Tom Bilyeu

How bad is it?

The silver crisis has revealed a fundamental flaw in the entire American strategy.

We act like the dollar's status as the world's reserve currency is a law of nature, when in fact, it is an increasingly fragile system based solely on trust.

just as the west treated silver as a paper asset that represented a real world asset that would always be available and got insanely overextended via a ratio of 356 paper claims to every actual ounce of physical silver the u.s treats the dollar like its status as the world's reserve currency is a permanent guarantee and has gotten itself insanely overextended via debt

When one move by the Chinese highlights that paper backed by nothing is nothing, imagine what happens to the dollar over time as the illusion of paper bets as safe bets permanently vanishes.

The dollar is the ultimate paper asset with zero physical backing.

It's not backed by anything other than the US government says it's valuable.

In no uncertain terms, it is a confidence game.

As long as people believe

that America will continue to be the most dominant military and economy on planet earth, you can tax the world via inflation because they're all gonna hold those dollars.

But if people realize that America is on shaky economic ground and at $38.5 trillion in debt, it is certainly that people will increasingly look for alternatives.

And that's why the percentage of global commerce settled in dollars has dropped from over 70% in the late 1990s to the high 50s today.

Confidence is America's primary export.

But that confidence is waning.

We print pieces of paper that we call dollars, and in exchange, the rest of the world gives us things like their oil, their electronics, and their silver.

But that only works as long as the world believes those pieces of paper will hold their value compared to the actual underlying asset.

That confidence has been under direct attack by China for a while now, and it's starting to work.

China is forcing a global pivot away from Western financial abstractions

and back towards physical reality.

If that forces the world to update their mental model away from paper assets as safe assets and into an obsession with what the paper asset is actually tied to, it will hasten the decline of the dollar.