Cryptocurrency: Bitcoin and the End of Super Imperialism

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Mon Nov 15 02:05:12 PST 2021

Bitcoin & The End Of US 'Super Imperialism'

Authored by Alex Gladstein via,

In 1972, one year after President Richard Nixon defaulted on the
dollar and formally took the United States off of the gold standard
for good, the financial historian and analyst Michael Hudson published
“Super Imperialism,” a radical critique of the dollar-dominated world

The book is overlooked by today’s economic mainstream and puts forward
a variety of provocative arguments that place it outside of the
orthodoxy. However, for those seeking to understand how the dollar won
the money wars of the past century, the book makes for essential

Hudson’s thesis comes from the left-leaning perspective — the title
inspired by the German Marxist phrase “überimperialismus” — and yet
thinkers of all political stripes, from progressives to libertarians,
should find value in its approach and lessons.

In “Super Imperialism,” Hudson — who has updated the book twice over
the past 50 years, with a third edition published just last month —
traces the evolution of the world financial system, where U.S. debt
displaced gold as the ultimate world reserve currency and premium
collateral for financial markets.

How did the world shift from using asset money in the form of gold to
balance international payments to using debt money in the form of
American treasuries?

How did, as Hudson puts it, “America’s ideal of implementing
laissez-faire economic institutions, political democracy, and a
dismantling of formal empires and colonial systems” turn into a system
where the U.S. forced other nations to pay for its wars, defaulted on
its debt, and exploited developing economies?

For those seeking to answer the question of how the dollar became so
dominant — even as it was intentionally devalued over and over again
in the decades after World War I — then “Super Imperialism” has a
fascinating, and at times, deeply troubling answer.

Drawing on extensive historical source material, Hudson argues that
the change from the gold standard to what he calls the “Treasury Bill
Standard” happened over several decades, straddling the post-World War
I era up through the 1970s.

In short, the U.S. was able to convince other nations to save in
dollars instead of in gold by guaranteeing that the dollars could be
redeemed for gold. But eventually, U.S. officials rug-pulled the
world, refusing to redeem billions of dollars that had been spent into
the hands of foreign governments under the promise that they were as
good as gold through fixed rate redemption.

This deceit allowed the U.S. government to finance an ever-expanding
military-industrial complex and inefficient welfare state without
having to make the traditional trade offs a country or empire would
make if its deficit grew too large. Instead, since U.S. policymakers
figured out a way to bake American debt into the global monetary base,
it never had to pay off its debt. Counterintuitively, Hudson says,
America turned its Cold War debtor status into an “unprecedented
element of strength rather than weakness.”

As a result, the U.S. has been able to, in Hudson’s words, pursue
domestic expansion and foreign diplomacy with no balance of payment
concerns: “Imposing austerity on debtor countries, America as the
world’s largest debtor economy acts uniquely without financial

A key narrative in Hudson’s 380-page book is the story of how the U.S.
government systematically demonetized gold out of the international
economic system. Curiously, he does not mention Executive Order 6102 —
passed by President Roosevelt in 1933 to seize gold from the hands of
the American public — but weaves a compelling narrative of how the
U.S. government pulled the world away from the gold standard,
culminating in the Nixon Shock of 1971.

In Hudson’s view, leaving the gold standard was all about America’s
desire to finance war abroad, particularly in Southeast Asia. He says
the Vietnam War was “single-handedly” responsible for pushing the U.S.
balance-of-payments negative and drastically drawing down America’s
once staggering gold reserves.

Ultimately, Hudson’s thesis argues that unlike classic European
imperialism — driven by private sector profit motives — American super
imperialism was driven by nation-state power motives. It was not
steered by Wall Street, but by Washington. Bretton Woods institutions
like the World Bank and International Monetary Fund (IMF) did not
primarily help the developing world, but rather harnessed its minerals
and raw goods for America and forced its leaders to buy U.S.
agricultural exports, preventing them from developing economic

There are, of course, several criticisms of Hudson’s narrative. It can
be argued that dollar hegemony helped defeat the Soviet Union,
pressuring its economy and paving the way for a more free world; usher
in the age of technology, science, and information; push growth
globally with surplus dollars; and isolate rogue regimes. Perhaps most
compellingly, history seems to suggest the world “wanted” dollar
hegemony, if one considers the rise of the eurodollar system, where
even America’s enemies tried to accumulate dollars outside of the
control of the Federal Reserve.

