The Beginning of the US Debt Collapse is Here

Kind: captions Language: en America is drowning in debt. $39 trillion of it. If you spent $1 million every single day since the birth of Christ, you still wouldn't reach $1 trillion. That's not even 2% of what America owes. It works out roughly to $114,000 for every single American. You've been told it's backed by the full faith and credit of the government. You've been told to trust the process. You've been lied to. It's held together by a system you've never seen. never voted for and probably never even thought about. It's a global system that forces the entire world to keep using the dollar just to survive. Now it's starting to crack. Countries controlling nearly half of the world's daily oil supply are tearing that system apart. When it breaks, it won't happen to them, it happens to you. Chapter one, the $39 trillion illusion. The US dollar appears in nearly 90% of all foreign exchange transactions on the earth. Nine out of 10 times a currency changes hands on this planet, one of those currencies is the dollar. When you figure that the earth currently has 180 national currencies, it's clear that the dollar is the operating system that the rest run on. What built this behemoth? Trade data and decades of financial flows point to one central mechanism, the global oil market, which also is ironically denominated in dollars. The global oil market is worth approximately $2.5 trillion per year. In fiscal terms, that is larger than the market value of the globe's gold, iron, copper, aluminum, nickel, zinc, lead, tin, cobalt, and lithium markets combined. Oil is the single largest traded good in human history. And for 50 years, the vast majority of it has been purchased in American dollars. A Japanese company buying Saudi oil has to convert yen to dollars first. French refineries importing Kuwaiti crude must buy dollars first. Indian power plants importing Iraqi oil have to buy dollars first. It all creates an insatiable demand for US currency. That demand is what absorbs American inflation. It's also what lets the Federal Reserve print money without immediately destroying the purchasing power of every American paycheck. The only reason your groceries aren't more expensive than they already are. Is because the central banks of Tokyo, Frankfurt, New Delhi, and Seoul are soaking up trillions of American dollars each year just to keep their lights on. and now it is quietly coming apart. Unlike most of the rest of the world, the United States exports more oil than it imports, mostly from either Mexico or Canada. It's a convenient closed North American circuit. What you may not know is that the United States is currently the single largest oil producer on the earth, producing [music] more than it consumes. So, while the US doesn't need to buy oil in dollars, it needs the rest of the world to buy oil in dollars. In fact, it depends on it. It's a completely different problem and one the United States is currently losing. Chapter 2, the 1974 secret handshake. In 1944, the United States gathered [music] 44 countries in Brenton Woods, New Hampshire, and they made them an offer. America had all these factories, most of the gold, and a global military posture that could politely discourage disagreement. The deal was simple. Everyone would peg their currency to the dollar. The dollar would be pegged to gold at $35 an ounce. In other words, a dollar represented more than just a piece of paper. It could be a claim on something real. Real gold. And for about 20 years, it worked beautifully. Then the cracks started to show. America made some expensive investments. Vietnam, the Great Society, the space race, a defense budget that would make a Las Vegas whale blush. By the late 1960s, the US was running deficits and printing dollars faster than it had gold to back them. That's when the Europeans, the French in particular, started doing the math. They started looking at how many dollars were actually circulating. And then they looked at America's gold reserves and they [music] decided those numbers were not adding up. So they started cashing out. Literally, they loaded dollars into hundreds of planes and ships, and they came back with gold. Over 3 years, France repatriated over 3,000 tons of gold to its vaults. Other countries followed. America's gold reserves once 80% of the world's supply started draining fast. By 1971, the jig was up. So, Richard Nixon went on television and closed the gold window. He announced that effective immediately, US dollars were no longer convertible to gold. He canled Breton Woods with no warning and no vote. The Americans called it the Nixon shock. The French called it several things that [music] don't translate politely. Suddenly, the global financial system, previously tied to gold, was now built on, well, a vague sense of trust that America would behave responsibly. Given the preceding decade, it was quite a lot to ask. Over the next few years, things got