With the domination of the dollar in danger, can this be a moment of encryption?

On Wednesday, President Trump Declare Its need for 90 days has stopped on the sharp tariffs he suggested last week during the “Liberation Day”-which were paid by important turmoil in the market caused by his first decision, including a disturbing rise in the main American treasury yield.

Currently, most countries still face a large tariff of 10 %, with two noticeable exceptions: Russia, exempt from the new customs tariff but have been marginalized by sanctions and China, while punishing a 145 % tariff. For the historical context, he considered the 1930 SMOOT-HWLY tariff law, and it blames a wide range for deepening the great depression. This measure raised the average customs tariff rate through goods to only 19.8 %, and even then, strategically targeted the specified agricultural and industrial goods.

Economists rarely find unanimously – but experimental evidence against full customs duties is almost unanimously. The customs tariff works mainly as an indirect tax on consumers, provokes revenge measures, pushing inflation to the top, and destabilizing financial markets. While targeted and temporary definitions can already protect the emerging industries from early foreign competition, these measures should be carefully exceeded once the industries are ripe. Likewise, selective definitions may support basic national security supply chains, but only if they are wisely implemented.

However, the last two weeks represent something unprecedented. To understand the long -term effects, we must start with the Chairman of the Board of Directors of CEA Steve Miran comments About America’s role in providing “global public goods”: primarily, a global security umbrella, and secondly, to maintain the position of the dollar as a global backup currency.

What Miran ignores is that these roles are inseparable: you cannot maintain the dominance of the backup currency without a military force. The geopolitical influence and credibility mainly depends on the nation’s ability to protect its interests, whether at home or external – whether it is the protection of global maritime trade roads, surface -to -sea Internet cables, critical energy resources and rare materials, biological payment and financial infrastructure.

But the narrowest misconception of the economy highlights its claim that being the source of the global reserve currency that is not proportional to the United States. The reality, as most economists realize, is the opposite of that specifically: the US dollar reserves status gives a “heavy privilege”.

What exactly does this privilege require? The global appetite of the dollar provides the US government, companies and residents to reduce borrowing costs and a greater purchase strength. It directs international capital to the US financial markets, which enhances growth. This unique position generates great profits from profit – effectively support American imports, facilitate the ongoing trade deficit without immediate economic repercussions, and promoting American geopolitical domination.

This privilege is so clear that even during severe global turmoil-such as Covid-19s or the 2008 financial crisis-investors have constantly resolved with US Treasury bonds as a safe haven, allowing flexible financial responses. In 2008, safety demand exceeded the increase in government auctions used to finance huge rescue operations.

However, Miran, along with Trump’s commercial advisor Peter Navarro, ignores this reality, on the pretext that importing goods at reasonable prices in exchange for low US debt-to benefit from confidence in American institutions-is a losing proposal. More dangerous, Miran fluctuates the economic logic completely, stressing that there is no privilege, only burdens, insisting that the rest of the world must bear the costs.

Miran suggests that states must either accept the customs tariff without revenge or, but rather, simply “write checks to the US Treasury.” This interesting idea somehow ignores the fact that these countries are “paid” already for the privilege of reaching the dollar by sending good value goods and services for dollars – which the United States is working to print the United States appropriately. This arrangement already supports America’s ability to finance the deficit at a cheap price and pay its debts without the trouble of its own currency, which it believes that it may be sufficient for a sweet deal without asking for additional compensation.

Yes, the superpower involves great responsibility. Excessive dependence on the risks of the cheap capital that is historically destined by every previous source of backup. Ray Dalio has repeatedly warned of this scenario: the escalating debt that led to economic and military excessive, inexpensive inequality, and low investments in education and infrastructure, which ultimately leads to erosion of confidence through endless accumulation and printing money.

But real treatment lies in disciplined fiscal policy, structural reforms that encourage innovation, strategic investments in education, upward movement, and infrastructure. Miraan and Navarro policies instead of the confidence on the global situation of the dollar. Their strategy is similar to the policies of the late Roman Empire of Emperor Diwalian – with interest in imposing taxes on the distant colonies to maintain the central power, which ultimately weakens loyalty and accelerates the decline. If the allies doubt America’s commitment – with a penetration and economically – the vortex of landing is accelerated only.