Hudson was not without contemporary critics, either. A 1972 review in
The Journal Of Economic History argued that “it would require an
exceptionally naive understanding of politics to accept the underlying
assertion that the United States government has been clever,
efficient, totally unscrupulous, and consistently successful in
exploiting developed and developing nations.”

The reader can be the judge of that. But even with these criticisms in
mind, Hudson’s work is important to consider. The undeniable bottom
line is that by shifting the world economy from relying on gold to
relying on American debt, the U.S. government implemented a system
where it could spend in a way no other country could, in a way where
it never had to pay back its promises, and where other countries
financed its warfare and welfare state.

“Never before,” Hudson writes, “has a bankrupt nation dared insist
that its bankruptcy become the foundation of world economic policy.”

In 1972, the physicist and futurist Herman Kahn said that Hudson’s
work revealed how “the United States has run rings around Britain and
every other empire-building nation in history. We’ve pulled off the
greatest rip-off ever achieved.”

Governments always dreamed of transforming their debt into the most
valuable asset on earth. This essay explains how the U.S. succeeded in
turning this dream into a reality, what the implications for the wider
world were, how this era might be coming to a close, and why a Bitcoin
standard might be next.

European powers, tempted by the ability to print paper money to
finance war operations, broke off the gold standard entirely during
World War I. The metal’s restraint would have resulted in a much
shorter conflict but the warring factions decided instead to prolong
the violence by debasing their currencies.

Between 1914 and 1918, German authorities suspended the convertibility
of marks to gold and increased the money supply from 17.2 billion
marks to 66.3 billion marks, while their British rivals increased
their money supply from 1.1 billion pounds to 2.4 billion pounds. They
expanded the German monetary base by six-fold and the British monetary
base by nearly four-fold.

While European powers went deeper and deeper into debt, America
enriched itself by selling arms and other goods to the allies, all
while avoiding conflict in its homeland. As Europe tore itself to
shreds, American farms and industrial operations ran full steam. The
world at large began to buy more from the U.S. than it sold back,
creating a large American current account surplus.

Post-war, U.S. officials broke with historical precedent and insisted
that their European allies repay their war debts. Traditionally, this
kind of support was considered a cost of war. At the same time, U.S.
officials put up tariff barriers that prevented the allies from
earning dollars through more exports to America.

Hudson argues that the U.S. essentially starved Germany through
protectionist policy as it was also unable to export goods to the U.S.
market to pay back its loans. Britain and France had to use whatever
German reparations they did receive to pay back America.

The Federal Reserve, Hudson says, held down interest rates so as not
to draw investment away from Britain, hoping in this way the English
could pay back their war debt. But these low rates in turn helped
spark a stock market bubble, discouraging capital outflows to Europe.
Hudson argues this dynamic, especially after the Great Crash, created
a global economic breakdown that helped trigger nationalism,
isolationism, autarky, and depression, paving the way for World War

Hudson summarizes America’s post-World War I global legacy as follows:
the devastation of Germany, the collapse of the British Empire, and a
stockpiling of gold. At home, President Roosevelt ended domestic
convertibility of dollars for gold, made holding gold a felony, and
devalued the dollar by 40%. At the same time, the U.S. received most
of Europe’s “refugee gold” during the 1930s as the threat of renewed
war with Germany led to capital flight from wealthy Europeans.
Washington was accumulating gold in its own coffers, just as it was
stripping the precious metal from the public.

As World War II neared, Germany halted reparations payments, drying up
the allied cash flow. Britain was unable to pay its debts, something
it wouldn’t be able to fully do for another 80 years. Capital flight
to the “safe” U.S. accelerated, combining with Roosevelt’s tariffs and
export-boosting dollar devaluation to further enlarge America’s
balance-of-payments position and gold stock. America became the
world’s largest creditor nation.

This advantage grew even more dramatic when the allies spent the rest
of their gold to fight the Nazis. By the end of the 1940s, the U.S.
held more than 70% of non-Soviet-central-bank-held gold, around 700
million ounces.

