➡ The article discusses the geopolitical tensions between the U.S., Iran, and China, focusing on the financial implications rather than the political ones. It explains how the U.S.’s threats of sanctions and tariffs on Iran and its trading partners, primarily China, can disrupt the global money system. The article suggests that such actions could force countries to find alternative financial infrastructures, potentially weakening the U.S. dollar’s status as the world’s reserve currency. It also highlights the potential for a power struggle between global superpowers over resources and financial control.
➡ The US dollar’s role as the global reserve currency is declining due to factors like adverse American foreign policies, economic sanctions, and the emergence of other nations as power centers. This has led to a shift towards de-dollarization, with countries seeking alternatives to the dollar for trade. One potential solution is a new payment system backed by gold, a trusted and neutral reserve asset. This system, separate from the US dollar and SWIFT network, allows nations to trade outside of the US dollar system, providing both liquidity and a settlement layer.
➡ Hong Kong and China are creating a new financial system that uses gold and the Chinese currency (RMB) to settle trades, instead of US Dollar Treasuries. This system is already being used by 32 countries, excluding the US. The shift is not aimed at replacing the US dollar, but rather the US Dollar Treasuries, which are the reserve of world banks. This change could impact the US’s ability to inflate its currency and could affect American markets and assets.
➡ The old methods and assets won’t keep up with the rising cost of living in this changing era. We need to adapt to new rules and stop relying on outdated ways. Feel free to ask for more details.

Right now, the headlines are focused on the U.S. iran, escalation, tariffs, pressure, geopolitical risk. And most people are reading this the same way they always do as politics, leverage or deterrence. But you see, that’s not the real consequence. The real consequence doesn’t show up in politics. It shows up in financial infrastructure. Because when access to the global money system becomes conditional, trade doesn’t just stop, capital doesn’t comply, it reroutes. And what just happened didn’t change the world overnight. It accelerated a chain reaction that was already in motion. Now, before we talk about where this goes, let’s be clear on what actually just happened and why the response was inevitable.

So let’s go. All right, so let’s just jump in real quick. And again, I’m not going to give you the news headlines. I’m going to tell you what the news headlines mean, what they’re missing. But before we do, let’s just go through the news headlines real quick. What even just happened? At this point, you already know, of course, we have massive protests going on over in Iran. We’re not exactly sure what’s going on over there because there’s a lot of different rumors. But again, we don’t know exactly what’s going on because we’ve also had media blackouts.

So they’ve been blocking a lot of communication, Internet traffic, phone traffic, all these things. So we call it the fog of war, if you will. Now, I like to go to a bunch of different news sources to get my news. And one of the news sources, especially when it comes to, like international news, Middle Eastern news, might be Al Jazeera, maybe it’s a little bit less biased than US US News sources, if you will. But they call it the protest, the blackout and the narrative war. Because it’s a blackout, it allows the fog of war to really start to escalate.

We don’t know exactly what’s going on, but that’s not important. That’s not what we’re talking about here. What we’re talking about is that what happens then is Trump starts to threaten Iran. All right, so we see that, like what’s happening. Trump calls for new leadership. Trump’s calling for tariffs, all of these different things, but these are just the signals that are being sent out. Again, going back to Al Jazeera, we see foreign based monitors. This is as best as we can tell, foreign based monitors. And Iranians abroad are saying that state forces killed protesters in huge numbers.

Tragic, absolute tragic. Doesn’t matter if it’s huge numbers, small numbers, Absolutely tragic. Humans. Right. Activists News agency says that somewhere between 3,300 to 4,300 people have been taken out during this protest. The organization said 2100 people have been severely wounded. Reuters are saying maybe up to 5,000 people. Okay, so that’s, that’s the what. But again, what does this mean to us as we navigate the world as we’re investors, we’re trying to understand the world from an investment lens, macro lens. Well, the signal that being. That is being sent to everybody is Trump is saying, well, hey, we’re going to threaten Iran not with war, but with sanctions.

Again, the one tool that the US has is sanctions on you and sanctions on you. And so if we don’t have enough tariffs already, he’s threatened to send a 25% tariff not just on Iran, but on every country that deals with Iran. We’re going to come back to that in a minute. But just to get a little idea of what this is looking like, we can see its trading partners. So Donald Trump threatened a 25% tariff on trading partners. Now, who are Iran’s trading partners? Well, primarily China. You see, Iran has oil, and China wants oil.

