What if people stop believing in the US dollar?

tl;dr: Money is a system of belief that can grow or shrink over time due to both internal and external pressures. This post explores some of the threats to the dominance of the US Dollar.

When you start getting deep into crypto, you invariably start asking yourself about money.

Not, “how do I make money?” rather “what is the essence of money?”

One of the best posts I’ve read on this is Adam Levi’s “Requiem for Fiat.” I highly recommend it. [Adam is also the CTO at DAOstack, where I am an advisor].

Once you get some of the concepts such as “store of value,” “means of exchange,” and “unit of account,” you begin to recognize that money, like religion, is a belief system.

If people believe it is money, then it is money.

This realization alone makes you realize how vulnerable the US dollar (or any currency) is to losing value.

All it takes is for people to stop believing it.

How People Lose Faith in Money
You don’t need to look too far to see examples of where people lose faith in money. Venezuela, Zimbabwe, and Argentina are the low-hanging fruit of this example.

Those are the “heart attack” versions of losing faith.

I think there’s another kind of risk, far more insidious. It’s more akin to obesity epidemic and diabetes.

It’s slow, gradual, and less obvious and it happens as faith in money is lost day by day.

The Largest Threat to the Dollar as a Belief System
As the British historian, Arnold Toynbee remarked, “civilizations die from suicide not from murder.”

Right now, my concern, is that the US government and its leaders are practicing a slow form of suicide on the value of the US dollar. That dollar suicide is far worse than any other threat.

The following tweetstorm is intense. Viewer discretion is advised.

However, the courage to face reality is the cornerstone of living a life with integrity and intellectual honesty.

The USD is going to turn into monopoly money faster than people realize

People are starting to say ‘deficits don’t matter’ just as they matter more than ever

Owning a non fiat store of value is more important than ever

In 2022 the govt officially turns into a ponzi

Here’s why— Brendan Bernstein (@BMBernstein) February 27, 2019

https://twitter.com/BMBernstein/status/1100811571469664257?s=19

Secondary Threats to the Dollar
As a currency empire starts to show signs of weakness, additional threats begin to emerge. They exploit the power vacuum and accelerate the death spiral. This is what happened on the edge of the Roman Empire.

It may look like this is all set up as a pro-Bitcoin post.

It’s not.

Right now, I don’t think that Bitcoin (or any other crypto) is likely to emerge as the most serious threat at a global level to the dollar. Perhaps to gold, as a response to decreased belief in fiat, but that’s the effect, not the cause.

Certainly, as crypto gets further adoption for international remittances, decentralized governance, and utility networks, belief in them will strengthen.

Still, alone, crypto is not enough…at least not in the short-term.

The larger threat to the dollar? China.
Keeping in mind that I am not a China expert, here’s my thinking.

I was reading an article in the Wall St. Journal recently about the explosion of Chinese tourists throughout Asia. Apparently, the huge quantity of tourists is leading merchants in countries like Japan to accept payments from their customers’ phones.

Those phones invariably have WeChat and Alipay on them.

If merchants in Asia start accepting payments that come through centrally controlled Chinese financial services which must, by law, have a member of the Communist Party on their board, there may be a new type of threat.

All they would need to do is to start offering WeChatCoin or AliCoin and you have an “invasive species” currency.

Small sidebar:Why do you think Facebook is so interested in starting a FBCoin? Same for JP Morgan. Big companies and countries now see a way to get their currency accepted as the default currency globally and the race is on. Slowly, but surely. Back to our program…

Other factors such as Alibaba’s effort to take control of MoneyGram and its new partnership enabling AliPay in all US Walgreens stores, make me wonder if this is all part of the “long game”that China is playing?

Is this a third leg of the “Belt and Road” initiative but deliberately kept out of view?

Is it a Sun-Tzu-esque “long game” against the financial system of the West?

One of the questions I asked at the Satoshi Roundtable was “can you trust the Chinese-based blockchains?”

The answer: No, because they are vulnerable to manipulation.

If that’s the case for the so-called “open” and “public” blockchains, I wonder if it’s even more the case for existing, centralized, and very powerful/wealthy Chinese companies?

I believe in Bitcoin’s transformative potential, but I am not rooting for a gross devaluation of the US Dollar. I’m just concerned that it’s happening in front of our eyes.

If it were just Bitcoin that replaced the dollar, that would be a big change, but it wouldn’t necessarily put the West under Chinese control.

That is a real threat.

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