weird. Currencies floated [music] against each other with no anchor, which led to a massive spike in inflation. The system was held together by good vibes and crossed fingers. Then, in October 1973, the Arab members of OPEC, led by Saudi Arabia, declared an oil embargo against the United States. Prices quadrupled. Gas stations ran dry. Americans lined up around city blocks hoping to fill their tanks. The economy already limping took a chair to the knees. Which is when Henry Kissinger stepped in. Kissinger, depending on your perspective, was either a master strategist or a war criminal with excellent table manners. What he undeniably was was effective. Something that was in short supply in 1974. The dollar had just lost its gold packing. The economy was wobbling. The US needed a new reason for the world to want its currency and [music] fast. Kissinger's solution was almost absurd in its simplicity. If you can't back the dollar with gold, back it with oil. Something every single country needs every single day. With this idea floating around in his head, he went to Saudi Arabia under the pretense of helping modernize infrastructure. But behind closed doors, the real deal took shape. Saudi Arabia would sell its oil exclusively in US dollars, which meant that every country on the earth that needed oil would first need dollars to buy it with. And just like that, a country that had quietly walked away from gold had created a new rule. If you want energy, you need dollars. In exchange, the US guaranteed Saudi Arabia's security. [music] The Saudis essentially got the most powerful bodyguard in history. America got its monetary mojo back. Both parties went home happy. Within a year, every major oil producer followed suit. No grand vote, no global summit. Saudi Arabia moved and it made sense [music] and everyone else fell in line. And the wildest part, well, some parts of this arrangement stayed classified for over 40 years. The deal that quietly determined the cost of energy, housing, [music] and groceries for half a century wasn't publicly confirmed until 2016, which tells you something. But by then, the system had already been working almost perfectly without interruption for half of a century until now. Chapter 3. Enter the dragon. What Kissinger built did something remarkable. It took America's greatest vulnerability, a currency that was no longer backed by anything physical, and it turned it into its greatest strategic weapon. Once oil was priced in dollars, countries no longer used up their dollar reserves. They held on to them. And when they held on to them, they invested them mostly into [music] US Treasury bonds, which meant that every time a foreign government bought American debt, they were effectively financing Washington's federal government. The US built highways, funded wars, expanded its military, and won the Cold War. All while the rest of the world helped foot the bill. It was like installing a toll booth on the global economy, and then making every country pass through it just to turn on their lights. For 50 years, the toll booth held. Then China decided to build a road around it. China currently imports nearly 2 million barrels of oil per day from Saudi Arabia alone. That's enough to fill approximately 127 Olympic size swimming pools with crude oil every 24 hours. China's now Saudi Arabia's single largest customer. For years, it's paid for all of that oil in dollars. For each barrel purchased, an invisible fee flowed back into the US system. All because of that deal in the 70s. But it was a different development. quieter and more technical that revealed China's true game plan. In 2021, a project launched out of Basel, Switzerland's Bank for International Settlements. It was called Mbridge, the multiple central bank digital currency or CBDC bridge. That name is forgettable. The idea is not a system that lets countries move money directly between each other using digital currencies issued by their own central banks. It avoids intermediaries, detours, and most critically any US oversight. To understand why that matters, you have to understand how things work today. Right now, if Thailand wants to send money to China, it must bounce it through a chain of banks, most of them western, and then ultimately settle the transaction in dollars using Swift. Swift is the messaging system that banks use to talk to each other. It processes about $5 trillion a day. And because it operates under western oversight, the US has enormous influence over it, which means it can be weaponized. And it has been. When Russia invaded Ukraine in February 2022, the G7 kicked Russian banks out of [music] Swift and froze approximately $300 billion in Russian Western Reserves. If you're another country watching that happen, like China, India, or Saudi Arabia, you start to ask uncomfortable questions. What happens if we're next? China didn't write a strongly worded letter in response. It simply just built its own exit. And that's the gist of Imbridge, a