In a low-trust, balkanized world, the 'set it and forget it' investment model is obsolete. The new priority is resiliency over efficiency. This means optimizing for optionality and physical reality, and prioritizing assets that are not someone else's liability, as counterparties and systems can no longer be fully trusted.
The world is moving away from an era of financial abstractions, where a digital entry was trusted as much as a real asset. As global trust breaks down, nations are prioritizing physical reality—commodities, manufacturing, and energy—over promises. You can't build a drone with a digital hedge or eat a futures contract.
Using the dollar as a weapon forces other countries to build their own financial 'armor' and alternative transaction systems (like BrixPay). This response fragments the global economy into hostile blocs, ironically diminishing the dollar's long-term dominance and reducing America's ability to finance its deficits.
The era of a strong, passive dollar designed to attract foreign capital is over. The US now actively manipulates the dollar's value to suit strategic needs, rewarding allies and punishing enemies. The currency has been drafted into foreign policy as a tool of statecraft, moving from a stable 'King' to an active 'General'.
Emergency monetary tools like quantitative easing 'leaked' into permanent use, acting as an 'engine of inequality.' This policy inflated asset prices for the wealthy (the top of the 'K') while hollowing out the middle class (the bottom of the 'K'), creating toxic inequality that directly fuels populist anger and social unrest.
The 'yen carry trade' relies on a weak yen. When the US Treasury signals it may defend the yen (a 'rate check'), it acts like a nuclear threat to traders. This forces a mass scramble to repay yen-denominated loans before their cost skyrockets, creating a violent buying panic and a potential 'margin call for the entire world.'