In 1922, European powers had gathered in Genoa to discuss the
reconstruction of Central and Eastern Europe. One of the outcomes was
an agreement to partially go back to the gold standard through a “gold
exchange” system where central banks would hold currencies which could
be exchanged for gold, instead of the metal itself, which was to be
increasingly centralized in financial hubs like New York and London.

In the later stages of World War II in 1944, the U.S. advanced this
concept even further at the Bretton Woods conference in New Hampshire.
There, a proposal put forth by British delegate John Maynard Keynes to
use an internationally-managed currency called the “bancor” was
rejected. Instead, American diplomats — holding leverage over their
British counterparts as a result of their gold advantage and the
bailouts they had extended through Lend-Lease Act policies — created a
new global trade system underpinned by dollars, which were promised to
be backed by gold at the rate of $35 per ounce. The World Bank,
International Monetary Fund, and General Agreement on Tariffs and
Trade were created as U.S.-dominated institutions which would enforce
the worldwide dollar system.

Moving forward, U.S. foreign economic policy was very different from
what it was after World War I, when Congress gave priority to domestic
programs and America adopted a protectionist stance. U.S. policymakers
theorized that America would need to remain a “major exporter to
maintain full employment during the transition back to peacetime life”
after World War II.

“Foreign markets,” Hudson writes, “would have to replace the War
Department as a source of demand for the products of American industry
and agriculture.”

This realization led the U.S. to determine it could not impose war
debt on its allies like it did after World War I. A Cold War
perspective began to take over: if the U.S. invested abroad, it could
build up the allies and defeat the Soviets. The Treasury and the World
Bank lent funds to Europe as part of the Marshall Plan so that it
could rebuild and buy American goods.

Hudson distinguishes the new U.S. imperial system from the old
European imperial systems. He quotes Treasury Secretary Morgenthau,
who said Bretton Woods institutions “tried to get away from the
concept of control of international finance by private financiers who
were not accountable to the people,” pulling power away from Wall
Street to Washington. In dramatic contrast to “classic” imperialism,
which was driven by corporate interests and straightforward military
action, in the new “super imperialism” the U.S. government would
“exploit the world via the international monetary system itself.”
Hence why Hudson’s original title for his book was “Monetary

The other defining feature of super imperialism versus classic
imperialism was that the former is based on a debtor position, while
the latter was based on a creditor position. The American approach was
to force foreign central banks to finance U.S. growth, whereas the
British or French approach was to extract raw materials from colonies,
sell them back finished goods, and exploit low wage or even slave

Classic imperialists, if they ran into enough debt, would have to
impose domestic austerity or sell off their assets. Military
adventurism had restraints. But Hudson argues that with super
imperialism, America figured out not just how to avoid these limits
but how to derive positive benefits from a massive balance-of-payments
deficit. It forced foreign central banks to absorb the cost of U.S.
military spending and domestic social programs which defended
Americans and boosted their standards of living.

Hudson points to the Korean War as the major event that shifted
America’s considerable post-World War II balance-of-payments surplus
into a deficit. He writes that the fight on the Korean peninsula was
“financed essentially by the Federal Reserve’s monetizing the federal
deficit, an effort that transferred the war’s cost onto some future
generation, or more accurately from future taxpayers to future

In the classic gold standard system of international trade, Hudson
describes how things worked:

    “If trade and payments among countries were fairly evenly
balanced, no gold actually changed hands: the currency claims going in
one direction offset those going in the opposite direction. But when
trade and payments were not exactly in balance, countries that bought
or paid more than they sold or received found themselves with a
balance-of-payments deficit, while nations that sold more than they
bought enjoyed a surplus which they settled in gold... If a country
lost gold its monetary base would be contracted, interest rates would
rise, and foreign short-term funds would be attracted to balance
international trade movements. If gold outflows persisted, the higher
interest rates would deter new domestic investment and incomes would
fall, thereby reducing the demand for imports until balance was
restored in the country’s international payments.”