payment system that routes around Swift entirely. It went live in 2024. By late 2025, Imbridge had processed over 4,000 transactions worth $55 billion, a massive increase from its early tests, but it is still tiny compared to Swift. [music] Inbridge wasn't designed to force its users to ask the West permission to make transactions. It was designed to avoid [music] that, which makes it something entirely new. It's not a replacement for the toll booth, but it is certainly a way around it. America's financial nuclear weapon, its ability to cut off any country from the global economy, doesn't look so unavoidable anymore. And this is where things get scary. Chapter 4, the slow bleed. In June 2024, news exploded across the internet claiming that Saudi Arabia had allowed its petro dollar agreement to expire. The deal was dead. It was time for the dollar to pack its bags. The Saudis were ready to receive payments from a grabag of currencies, including the euro, the rupee, and even the Chinese yuan. It's a bit of a stretch to say that there was ever a binding legal contract at all. The 1974 bilateral economic agreement between the US and Saudi Arabia had technically expired in 2001, and it was never the legal foundation of anything. The petro dollar system was never a treaty, but a structural agreement, a self-reinforcing habit of mutual dependency. It didn't need to be renewed. It was simply baked into the architecture of global trade itself. That system though is undeniably unraveling, one yuan denominated oil transaction at a time. Economist Zultan Pulchar called this transition Bretton Woods 3. His argument first made in March 2022 is that the world is shifting from what he calls inside money, paper claims on governments like US Treasury bonds to outside money, physical stuff like gold and commodities. His punchline was commodities are collateral and collateral is money. When the G7 froze Russia's reserves, it didn't merely punish Russia. It told every non-western central bank on Earth that dollar denominated assets could be confiscated. And that changed the calculus permanently. In practice, ddollarization, as it's been called, looks more like a slow bleed than an outright crash. The dollar share of global foreign exchange reserves has dropped from around 85% in the 1970s to roughly 58% today. Sure, it took 50 years to get to a number that's still nothing to bulk at, but that number, it is the lowest point in two decades. And here is where all of this might land in your life. The US government currently pays over a trillion dollars a year in interest on its debt. That is more than the annual spend of the entire defense and education budgets combined. The number is kept from being even more catastrophic because foreign governments are constantly buying US Treasury bonds. It keeps the bond prices up and yields and therefore interest rates down. Mortgage rates track treasury yields almost exactly when rates moved from 2.65% to 7.79%. Between 2021 and 2023, the monthly payment on a $400,000 loan jumped by almost $1,300, putting car payments and family vacations in jeopardy. Now imagine that instead of the Fed raising rates deliberately, the driver is simply fewer countries needing to buy dollars for oil. With fewer dollars needed, that's fewer treasuries purchased. Bond prices quickly fall and yields rise as mortgage rates follow. The Fed can cut the federal funds rate all at once, but it can't force central banks to keep absorbing American debt. [music] And if they stop, that bill lands on you. Chapter 5, the final domino. Every global reserve currency in history has eventually lost that status. Every single one. The Roman dinarios, the Dutch Gilder, the British pound sterling. Each one was in its era the operating system of global commerce. And each one fell when the underlying economic logic that made everyone want that currency slowly stopped being true. Reserve currencies have the same problem as bad software. Everyone knows a better option exists, but switching is a pain. So, you keep on running the old version until you absolutely can't anymore. When Britain finally lost reserve currency status, it didn't go quietly all at once in a big apocalyptic bang. It went through decades of inflation, emergency bailouts, and a standard of living that steadily declined relative to the rest of the developed world. The pound just slowly became less and less relevant. British citizens absorbed the cost in ways that never quite showed up on a single front page. That is the template for the dollar today. The US is not Britain in 1945. The dollar is vastly more embedded in global finance than sterling ever was. But the pattern is the same. Build global demand for your currency and then watch that demand erode. Britain did it through empire. America did it through oil. Now that system is being routed around. Bricks now represents almost 36% of global GDP and 44% of global oil production. The block includes most of the world's largest