Whether we like it or not, it can be said that the leading “export” in America is its financial sector. Certainly rebuilding manufacturing in critical sectors is important, but intensive manufacturing functions in employment are no longer-those jobs are now migrating from China to Vietnam, India and Bangladesh. The future depends on innovation and leadership in areas such as artificial intelligence, robots and defense technology – not to chase nostalgia dreams to previous industrial glories.

The destruction of relations with global trade partners, especially the allies, through random tariffs threatens the domination of the dollar, which prompted states to search for alternatives to security and trade. The loss of the reserve currency mode means a significant decrease in the geopolitical, economic and military influence – redefining America, such as Spain, the Netherlands and Britain in front of it, to the ranks of the previous global economic powers.

This danger explains the reason for the US Treasury’s revenues closely watched during the recent market turmoil. The high yield – led by hedge funds that benefit from traded trading and foreign central banks that sell treasury bonds to achieve stability in their currencies before the repercussions of customs tariffs – of Trump’s well -being to ignore gambling. Continuous wrong policy movements can erode the investor’s confidence in US Treasury bonds as safe assets, and eventually threatens to put the dollar budget.

Thus, Miran and Navarro believing that America must impose the world’s taxes to use the dollar on irony to accelerate the decline in the dollar, and the trade deficit unintentionally – but in the most painful way as possible.

If the dollar stumbles, is it a moment of encryption?

Most likely no – at least not immediately. Bitcoin may offer Neutrality In a fragmented global system, but with the exception of institutional collapse in the United States, this scenario remains far away. Likewise, there is no Fiat currency ready to inherit the role of the dollar clearly.

The euro area, despite its pride in a strong economy, deep financial markets, and a reliable independent central bank, faces great challenges – advanced financial policies, internal political tensions, and the absence of a unified and strong military presence. While the euro is still the second most circulating currency in the world, its potential for a dominant reserve is restricted unless deeper financial integration, resolves internal conflicts, and expanding commercial alliances with the United Kingdom, Canada and other global partners.

RMB in China, with the support of the second largest economy in the world and a large -scale global commercial presence, faces great obstacles. It hinders the ongoing control controls, the concerns of transparency, and the issues of basic trust in terms of the rule of law significantly a broader adoption by Western economies. In the absence of a major geopolitical shift, similar to the transformations following World War II, the acceptance of global RMB remains limited.

One of the possible solutions can be a basket of currencies, similar to the approach we designed for Al -Mizan Project. However, determining the weighting of the basket will inevitably lead to endless geopolitical discussions, as shown by the limited appeal of the Special Drawing Rights (SDR), which has never gained a large -scale traction beyond the use of the central bank. However, the currency basket can better acquire the dynamics of the changing day today, balance commercial interconnection and identify the advanced international system. However, the real challenge lies in creating a new reliable account unit – a huge mission, so that the European Union discovered during its integration efforts.

Trump’s gambling may be pressure on everyone, but China in agreements reminds us of the Pacific Pacific Partnership (TPP), which was originally designed to reduce customs tariffs and improve ownership standards and intellectual work on the edge of the Pacific, as it was summarized by investor Bill Akamin:

However, the risks are great, especially since China is unlikely to decline. If tensions persist and major economic turmoil occurs, many scenarios become reasonable. Countries around the world, including Europe, may increase in a neutral position, which stresses the importance of the upcoming Chinese European Union negotiations. Instead, the world can be amazing to Bitcoin – which already works as a somewhat unusual likely that represents different views of countries about the future of monetary policy.

Ultimately, this is America’s game that you will lose-and in the ideal aspect, reasonable policies such as free trade, dangerous investments in education, critical infrastructure, real innovation and smart stakes on strategic sectors on short-term commercial skirmishes and doubtful economic theories. After all, it is rarely undermining your strengths is a profitable strategy.