The world is in a state of geopolitical and economic upheaval, with the US trying to secure its global leadership role through strategic measures such as tariffs, industrial policy and currency control. The aim is to ensure national security, economic sovereignty, the repatriation of critical industries and the preservation of the US dollar as a reserve currency.
A central dilemma: the US dollar as a global reserve currency leads in the long term to an appreciation and thus to a weakening of the US export economy – the so-called Triffin dilemma. At the same time, decades of debt accumulation and dependence on foreign supply chains have revealed the structural vulnerability of the US.
The solution being sought is a new global order that would use economic pressure and incentive systems to guide other states into a new multilateral agreement – possibly analogous to the historic Bretton Woods system. In this system, access to the US market could be made contingent on conditions such as military cooperation, currency pegging and protection of intellectual property.
For the financial markets, this means:
- Equities are under pressure as geopolitical risks alter the fundamentals for many companies.
- Sovereign bonds are losing trust, which calls into question their role as a safe haven.
- Bitcoin and gold are becoming more attractive as neutral, limited stores of value without counterparty risk.
Bitcoin stands out: as a digital, state-independent asset with a fixed money supply, it could establish itself in the long term as a global store of value in a multipolar world – especially in times of growing instability, global debt problems and disintegrating systems of trust.
In this newly emerging world, the question is: where can wealth be stored safely when even established institutions and currencies are losing trust? For many investors and nations, the answer could increasingly be Bitcoin.
Relevant article: Comprehensive analysis of the new US tariff policy and its global impact
Global Realignment and Economic Tensions
The world is in a state of profound upheaval. Political and economic decisions by major nations suggest that a new global structure is emerging. The United States, in particular, is trying to maintain its economic power and political dominance in the future. One of its central instruments are economic sanctions, especially in the form of tariffs on imports. These are intended not only to protect the domestic market, but also to serve as leverage in geopolitical negotiations.
While many observers criticize the current actions as uncoordinated or irrational, it is worth taking an analytical look: assuming that there is a strategic plan behind the measures, it could be aimed at reindustrializing the US, stabilizing its own currency, and securing geopolitical supremacy.
Strategic Goals of the United States
From an economic point of view, the US government is pursuing four main objectives:
- Restoring national security: The global dependence on supply chains, particularly from Asia, has highlighted the vulnerability of the US economy – not least through the experiences during the COVID-19 pandemic.
- Maintaining the reserve currency status of the US dollar: As the world’s reserve currency, the dollar allows the US to borrow money on favorable terms and distribute it around the world.
- Refinancing the national debt: With trillions of dollars in debt, the US relies on low interest rates to maintain its financial stability.
- Continued global leadership: The economic and political dominance of the US is increasingly under pressure – not least from the rise of China.
However, these goals are difficult to achieve under the current global conditions, which is why a reorganization of the existing world order is being sought.
Basics: Tariffs and the Triffin Dilemma
Tariffs are import taxes that artificially raise the price of foreign products. They are designed to protect the domestic market and encourage foreign companies to locate their production directly in the domestic market to avoid tariffs. This is particularly effective if the domestic market – like the US – represents one of the largest sales markets in the world.
The Triffin dilemma describes a fundamental problem for countries whose currency serves as a global reserve currency. On the one hand, the status implies economic power and privileges (e.g. export of inflation), but on the other hand, in the long term it leads to a devaluation of domestic industrial capacities. A strong currency makes exports more difficult and encourages the relocation of production sites abroad. At the same time, new debts must constantly be incurred to meet global demand for the reserve currency. This can erode confidence in the currency in the long term.
Reindustrialization and Automation
A central goal of the USA is to bring back critical industries – for example in the areas of armaments, semiconductor technology, medicine and energy. In view of high wages at home, the focus is on automated production using robotics and artificial intelligence. This will reduce production costs without relying on low-wage countries.