oil producers. IMBbridge works. SIPs, China's alternative to Swift, connects 109 countries. India is buying Russian oil and yuan and rupes. Brazil and China ditched the dollar in their bilateral trade. Saudi Arabia [music] is conducting transactions on Imbridge while simultaneously declining to formally join bricks. It's exactly the kind of strategic ambiguity a country maintains when it's keeping its options open. None of these systems are the dollar. None of them replace Swift on their own. But the dollar didn't take over the world overnight either. It won because for decades the rules were simple. The world runs on oil and oil is priced in dollars. So if you wanted energy, you needed dollars. That's the [music] part that's starting to crack. America's $39 trillion in debt only works because the rest of the world keeps needing dollars. The real question isn't whether China builds a perfect alternative. It's what happens when the world decides what it's built is good enough and starts moving those trillions somewhere else. Because if that shift actually begins, it doesn't stay contained to currency markets. It spills into interest rates, asset prices, and eventually real life. And at that point, the system doesn't slowly adjust. The world is on fire, and nobody is looking where it really matters. Every headline screams about the Middle East, chaos, and global fear. The media wants you glued to the straight of Hormuz, and the rising price of oil. But it's a lie, a distraction. The real story is in Japan. In 2024, after 17 years, the planet's biggest creditor ended its era of free money. The engine of the global economy is sputtering in Tokyo. And if you have a mortgage, a savings account, or a 401k, you're in the crosshairs. Chapter 1, the demographic black hole. On the surface, Japan looks like it's already living in the future. A place where tech giants dominate the world stage. Robots share the streets with people. AI predicts what'll come next. And entire cities run smarter, cleaner, and faster than anywhere else. But look past the distractions, dim the neon signs, forget the shiny gadgets. Focus instead on the finances, the numbers. That's where Japan's deepest, darkest, most disturbing secrets lie. The demographic death spiral. Because in 2026, Japan's population officially sits at approximately 122.6 million people. That might sound like a lot, but in 2010 it was even higher. 128 million to be precise. Since the late 2000s, Japan has been on a steady, unrelenting decline. It's losing around half a million people [music] from its population every single year. That's like the city of Atlanta vanishing every 12 months. To make matters worse, Japan also has the highest proportion of elderly [music] citizens anywhere in the world. In 2014, close to 26% of the population was over 65. By [music] 2022, that increased to more than 29%. The population is getting older while [music] the birth rate is hitting its lowest level in more than a century. Fewer and fewer people are choosing to start families. Birth rates are falling. Meanwhile, [music] the number of people of working age keeps shrinking. It's reached the point where now there are two deaths in Japan for every birth. That is a problem for a lot of reasons, especially for the economy. Every year that these trends continue, Japan's tax base disappears bit by bit. With more retirees, fewer families, and [music] fewer people paying taxes, Japan's financial foundations are starting to crack. But the Bank of Japan [music] saw this problem coming, and they acted in a way that was desperate, dramatic, unprecedented. They made money free. Instead of raising interest rates [music] to fight the problem, they kept them at zero. At times, they went below zero. At the same time, trillions of yen were pumped into the system. The Bank of Japan became one [music] of the biggest buyers of its own stocks. In effect, it socialized its stock market just to keep the lights on. It was a gamble, one with a massive amount of risk attached. No other central bank of any major developed nation around the world operated the same [music] way as Japan's. But somehow the gamble paid off, at least for a little while. People in businesses didn't have to worry about paying back much more than they'd originally borrowed. Loans became almost irresistible. Families took them. Businesses took them. Everyone wanted in. Why wouldn't they? It was almost like free money. Wall Street hedge funds and investment firms took advantage too, but on a much bigger scale. They realized they could borrow huge amounts of the Japanese yen at 0% interest and convert all that cash to dollars. They would then use that cash to buy US tech stocks, treasury bonds, or anything else they wanted. It was known as the yen carry trade, and it [music] was like some sort of video game infinite money glitch. A seemingly foolproof way to guarantee returns. For a while, Japan retained its status as an innovative, pioneering, and worldl