And there’s already massive sanctions there already. But China’s able to do some backdoor deals, some black market oil. They get it for very, very cheap. They don’t want to give that up. So it says here, primarily, China retaliated by opposing unilateral sanctions and threatening countermeasures. So, so China’s like, all right, sanctions on us. Well, then sanctions on you, too. Right. They want to protect their economic interests, particularly oil imports. They need the oil. They want it from Iran. Okay, so Trump threatened tariffs, 25% tariff on goods. So any goods that are going in and out of Iran from any of the trading partners.

Also Russia. Russia and China. And then China’s response is opposition to the sanctions again. So Beijing firmly opposes unilateral sanctions. Of course, economic lifeline. China relies heavily on Iranian oil, so they need this. So what we have here is not politics. This is not politics. I mean, yes, it’s about politics, but that’s what we’re talking about. We’re talking about power, we’re talking about money, we’re talking about energy, we’re talking about resources. And we’re talking about a power struggle between the three global superpowers, China, Russia, and the US as we fight over this, power doesn’t just disappear.

So it’s fine to have the ultimate say, the ultimate power, the. The ability to kick people out of a system you can do that. But just because you kick someone out of a system doesn’t mean they just go in a corner and die. It means they do something else. We’ll come back to that. But we have to understand that it’s not just the dollar that’s powerful. It’s not just that the dollar is the reserve currency of the world. Is that the dollar system, the infrastructure is the payment network of the world. It’s like Visa or MasterCard or sort of like the credit card processors of the digital world now.

And so today, if you were a merchant and you couldn’t get a Visa merchant system, it’s very difficult to do business. And so we have to understand that financial systems are networks. They also have network effects. Network effects are like, everybody’s on X. I could go start a copy of X. It’d be very difficult to get the world to come over to my platform, because network effects are very powerful. And so the US Dollar is. Is the largest financial network, has the network effects. But again, as we continue to weaponize it and sanction more people and then, yes, kick people out of it, then they have to do something else.

Now, we know that China is already having a response. Capital in general is already having a capital response. We can see this. So we can see immediately as this is being announced, Iranian regime elites allegedly move millions of dollars out of the country amid sanctions. So they see this is going to happen. So what do they do? They start getting it out of that system where it can be impacted, and they start moving it outside of there. We can see here what China has said about this to Al Jazeera, again, going back to that news source, they said that not only could this jeopardize the current stability that we have between Beijing and Washington, so there’s been a lot of wars, tariff wars, going back and forth lately.

And so we’ve been sort of stabilizing that. But this threatens that. It also threatens Trump’s planned trip to Beijing coming up in April. Um, and also it says here that it would take all necessary. China would take all necessary measures to defend its interest. What necessary measures are these? Or actually, a better question is what necessary measures have already been put in place that they could activate right now? That’s the better question. We’re going to come back to that question. But we can see this power struggle that’s happening, and it’s not about Iran. That’s the catalyst that’s pushing this forward.

We have to understand that Rails Financial. Rails, that’s the infrastructure, right? The Swift Network, the correspondent banks. That’s the infrastructure. But if all of that’s at risk, what’s going to happen? These nations have to find another way. They can’t afford a single point of failure. If you’re a nation and you need to trade and use supplies, you can’t afford a single point of failure. You can’t afford to have one nation, one president like Trump just decided to wake up one morning and just cut you off. And so you have to start accelerating to build out a new structure.

And again, what if there’s already one built out? We’re going to come back to that. But what does this routing look like in practice? I’m going to break that down for you. There’s a couple options, and there’s one that you are probably going to be pretty surprised about. Okay, the hidden cost of the dollar. Now, the dollar again, the reserve currency of the world. There’s a huge benefit to having that reserve currency in the world. The US Dollar has been dominant not just because the United States has the biggest military in the world, not just because we were the greatest industrial nation after World War II, but because of the network, because of the payment rails, because of the settlement systems, the correspondent banks that we have, the Swiss system, and because right here, it’s trusted collateral.

The US Dollar has been the nation that has the best rules, the best order, the best private property rights. And so it’s been the best trusted collateral. But when you continue to weaponize it over and over and over, people get burned over and over and over, they start to trust it less. When Russia saw their bank accounts get seized by the United States, by the west, by NATO, the rest of the world was put on notice that if one of three superpowers with nukes can have their money taken, it can happen to anybody. So once it’s weaponized one time, people aren’t going to trust anymore.

It’s not one of those things where it’s like, I don’t really know. It’s like, okay, I see what can happen. I’m not going to put myself in that same place again. So what happens? Does trade completely stop? Well, we can see that it starts to transfer. So take a look at this chart right here. We can see the dollar’s role in global reserves is withering away. So again, it’s the reserve currency, though. What does that mean? It’s the reserve. So what we can see in the dollar’s place, going back here to about 20, 15, about 10 years, we are around almost 60% of reserves and Today the withering away has seen it go down to about 40%.