Incentives such as tax cuts and tariff breaks for domestic production are being used to try to persuade companies to relocate. This is reminiscent of the platform strategies of large online retailers: if you want to sell in the largest market, you have to follow the rules of the game.
The Challenge of Currency Appreciation
However, the appreciation of the US dollar that goes hand in hand with its reserve currency status remains a long-term problem. This weighs on US exports and counteracts reindustrialization. The US must therefore try to maintain the advantages of the status without having to bear the full brunt of the disadvantages – a balancing act that requires political skill.
One conceivable solution would be a new global monetary system in which the appreciation of the US dollar is offset by parallel appreciations of other currencies. This would keep price relations stable and not make US exports any more expensive.
Lessons from the Past: The Cycle of World Powers
Historical analyses such as those by Ray Dalio show that every dominant world power follows a cyclical pattern: rise through economic strength, increasing debt, social tensions and finally decline. Internal crises often lead to external conflicts that can accelerate the decline. The US may be in a late phase of this cycle and is now trying to secure its own status by restructuring the system – possibly also by negotiating a new global order.
The cycle of world powers (Image: The Changing World Order by Ray Dalio)
New World Order: A Strategy of Negotiating Power
The introduction of high tariffs can be seen as a tactical means of building bargaining power. The aim is to bring other countries to the negotiating table to define new framework conditions. Possible elements of a new world order could include:
- Re-pegging currencies to the dollar (with flexible adjustment of exchange rates)
- Access to the US market only with certain concessions
- Paid military protection by the US
- Protection of intellectual property (IP)
- Freedom of investment for US companies abroad – and vice versa
Such a step could be reminiscent of the Bretton Woods system after the Second World War, only under different conditions and in a multipolar world.
Impact on Financial Markets and Bitcoin
The realignment of the global economy has a direct impact on asset classes:
- Equities: If the focus of politics shifts from Wall Street to Main Street, stock markets could lose some of their relevance. In addition, geopolitical risks and supply chain problems are changing the valuation bases of many companies.
- Government bonds: The credibility of US government bonds as a safe haven could decline – especially if the market fears that debt will be reduced by money creation.
- Bitcoin and gold: As neutral, non-manipulable assets, these could become more attractive as mistrust of governments and central banks grows. In this constellation, Bitcoin in particular, as a digital, borderless asset without counterparty risk, gains in importance.
Relevant article: Bitcoin as a geopolitical instrument of power – A detailed analysis
International Reactions and Currency Devaluation
Many countries could try to alleviate economic pressure by devaluing their own currencies. China, in particular, is already taking measures in this direction. At the same time, there is a risk of consequences such as capital flight, which could further strengthen Bitcoin as an alternative store of value.
A parallel development concerns the role of intellectual property. If China were to openly renounce the protection of Western technologies in an economic conflict, this could have serious consequences for Western technology companies.
Relevant article: The global economic crisis and the role of Bitcoin
The Search for Stability in an Uncertain World
In a world that is increasingly dominated by power interests rather than legal principles, neutral and transparent stores of value are becoming more relevant. In this context, Bitcoin could play a growing role as a digital reserve alternative – not only for individuals, but also for institutional investors and possibly even states.
The coming years are likely to be characterized by uncertainties – politically, economically and technologically. Anyone seeking stability in this phase must take a close look at the fundamentals of the monetary system, geopolitical power shifts and the characteristics of different asset classes.
Author
Ed Prinz serves as the chairman of https://dltaustria.com, the most renowned non-profit organization in Austria specializing in blockchain technology. DLT Austria is actively involved in educating and promoting the added value and possible applications of distributed ledger technology. This is done through educational events, meetups, workshops and open discussion groups, all in volunteer collaboration with leading industry players.
Disclaimer
This is my personal opinion and not financial advice.
Therefore, I cannot guarantee the accuracy of the information in this article. If you are unsure, you should consult a qualified advisor you trust. No guarantees or promises of profits are made in this article. All statements in this and other articles are my personal opinions.