Gold helped nations account with each other in a neutral and
straightforward way. However, just as European powers discarded the
restraining element of gold during World War I, Hudson says America
did not like the restraint of gold either, and instead “worked to
‘demonetize’ the metal, driving it out of the world financial system —
a geopolitical version of Gresham’s Law,” where bad money drives out
the good. By pushing a transformation of a world where the premium
reserve was gold to a world where the premium reserve was American
debt, the U.S. hacked the system to drive out the good money.

By 1957, U.S. gold reserves still outnumbered dollar reserves of
foreign central banks three to one. But in 1958, the system saw its
first cracks, as the Fed had to sell off more than $2 billion of gold
to keep the Bretton Woods system afloat. The ability of the U.S. to
hold the dollar at $35 per ounce of gold was being called into
question. In one of his last acts in office, President Eisenhower
banned Americans from owning gold anywhere in the world. But following
the presidential victory of John F. Kennedy — who was predicted to
pursue inflationist monetary policies — gold surged anyway, breaking
$40 per ounce. It was not easy to demonetize gold in a world of
increasing paper currency.

American and European powers tried to band-aid the system by creating
the London Gold Pool. Formed in 1961, the pool’s mission was to fix
the gold price. Whenever market demand pushed up the price, central
banks coordinated to sell part of their reserves. The pool came under
relentless pressure in the 1960s, both from the dollar depreciating
against the rising currencies of Japan and Europe and from the
enormous expenditures of Great Society programs and the U.S. war in

Some economists saw the failure of the Bretton Woods system as
inevitable. Robert Triffin predicted that the dollar could not act as
the international reserve currency with a current account surplus. In
what is known as the “Triffin dilemma,” he theorized that countries
worldwide would have a growing need for that “key currency,” and
liabilities would necessarily expand beyond what the key country could
hold in reserves, creating a larger and larger debt position.
Eventually the debt position would grow so large so as to cause the
currency to collapse, destroying the system.

By 1964, this dynamic began to visibly kick in, as American foreign
debt finally exceeded the Treasury’s gold stock. Hudson says that
American overseas military spending was “the entire
balance-of-payments deficit as the private sector and non-military
government transactions remained in balance.”

The London Gold Pool was held in place (buoyed by gold sales from the
Soviet Union and South Africa) until 1968, when the arrangement
collapsed and a new two-tiered system with a “government” price and a
“market” price emerged.

That same year, President Lyndon B. Johnson shocked the American
public when he announced he would not run for another term, possibly
in part because of the stress of the unraveling monetary system.
Richard Nixon won the presidency in 1968, and his administration did
its part to convince other nations to stop converting dollars to gold.

By the end of that year, the U.S. had drawn down its gold from 700
million to 300 million ounces. A few months later, Congress removed
the 25% gold backing requirement for federal reserve notes, cutting
one more link between the U.S. money supply and gold. Fifty economists
had signed a letter warning against such an action, saying it would
“open the way to a practically unlimited expansion of Federal Reserve
notes… and a decline and even collapse in the value of our currency.”

In 1969, with the end of Bretton Woods palpably close, the IMF
introduced Special Drawing Rights (SDRs) or “paper gold.” These
currency units were supposed to be equal to gold, but not redeemable
for the metal. The move was celebrated in newspapers worldwide as
creating a new currency that would “fill monetary needs but exist only
on books.” In Hudson’s view, the IMF violated its founding charter by
bailing out the U.S. with billions of SDRs.

He says the SDR strategy was “akin to a tax levied upon payments
surplus nations by the United States… it represented a transfer of
goods and resources from civilian and government sectors of
payments-surplus nations to payments deficit countries, a transfer for
which no tangible quid pro quo was to be received by the nations who
had refrained from embarking on the extravagance of war.”

By 1971, short-term dollar liabilities to foreigners exceeded $50
billion, but gold holdings dipped below $10 billion. Mirroring the
World War I behavior of Germany and Britain, the U.S. inflated its
money supply to 18-times its gold reserves while it waged the Vietnam

As it became clear that the U.S. government could not possibly redeem
extant dollars for gold, foreign countries found themselves in a trap.
They could not sell off their U.S. treasuries or refuse to accept
dollars, as this would collapse the dollar’s value in currency
markets, advantaging U.S. exports and harming their own industries.
This is the key mechanism that made the Treasury bill system work.

