I wish I had spent more time learning history. We live in what will go down as one of the most interesting times that man has ever experienced, and so many answers to what is to come lie in learning about the past.

I'm sure countless experts and books discuss this in great detail, such as "Why Empires Fall", but it is becoming ever more clear that the United States, as the hyperpower it has become, is in some form of decline. Let me get it out of the way that I love America, but it is fascinating to note the parallels to past declines of empires to today. Most clear to me are conflicts like Russia and Ukraine. We live in a globalized world, and trying to ignore a conflict such as that is virtually impossible. We flail like the Empire of Rome struggled towards its end in attempting to defend distant borders and land through expensive military campaigns funded by a deeply indebted government. We have spent billions on a potentially futile war in Ukraine and recently imposed tariffs to attempt to swing back some of the debt in a form of tax that will most likely impact consumers more than anyone else.

So we have some headwinds, and I won't dive too deep into history, but I think the tariffs are a great place to start to paint the path we go from here.

One of the most significant victories the US had as a result of its dubs in the world wars was the establishment of the US dollar as the global reserve currency. International deals across energy, trade, and settlement are done in US dollars. This has resulted in many of the trade deficits that Trump views as "unfair" because one effect of this dominance is that it has kept goods from elsewhere cheap. Other countries want their currencies to be weak against the dollar to make their goods attractive. They've devalued them so much that we've even had to make agreements in the past (see the Plaza Accord of 1985) to collectively depreciate the dollar against other currencies to protect American manufacturing against foreign competition. So what are some of the second and third-order effects of this? Importantly, countries that receive those pretty green pieces of paper in exchange for their goods are more likely to reinvest in America. If you hold USD, it makes sense for you to purchase US assets, which keeps equities and debt demand. The US can also now impose its will on many countries as their dollar-denominated trade and loans are at the whims of the US government and, somewhat more importantly, the FED. Our chaotic printing and the no-longer-transitory inflation that led to the steepest rate hikes since the 1980s didn't just hurt the American home-buying spree, it figgity fucked other countries due to their USD-denominated debt.

On the other hand, since dollar dominance is at the root of the trade deficits, it is part of the reason US manufacturing has struggled. For those concentrated pockets of America that work in tech, finance, and other high-margin industries, you've kept winning. But much of the country that depended on US manufacturing, such as the Rust Belt, has lost to foreign competition. It's a double-edged sword because globalization is deflationary, but having such dollar-dominance is not a sustainable state. More than anything, dollar dominance has let us play on easy-mode when it comes to influencing the global economy and printing as we please because there is so much demand for the dollar. Letting this run for decades has made it pretty hard to undo. It takes years to bring manufacturing up to speed, and US wages would make whatever goods we can be competitive at (incl. tariffs) relatively expensive. Still, the current administration has made it a point to get the best of both worlds by maintaining the dollar dominance while restoring manufacturing. Independence Day on April 2nd was a first, aggressive move in this direction.

I wish I had spent more time learning history. We live in what will go down as one of the most interesting times that man has ever experienced, and so many answers to what is to come lie in learning about the past.

I'm sure countless experts and books discuss this in great detail, such as "Why Empires Fall", but it is becoming ever more clear that the United States, as the hyperpower it has become, is in some form of decline. Let me get it out of the way that I love America, but it is fascinating to note the parallels to past declines of empires to today. Most clear to me are conflicts like Russia and Ukraine. We live in a globalized world, and trying to ignore a conflict such as that is virtually impossible. We flail like the Empire of Rome struggled towards its end in attempting to defend distant borders and land through expensive military campaigns funded by a deeply indebted government. We have spent billions on a potentially futile war in Ukraine and recently imposed tariffs to attempt to swing back some of the debt in a form of tax that will most likely impact consumers more than anyone else.

So we have some headwinds, and I won't dive too deep into history, but I think the tariffs are a great place to start to paint the path we go from here.

One of the most significant victories the US had as a result of its dubs in the world wars was the establishment of the US dollar as the global reserve currency. International deals across energy, trade, and settlement are done in US dollars. This has resulted in many of the trade deficits that Trump views as "unfair" because one effect of this dominance is that it has kept goods from elsewhere cheap. Other countries want their currencies to be weak against the dollar to make their goods attractive. They've devalued them so much that we've even had to make agreements in the past (see the Plaza Accord of 1985) to collectively depreciate the dollar against other currencies to protect American manufacturing against foreign competition. So what are some of the second and third-order effects of this? Importantly, countries that receive those pretty green pieces of paper in exchange for their goods are more likely to reinvest in America. If you hold USD, it makes sense for you to purchase US assets, which keeps equities and debt demand. The US can also now impose its will on many countries as their dollar-denominated trade and loans are at the whims of the US government and, somewhat more importantly, the FED. Our chaotic printing and the no-longer-transitory inflation that led to the steepest rate hikes since the 1980s didn't just hurt the American home-buying spree, it figgity fucked other countries due to their USD-denominated debt.

On the other hand, since dollar dominance is at the root of the trade deficits, it is part of the reason US manufacturing has struggled. For those concentrated pockets of America that work in tech, finance, and other high-margin industries, you've kept winning. But much of the country that depended on US manufacturing, such as the Rust Belt, has lost to foreign competition. It's a double-edged sword because globalization is deflationary, but having such dollar-dominance is not a sustainable state. More than anything, dollar dominance has let us play on easy-mode when it comes to influencing the global economy and printing as we please because there is so much demand for the dollar. Letting this run for decades has made it pretty hard to undo. It takes years to bring manufacturing up to speed, and US wages would make whatever goods we can be competitive at (incl. tariffs) relatively expensive. Still, the current administration has made it a point to get the best of both worlds by maintaining the dollar dominance while restoring manufacturing. Independence Day on April 2nd was a first, aggressive move in this direction.