So it’s, that’s happened in a decade. It’s pretty quickly. At the same time, we’re going to come back to this. But at the same time, look at gold picking up here, almost a 50%. We’re seeing a structural transition happening right in front of our very eyes. Now again, why does this happen? I’ve sort of already explained that. But adverse American foreign policies and tariffs, that’s it. Right. Weaponization of economic sanctions and the swift system. The swift system is the payment system around the world has forced other nations to de dollarize to get away from the dollar, find another way to do business, to maintain their sovereignty because they don’t want to continue to get sanctions, sanctions, sanctions slapped on you.

And also there’s emergence of other nations as power centers. And so the US Was the dominant power center of the world, but now there’s other power centers, economic and political reforms in countries like China and India, a shift toward de dollarization is altering the global balance of power. Right. And so as more countries want to get off of that, it says here, as of 2025, US dollar is still dominant. It’s still, still the dominant one in foreign exchange markets. 88%. All right, so that’s in the FX markets, however, trade invoicing is only 40%. Cross border liabilities, 48%.

Those are below 50%. We can see here declining in the foreign currency reserves from 90% in 1960 to 45% in 2023. That’s a massive decline. As you can see the bond market from earlier 50% now, 30% in 2024. Yes, it’s still the dominant one, but it’s falling very, very rapidly for all the reasons that I’ve given you. Now again, the response to this isn’t just the pressure, it’s risk management. They can’t just be cut off from the world. Nations need energy, they need food, they need to trade. So where does it go next? All right, we’ve heard a lot of different things, but I have one that you probably haven’t heard of that I think is going to be the dominant new network that’s challenging.

So again, it’s just risk management. And again, if, so if you run a country, the trade has to settle, you have to be able to pay and so then you have to start diversifying. Okay, but who, so we talked about the dollar. Was the Dominan payment network partly because of trust, a big piece because of trust and how that trust is degrading so the problem is who, who else can we trust? We’ve heard a lot about, I’ve talked about on this channel, quite a bit brics. So this is Brazil, Russia, India, China and South Africa forming a coalition and doing trade between themselves.

And there’s been endless talk about a BRICS currency. So they’ll come together, they’ll create their own currency to challenge the US block and they’ll have some sort of a currency. There’s news headlines about this today. As a matter of fact, I saw this article just pop. I think in the last day or two, brics, nations unite. They’re all going to come together, they’re going to explore digital currency. Now, a cbdc, apparently they’re going to challenge the dollar dominance again. It’s like in the news all the time, constantly. But these guys, they’re all going to coordinate. Let me just give you an example.

So remember Brazil, Russia, India, China, South Africa. So Russia, South Africa. So last year when they had the meeting in South Africa, Putin from Russia couldn’t even go because they were going to arrest him for war crimes. All right, so that’s how well they trust each other, that’s how well they get along. So the chance of them coordinating to get anything seems pretty slim to none. Now another viable option is one that I’ve talked about a few times here is something called Project Enbridge. So this is basically a CBD system where all the nations could have their own cbdc, but then you have a hub, a central hub that exchanges these.

All right, so we can see China led, of course. So in brics, the C is the biggest China LED cross border CBDC platform. Enbridge surges past 55 billion in transaction volume. It’s not small, it’s operational, it’s working, countries are using it. 55 billion is not a small number. And again, it’s not so much the number, the size, it’s the direction that it’s going. So we can see here Project Enbridge has processed over 50, 55 billion. But again, it’s not the size, it’s the direction. Well, what’s the direction? A 2500 times increase just since 2022. So it’s not the size, it’s the direction.

And we can see it’s going up and to the right. China’s Digital Yuan accounts for approximately 95% of the settlement. So I don’t know about the bricks. Certainly looks like China’s Digital Yuan. Their CBDC is taking off. The BIS bank of International Settlements now has left Project Enbridge Sort of leaving it up to them to go, continue to run. And now the BIS is focused on a rival Western initiative. Pretty interesting. So now they want to create competing networks. If you’ve been watching my channel for a long period of time, you know that I’m a big fan of competition.

We’ll come back to that in a minute. But again, who would you trust in those systems? Are you going to trust the BRICs? They can’t even trust themselves. Are you going to trust China? They don’t even have open capital markets. So where will you leave your money? Who will you trust with your reserves to not weaponize them or steal them from you? So even though there’s competing infrastructure, there’s a massive component missing, and that’s trust. However, there might be a solution to that. Let’s take a look. So there’s a gold mechanism. Gold has been money for over 5,000 years.