As foreign central banks received dollars from their exporters and
commercial banks, Hudson says they had “little choice but to lend
these dollars to the U.S. government.” They also gave seigniorage
privilege to the U.S. as foreign nations “earned” a negative interest
rate on American paper promises most years between the end of World
War II and the fall of the Berlin Wall, in effect paying Washington to
hold their money on a real basis.

“Instead of U.S. citizens and companies being taxed or U.S. capital
markets being obliged to finance the rising federal deficit,” Hudson
writes, “foreign economies were obliged to buy the new Treasury bonds…
America’s Cold War spending thus became a tax on foreigners. It was
their central banks who financed the costs of the war in Southeast

American officials, annoyed that the allies never paid them back for
World War I, could now get their pound of flesh in another way.

French diplomat Jacques Rueff gave his take on the mechanism behind
the Treasury bill standard in his book, “The Monetary Sin Of The

    “Having learned the secret of having a ‘deficit without tears,’ it
was only human for the US to use that knowledge, thereby putting its
balance of payments in a permanent state of deficit. Inflation would
develop in the surplus countries as they increased their own
currencies on the basis of the increased dollar reserves held by their
central banks. The convertibility of the reserve currency, the dollar,
would eventually be abolished owing to the gradual but unlimited
accumulation of sight loans redeemable in US gold.”

The French government was vividly aware of this, and persistently
redeemed its dollars for gold during the Vietnam era, even sending a
warship to Manhattan in August 1971 to collect what they were owed. A
few days later, on August 15, 1971, President Nixon went on national
television and formally announced the end of the dollar’s
international convertibility to gold. The U.S. had defaulted on its
debt, leaving tens of billions of dollars abroad, all of a sudden
unbacked. By extension, every currency that was backed by dollars
became pure fiat. Rueff was right, and the French were left with paper
instead of precious metal.

Nixon could have simply raised the price of gold, instead of
defaulting entirely, but governments do not like admitting to their
citizenry that they have been debasing the public’s money. It was much
easier for his administration to break a promise to people thousands
of miles away.

As Hudson writes, “more than $50 billion of short-term liabilities to
foreigners owed by the U.S. on public and private account could not be
used as claims on America’s gold stock.” They could, of course, “be
used to buy U.S. exports, to pay obligations to U.S. public and
private creditors, or to invest in government corporate securities.”

These liabilities were no longer liabilities of the U.S. Treasury.
American debt had been baked into the global monetary base.

“IOUs,” Hudson says, became “IOU-nothings.” The final piece of the
strategy was to “roll the debt over” on an ongoing basis, ideally with
interest rates below the rate of monetary inflation.

Americans could now obtain foreign goods, services, companies, and
other assets in exchange for mere pieces of paper: “It became possible
for a single nation to export its inflation by settling its payment
deficit with paper instead of gold… a rising world price level thus
became in effect a derivative function of U.S. monetary policy,”
Hudson writes.

If you owe $5,000 to the bank, it’s your problem. If you owe $5
million, it’s theirs. President Nixon’s Treasury Secretary John
Connolly riffed on that old adage, quipping at the time: “The dollar
may be our currency, but now it’s your problem.”

As the U.S. deficit increased, government spending accelerated, and
Americans — in a phenomenon hidden from the average citizen — watched
as other nations paid “the cost of this spending spree” as foreign
central banks, not taxes, financed the debt.

The game which the Nixon administration was playing, Hudson writes,
“was one of the most ambitious in the economic history of mankind ...
and was beyond the comprehension of the liberal senators of the United
States… The simple device of not hindering the outflow of dollar
assets had the effect of wiping out America’s foreign debt while
seeming to increase it. At the same time, the simple utilization of
the printing press — that is, new credit creation — widened the
opportunities for penetrating foreign markets by taking over foreign

He continues:

    “American consumers might choose to spend their incomes on foreign
goods rather than to save. American business might choose to buy
foreign companies or undertake new direct investment at home rather
than buy government bonds, and the American government might finance a
growing world military program, but this overseas consumption and
spending would nonetheless be translated into savings and channeled
back to the United States. Higher consumer expenditures on Volkswagens
or on oil thus had the same effect as an increase in excise taxes on
these products: they accrued to the U.S. Treasury in a kind of forced

By repudiating gold convertibility of the dollar, Hudson argues
“America transformed a position of seeming weakness into one of
unanticipated strength, that of a debtor over its creditors.”

