Several readers have commented on my yesterday’s post (“USD, Gold, Crypto and a mountain of $38trn debt”). Some agree that the “debt manipulation” theory was far-fetched, others argued that I was underplaying the seriousness of America’s fiscal overhang. Both reactions are valid. My intent, however, was not to trivialize the US debt issue, but to put it in its proper context — and to focus attention on the much larger transitions now underway in the global financial order.
I would like to elaborate to convey my point in the right perspective.
The Debt Problem Is Real — but Not New
The US federal debt now stands around $38 trillion, or roughly 120% of GDP. That sounds alarming, but the ratio has hovered near that level for over a decade. The composition, though, has changed dramatically.
After the dotcom bust, debt piled up in corporate and household balance sheets. After Lehman, it migrated to banks. Post-Covid, it has firmly shifted to the sovereign. In essence, the debt hasn’t disappeared — it has just changed owners.
This doesn’t mean the US is immune to a confidence crisis. But it does mean that debt is a chronic structural feature of modern fiat economies — not an engineered plot to reset the system.
1933, 1971 — and the temptation of simplistic parallels
Many commentators love to invoke 1933 or 1971 to suggest a looming “USD reset.”
But both those episodes happened in very different institutional and political contexts — gold standard rigidity, post-war reconstruction, and early Cold War dynamics.
Today’s world operates on a networked, digitalized, and politically fractured global economy. If history rhymes, it does so in free verse, not repetition.
The better historical analogy might not be 1933 or 1971, but the slow disintegration of older orders — Roman, British, Ottoman or Mughal — when economic dominance eroded gradually, not overnight.
What the real transition looks like
The true story of this decade isn’t gold manipulation or crypto suppression. It’s the slow-motion rebalancing of global power, as the post-WW2 order strains under its own contradictions:
· Fiscal dominance is replacing monetary orthodoxy — politics increasingly dictates central bank balance sheets.
· Fragmentation is replacing globalization — parallel payment systems (like China’s CIPS and India’s UPI stack) are nibbling at the dollar’s monopoly.
·
Asset inflation remains the political lifeline of democracies — as long as homes, stocks, and jewellery rise in nominal value, grocery inflation can be tolerated.
Digital money: Evolution, not Revolution
The tokenization of debt and the emergence of digital treasuries is definitely worth watching. But speculating that Crypto or stablecoins could “replace” outstanding treasuries may be a little far-fetched.
These aren’t part of a grand conspiracy to devalue debt — they are the next evolutionary stage of financial plumbing, blending liquidity, programmability, and regulatory control.
Think less “Nixon shock,” more “software upgrade.”
The real risk: A world without a coherent order
While investors debate gold and Bitcoin, the bigger risk is that the rules of the global system — trade, capital flows, reserve currency privileges — are eroding without a clear replacement.
This “interregnum” between the US-led order and an undefined multipolar system may prove far more destabilizing than any Fed balance sheet maneuver.
In such a world, volatility will not come from conspiracy or manipulation — it will come from institutional entropy.
Investment implications: focus on what’s observable
Instead of gaming hypothetical resets, investors may be better served by tracking:
· Real yields and the pace of balance-sheet normalization
· Fiscal-monetary coordination trends in major economies
· Shifts in global trade invoicing patterns (USD vs CNY vs others)
· Political tolerance for inequality and asset inflation
The Takeaway
Markets thrive on stories, and conspiracy is a powerful story. But history suggests that disorder, not design, drives most turning points.
The bigger challenge ahead is navigating a world that’s losing its monetary anchor and political consensus at the same time.
The “debt conspiracy” may fade, but the era of permanent volatility is just beginning.
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