Gold can be somewhat trusted because it’s a commodity. You can find it anywhere in the world. Anybody could dig it up. Gold is fungible. Gold is gold anywhere in the world. It’s been used as collateral for decades. And that’s the key piece. What collateral has trust? Right, so dollars, if the government, if the Fed can just push a button and create more of those without telling anybody, it’s hard to trust that. But gold as collateral has trust. It’s inherently in there because it’s physical by nature. It’s not what it is. It’s not that it’s gold. It’s what it represents.

What does it represent? Well, it represents a neutral reserve asset. All right, so we know that China has been building its gold reserves for decades. As a matter of fact, we don’t really know because they’re somewhat secretive about how much gold they have. They buy it through proxies and this and that. But we know that they’ve been not only mining more gold than any other country in the world, we know they’ve also been buying more gold than any country in the world. They have massive gold reserves somewhere. Sometimes the rumors are up to 20, maybe 30,000 tons, a crazy amount.

But they’ve also been building infrastructure for another payment system. And this is the one I want to talk about again. They want to build this new payment system. They want to put trust in it, because no one’s going to trust the Chinese currency, nor do the Chinese want their currency to be an open capital market. So they’re not using gold as money. They’re using gold in this new system as neutral settlement collateral. So how does this work. So they’ve set up a system that allows other nations to trade in a payment in a parallel payment network.

Outside of the US dollar system, outside of the SWIFT network, there’s a new parallel system and it needs two things. It needs liquidity. So it needs the network to train, to change hands liquidity. And it then needs a settlement layer because again, nobody wants to leave their money in a Chinese system or a brick system or whatever system that is. We can see how this is already starting to take hold if you take a look at the chart I showed you sort of one earlier. But look at how we can see gold is starting to really take off in central bank reserves at the same time as US Treasuries are starting to fall off a cliff.

So there’s a shift happening. We can see that. Also if you’ve been paying attention, gold’s been making new all time highs over and over and over. It’s about $4,600 ish somewhere right around now. But why, why is it doing it? And that is because of what is going on here. Now we can see it explained right here. Christopher Hoy said that Hong Kong’s gold market has preliminary formed a complete industrial chain and will establish a gold industry organization. Keyword here, industrial chain, a payment network. Let me show you what, show you what we’re talking about here.

So in a, in a quote from him directly here, it says that the first phase of expansion of the Hong Kong Airport Authority’s precious metals depository has been complete. So Hong Kong has been one of the financial centers, one of the hubs of the world. And so, so they’ve created a new gold exchange in Hong Kong, additionally the Shanghai Gold Exchange, the sge. This is China’s gold reserves of course is in conjunction with this and they’ve established its first offshore warehouse where in Hong Kong, where all this is being set up. They say here they, they’re building a deeply integrated regional gold ecosystem, integrated in Asia, Hong Kong, China integrated gold ecosystem.

Laying the foundation for processing trade cooperation between Hong Kong and Shenzhen, between Hong Kong and China. So Hong Kong is the capital center of the world, one of the major capital centers of the world. And of course China has all the gold. And so of course they’re working together to set this up in what, a government owned company to rival the other gold centers of the world. Like the comics in New York or like the LBMA in London. Okay, so this is what’s happening and it’s not just happening. Let me say it another way. It’s Already happened.

It’s already there. And not only is it already there, they’ve already opened up swap lines with most of the countries in the world. 32 countries are now set up to exchange on this new parallel financial system. And if I read off the names here, you might notice one country is missing off this list, and that’s the United States. But of course, everybody else is on here. Canada, Australia, Japan, Brazil, Malaysia, Switzerland, Russia, Argentina, Thailand, Chile, Saudi Arabia. I could go on. You get the point. But again, what they’re doing is setting up a parallel financial system using RMB as the liquidity, but using gold to settle the trade, to remove the need for trust.

But what they’re doing is they’re not trying to replace the US dollar. So everybody has it wrong. They think that there’s a competition for the dollar. They’re not trying to replace the dollar. They’re trying to replace the usdt. No, not tether Treasuries. US Dollar Treasuries, which is what’s the reserve of the world banks. Okay? And this isn’t speculative. This is structural. It’s happening. I just showed this to you. It’s already in effect and it’s already being used by all these countries. And at this point, it’s only about acceleration. Typically, the way it works with humans is we only move when the pain is high enough, right? Everything has a cost.