“What was so remarkable about dollar devaluation,” he writes, “is that
far from signaling the end of American domination of its allies, it
became the deliberate object of U.S. financial strategy, a means to
enmesh foreign central banks further in the dollar-debt standard.”

One vivid story about the power of the Treasury bill standard — and
how it could force big geopolitical actors to do things against their
will — is worth sharing. As Hudson tells it:

    “German industry had hired millions of immigrants from Turkey,
Greece, Italy, Yugoslavia and other Mediterranean countries. By 1971
some 3 percent of the entire Greek population was living in Germany
producing cars and export goods… when Volkswagens and other goods were
shipped to the United States… companies could exchange their dollar
receipts for deutsche marks with the German central bank... but
Germany’s central bank could only hold these dollar claims in the form
of U.S. Treasury bills and bonds... It lost the equivalent of
one-third the value of its dollar holdings during 1970-74 when the
dollar fell by some 52 percent against the deutsche mark, largely
because the domestic US inflation eroded 34 percent of the dollar’s
domestic purchasing power.”

In this way, Germany was forced to finance America’s wars in Southeast
Asia and military support for Israel: two things it strongly opposed.

Put another way by Hudson: “In the past, nations sought to run
payments surpluses in order to build up their gold reserves. But now
all they were building up was a line of credit to the U.S. Government
to finance its programs at home and abroad, programs which these
central banks had no voice in formulating, and which were in some
cases designed to secure foreign policy ends not desired by their

Hudson’s thesis was that America had forced other countries to pay for
its wars regardless of whether they wanted to or not. Like a tribute
system, but enforced without military occupation. “This was,” he
writes, “something never before accomplished by any nation in

Hudson wrote “Super Imperialism” in 1972, the year after the Nixon
Shock. The world wondered at the time: What will happen next? Who will
continue to buy all of this American debt? In his sequel, “Global
Fracture,” published five years later, Hudson got to answer the

The Treasury bill standard was a brilliant strategy for the U.S.
government, but it came under heavy pressure in the early 1970s.

Just two years after the Nixon Shock, in response to dollar
devaluation and rising American grain prices, Organization of the
Petroleum Exporting Countries (OPEC) nations led by Saudi Arabia
quadrupled the dollar price of oil past $10 per barrel. Before the
creation of OPEC, “the problem of the terms of trade shifting in favor
of raw-materials exporters had been avoided by foreign control over
their economies, both by the international minerals cartel and by
colonial domination,” Hudson writes.

But now that the oil states were sovereign, they controlled the
massive inflow of savings accrued through the skyrocketing price of

This resulted in a “redistribution of global wealth on a scale that
hadn’t been seen in living memory,” as economist David Lubin puts it.

In 1974, the oil exporters had an account surplus of $70 billion, up
from $7 billion the year before: an amount nearly 5% of US GDP. That
year, the Saudi current account surplus was 51% of its GDP.

The wealth of OPEC nations grew so fast that they could not spend it
all on foreign goods and services.

“What are the Arabs going to do with it all?” asked The Economist in early 1974.

In “Global Fracture,” Hudson argues that it became essential for the
U.S. “to convince OPEC governments to maintain petrodollars [meaning,
a dollar earned by selling oil] in Treasury bills so as to absorb
those which Europe and Japan were selling out of their international
monetary reserves.”

As detailed in the precursor to this essay — “Uncovering The Hidden
Costs Of The Petrodollar” — Nixon’s new Treasury Secretary William
Simon traveled to Saudi Arabia as part of an effort to convince the
House of Saud to price oil in dollars and “recycle” them into U.S.
government securities with their newfound wealth.

On June 8, 1974, the U.S. and Saudi governments signed a military and
economic pact. Secretary Simon asked the Saudis to buy up to $10
billion in treasuries. In return, the U.S. would guarantee security
for the Gulf regimes and sell them massive amounts of weapons. The
OPEC bond bonanza began.

“As long as OPEC could be persuaded to hold its petrodollars in
Treasury bills rather than investing them in capital goods to
modernize its economies or in ownership of foreign industry,” Hudson
says, “the level of world oil prices would not adversely affect the
United States.”

