the rules in a way that could reshape everything. A new stablecoin bill is creating different regulatory tiers. Banks have to follow strict know-your-customer rules and hold significant capital. FinTechs face lighter requirements. But offshore stablecoin issuers? Even lighter than that.
For the first time, there will be an official two-tier dollar system: one controlled from New York (stricter), one controlled offshore (looser).
“This is creating an incentive for stablecoin issuers to leave the United States and to go offshore,” Caitlin warned.
Europe, meanwhile, killed its own stablecoin market through regulation. The Bank of England banned euro stablecoins from earning interest. That made them economically pointless—why hold a stablecoin that pays nothing when you could hold cash? Tether packed up and left Europe entirely. They’re not even trying to comply with European regulations anymore.
This forced stablecoin innovation away from Europe and toward the U.S. and other countries that would embrace it. Tom and Caitlin see this as a strategic blunder.
“They shot themselves in the foot,” Tom said. “The Iranians, the Russians—they’re going to have their own systems now. Europe destroyed their own stablecoin market, and now they’re watching the dollar—backed by American stablecoins—take over globally. They shot themselves in the foot on this piece too.”
In other words, Europe tried to regulate stablecoins out of existence within their borders. Instead, they just pushed the innovation somewhere else—somewhere that benefits America.
The Real Game
What’s happening is geopolitical chess disguised as technical finance jargon.
The Trump administration, through Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell, appears to be shifting financial power from London to New York. Tom and Caitlin argue this represents a deliberate strategy to move away from centralized banking controlled by European institutions.
Bessent and Powell have lunch every Monday, we’ve learned recently. “They’re clearly talking and coordinating,” Tom observed. “That’s very different from Powell and Yellen, where they were at each other’s throat.”
Under the Obama-Biden years, the Treasury and Fed were in open conflict. Janet Yellen and others were doing quantitative easing and yield curve control, suppressing the short end and supporting the long end. The treasury was spending money like “a drunken sailor,” Caitlin noted, and the Fed was enabling it. It was a disaster of policy coordination.
Now there’s alignment. Powell and Bessent are on the same page. The goal is clear: restructure American finance and take back control from London. Most Americans would find it shocking that this is taking place and that for decades the Europeans were actually controlling U.S. monetary policy.
Caitlin sees the bigger picture: “What I’ve been positing for a while is that in order to finish, they have a plan to recapitalize the United States, and I think they want to create a domestic dollar that is backed differently than the offshore dollar.”
This isn’t theoretical. It’s happening now. The supplemental leverage ratio is being relaxed, which will flood money into Treasury markets. New central clearing rules will push Treasury trading toward New York, not London. Stablecoins will distribute dollars globally without central bank permission. SOFR futures are now what determines the global cost of dollars, not LIBOR set by London banks.
Europe is watching its financial influence evaporate and their language is becoming more and more shrill. Their sanctions on Russia destroyed the “petro-euro” just as it was building. From 2021 onwards, as Europe bought Russian oil and gas, the euro was gaining ground as a reserve currency. Trade settlement in euros was climbing to about 35 percent of non-eurozone transactions. Then sanctions hit. That collapsed to 13 percent almost overnight. The U.S. dollar captured the entire market share.
Their negative interest rates pushed savers toward alternatives. Their refusal to regulate stablecoins handed the market to America. Their overvaluation of long-term Treasuries during the pandemic set them up for huge losses when rates rose.
Tom puts it bluntly: “If you’re Europe, if you’re the Rothschilds, if you’re the old colonial banks of Europe that have been moving markets for five hundred years… and you’re staring at Trump remaking the entire global financial system… would you not set off every financial nuclear weapon to try and stop that?”
But they tried. They failed. The markets held.
What Comes Next?
Both Tom and Caitlin caution that real stress could show up in three to six months. History suggests financial shocks echo. What happens in September or October might trace back to April.
Caitlin pointed to the pattern from 2007-2008: a repo crisis in September, then scaling problems through the fall, then Bear Stearns imploding in March, then Lehman Brothers collapsing six months after that. In 2019, they had another repo crisis in September. Six months later, in March 2020, the Treasury market went bidless and the Fed had to step in aggressively.
“We have defined who the real enemies are,” Caitlin said. “If this is the inciting incident, and if history repeats and rhymes, are we going to have a bigger one three to six months from now?”
But this time might be different. Under the old LIBOR system, a shock like the April 9 attack would have triggered cascading defaults and panic. Banks would have failed. The Fed would have been forced to bail everyone out. That happened in 2008 and again in 2020.
This time? Nothing. The market held. The collateral requirements worked. The system was stable.
“Something fundamental changed,” Tom said. “For the first time since the American Revolution, the United States has real control over its own financial markets. That matters.”
The system is stronger. The collateral requirements are real. American institutions are in control. The old system of infinite rehypothecation and London control is gone.
Whether Europe tries one last financial offensive remains to be seen. But on April 9, 2025, they threw their best punch. America’s markets didn’t flinch.