If I switch, there’s a high switching cost. If I stay, there’s a cost for staying. And what happens is I typically don’t move until the cost of staying is more than the cost of switching. But once I’ve switched, there’s a cost if I want to switch back. Which means once we kick enough people out of the financial system and they move to a new financial system, the chance of them coming back is slim to none unless the pain gets high over there. So this doesn’t roll back when tensions cool, when we decide to negotiate, when we decide to end the wars, we decide to drop the tariffs.

They don’t come back to the network, all right? They’re gone. And what this does is creating competition. As I said earlier, I love competition because competition creates better products, better services, better prices. And so now we’re seeing 1, 2, 3 new payment networks being set up. And this doesn’t stop, right? It doesn’t stop. Nations aren’t going to just go die when you kick them out of the dollar system. They’re just going to move to the new network that’s already set up. It’s already running, and it’s already being used. Alternative settlement paths, again, they don’t just disappear.

So as these systems are being set up, don’t be misled by the fact that maybe the growth is slower than you might expect. Whatever preconceived notion you have of that, those alternative networks are there as backups. The decentralization of these networks is important even if they’re not being used right now. Right, because we need to have safety, we have to protect ourselves if something were to happen. I need the backup source. So don’t get caught up in the numbers right now. Just know that the very fact that they’re there is the danger alone. And the fact that again, tariffs continue to happen, trade wars continue to happen, sanctions continue to happen, only pushes value over here.

Also the usdt, the US dollar Treasuries, there’s second order effects to that. All right, this isn’t just about other nations find another way to trade. And our sanctions, our tariffs aren’t effective or efficient anymore. What it really comes down to then is if those nations aren’t going to buy the US Treasuries, who will? If they don’t buy the US Treasuries, how does the United States get to continue to inflate its currency? What does that do to American markets? What does that do to dollar denominated stocks and assets? What does that do to Americans that live in America? Well, that’s a bigger topic.

We’ll come back to that. But really what it does, it brings us to the only question that really matters for you and I right now. The question we should be asking is what does this mean for us right now? Well, specifically we want to understand that the rules are changing. We want to understand that as we continue to sort of have this decline of America, the declining power while other nations powers are rising, we have to understand that sort of to hang on to that power. It’s more sanctions, that’s more tariffs and it’s more protectionism. But unfortunately the more you squeeze, the more people tend to fall out and go.

So the rules are changing. We have to understand that it’s not going to be reversed at this point. Okay, number two, we want to understand that volatility is part of this. But volatility is not the problem. The problem that you want to be watching out for is the repricing. Okay, it’s going to be volatile. You don’t just change powers in hands like this without volatility. But don’t be worried about volatility. Understand the direction, but more importantly, beware of the Repricing, that’s what’s happening. Also, we want to understand that collateral is much more important. But we also want to understand that as this repricing happens, we want to have the right collateral to keep up with the cost of living.

So whatever you’re currently using for your unit of account, for your collateral, for your, for your base denominator, the US dollar assets, as I referenced earlier, they’re not going to be keeping up with the cost of living. And so what do we want to do? Well, we want to understand that traditional assets, those dollar denominated assets, the stocks, the Treasuries, the bonds, they’re not going to do it anymore. So whatever’s worked in the past is not going to work moving forward in this new system. So what is. Well, what is, is assets that don’t depend on permission.

Of course. Are you following the theme here? Right. We’re having a breakdown in trust. So what are those? Well, there’s a couple things. One, let me show you this chart my good friend Larry Lepard showed me the other day. When American money printing goes exponential, you can see this exponential line right here. And every time the Fed balance sheet touches or violates this line is where it has to pop. So it violated the line right here, it blew up, it came back down to retest, the line blew up. And right here it broke through the line again.

Now, if you’re like an elementary kid and you can understand patterns, what do you think happens next? Well, most likely this balance sheet comes up here somewhere. So as this trust gets, continues to erode, this continues to happen. What happens is something known as the debasement trade. This is what’s being talked about quite a bit. JP Morgan put it out. And what that means is that assets that can hold up, that can’t be printed, so we’re talking about basically gold and Bitcoin at this point are going to be the assets that you’re going to want to move to when that endless money printing happens and the trust gets continued to be eroded away.

All right, so that’s how we want to think about this. We want to go to assets that don’t depend on permission. The past is no longer going to work anymore. The traditional assets aren’t working. They’re not going to keep up with the cost of living increases in a new era where the rules are changing. And that’s the key piece, the answer’s changed. And if you’re still looking at the old way, it’s not going to work anymore. All right, that’s what we got right now. Hopefully that makes sense. Let me know in some comments or questions down below if you want me to dig in any deeper.

And that’s what I got. All right. To your success. I’m out.
[tr:tra].

See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.