At the time, there was a public and much-discussed fear in America of
Arab governments “taking over” U.S. companies. As part of the new
U.S.-Saudi special relationship, American officials convinced the
Saudis to reduce investments in the U.S. private sector and simply buy
more debt.

The Federal Reserve continued to inflate the money supply in 1974,
contributing to the fastest domestic inflation since the Civil War.
But the growing deficit was eaten up by the Saudis and other
oil-exporters, who would recycle tens of billions of dollars of
petrodollar earnings into U.S. treasuries over the following decade.

“Foreign governments,” Hudson says, “financed the entire increase in
publicly-held U.S. federal debt” between the end of WWII and the
1990s, and continued with the help of the petrodollar system to
majorly support the debt all the way to the present day.

At the same time, the U.S. government used the IMF to help “end the
central role of gold that existed in the former world monetary
system.” Amid double-digit inflation the institution sold off gold
reserves in late 1974, to try and keep any possible upswing in gold
down as a result of a new law in the United States that finally made
it legal again for Americans to own gold.

By 1975, other OPEC nations had followed Saudi Arabia’s lead in
supporting the Treasury bill standard. The British pound sterling was
finally phased out as a key currency, leaving, as Hudson writes, “no
single national currency to compete with the dollar.”

The legacy of the petrodollar system would live on for decades,
forcing other countries to procure dollars when they needed oil,
causing America to defend its Saudi partners when threatened with
aggression from Saddam Hussein or Iran, discouraging U.S. officials
from investigating Saudi Arabia’s role in the 9/11 attacks, supporting
the devastating Saudi war in Yemen, selling billions of dollars of
weapons to the Saudis, and making Aramco the second-most valuable
company in the world today.

The Treasury bill standard carried massive costs. It was not free. But
these costs were not paid for by Washington, but were often borne by
citizens in Middle Eastern countries and in poorer nations across the
developing world.

Even pre-Bretton Woods, gold reserves from regions like Latin America
were sucked up by the U.S. As Hudson describes, European nations would
first export goods to Latin America. Europe would take the gold —
settled as the balance-of-payments adjusted — and use it to buy goods
from the U.S. In this way, gold was “stripped” from the developing
world, helping the U.S. gold stock reach its peak of nearly $24.8
billion (or 700 million ounces) in 1949.

Originally designed to help rebuild Europe and Japan, the World Bank
and International Monetary Fund became in the 1960s an “international
welfare agency” for the world’s poorest nations, per The Heritage
Foundation. But, according to Hudson, that was a cover for its true
purpose: a tool through which the U.S. government would enforce
economic dependency from non-Communist nations worldwide.

The U.S. joined the World Bank and IMF only “on the condition that it
was granted unique veto power… this meant that no economic rules could
be imposed that U.S. diplomats judged did not serve American

America began with 33% of the votes at the IMF and World Bank which —
in a system that required an 80% majority vote for rulings — indeed
gave it veto power. Britain initially had 25% of the votes, but given
its subordinate role to the U.S. after the war, and its dependent
position as a result of Lend-Lease policies, it would not object to
Washington’s desires.

A major goal of the U.S. post-WWII was to achieve full employment, and
international economic policy was harnessed to help achieve that goal.
The idea was to create foreign markets for American exports: raw
materials would be imported cheaply from the developing world, and
farm goods and manufactured goods would be exported back to those same
nations, bringing the dollars back.

Hudson says that U.S. congressional hearings regarding Bretton Woods
agreements revealed “a fear of Latin American and other countries
underselling U.S. farmers or displacing U.S. agricultural exports,
instead of the hope that these countries might indeed evolve towards
agricultural self-sufficiency.”

The Bretton Woods institutions were designed with these fears in mind:
“The United States proved unwilling to lower its tariffs on
commodities that foreigners could produce less expensively than
American farmers and manufacturers,” writes Hudson. “The International
Trade Organization, which in principle was supposed to subject the
U.S. economy to the same free trade principles that it demanded from
foreign governments, was scuttled.”

In a meta-version of how the French exploit Communauté Financière
Africaine (CFA) nations in Africa today, the U.S. employed many double
standards, did not comply with the most-favored-nation rule, and set
up a system that forced developing countries to “sell their raw
materials to U.S.-owned firms at prices substantially below those
received by American producers for similar commodities.”

Hudson spends a significant percentage of “Super Imperialism” making
the case that this policy helped destroy economic potential and
capital stock of many developing countries. The U.S., as he tells it,
forced developing nations to export fruit, minerals, oil, sugar, and
other raw goods instead of investing in domestic infrastructure and
education — and forced them to buy American foodstuffs instead of grow
their own.

Post-1971, why did the Bretton Woods institutions continue to exist?
They were created to enforce a system that had expired. The answer,
from Hudson’s perspective, is that they were folded into this broader
strategy, to get the (often dictatorial) leaders of developing
economies to spend their earnings on food and weapons imports. This
prevented internal development and internal revolution.

In this way, “super imperial” financial and agricultural policy could,
in effect, accomplish what classic imperial military policy used to
accomplish. Hudson even claims that “Super Imperialism” the book was
used as a “training manual” in Washington in the 1970s by diplomats
seeking to learn how to “exploit other countries via their central

In Hudson’s telling, U.S.-directed aid was not used for altruism, but
for self interest. From 1948 to 1969, American receipts from foreign
aid approximated 2.1 times its investments.

“Not exactly an instrument of altruistic American generosity,” he
writes. From 1966 to 1970, the World Bank “took in more funds from 20
of its less developed countries than it disbursed.”

In 1971, Hudson says, the U.S. government stopped publishing data
showing that foreign aid was generating a transfer of dollars from
foreign countries to the U.S. He says he got a response from the
government at the time, saying “we used to publish that data, but some
joker published a report showing that the U.S. actually made money off
the countries we were aiding.”

Former grain-exporting regions of Latin America and Southeast Asia
deteriorated to food-deficit status under “guidance” from the World
Bank and IMF. Instead of developing, Hudson argues that these
countries were retrogressing.

Normally, developing countries would want to keep their mineral
resources. They act as savings accounts, but these countries couldn’t
build up capacity to use them, because they were focused on servicing
debt to the U.S. and other advanced economies. The World Bank, Hudson
argues, pushed them to “draw down” their natural resource savings to
feed themselves, mirroring subsistence farming and leaving them in
poverty. The final “logic” that World Bank leaders had in mind was
that, in order to conform with the Treasury bill standard,
“populations in these countries must decline in symmetry with the
approaching exhaustion of their mineral deposits.”

Hudson describes the full arc as such: Under super imperialism, world
commerce has been directed not by the free market but by an
“unprecedented intrusion of government planning, coordinated by the
World Bank, IMF, and what has come to be called the Washington
Consensus. Its objective is to supply the U.S. with enough oil,
copper, and other raw materials to produce a chronic over-supply
sufficient to hold down their world price. The exception of this rule
is for grain and other agricultural products exported by the United
States, in which case relatively high world prices are desired. If
foreign countries still are able to run payments surpluses under these
conditions, as have the oil-exporting countries, their governments are
to use the process to buy U.S. arms or invest in long-term illiquid,
preferably non-marketable U.S. treasury obligations.”

This, as Allen Farrington would say, is not capitalism. Rather, it’s a
story of global central planning and central bank imperialism.

Most shockingly, the World Bank in the 1970s under Robert McNamara
argued that population growth slowed down development, and advocated
for growth to be “curtailed to match the modest rate of gain in food
output which existing institutional and political constraints would

Nations would need to “follow Malthusians policies” to get more aid.
McNamara argued that “the population be fitted to existing food
resources, not that food resources be expanded to the needs of
existing or growing populations.”

To stay in line with World Bank loans, the Indian government forcibly
sterilized millions of people.

As Hudson concludes: the World Bank focused the developing world “on
service requirements rather than on the domestic needs and aspirations
of their peoples. The result was a series of warped patterns of growth
in country after country. Economic expansion was encouraged only in
areas that generated the means of foreign debt service, so as to be in
a position to borrow enough to finance more growth in areas that might
generate yet further means of foreign debt service, and so on ad

"On an international scale, Joe Hill’s 'We go to work to get the cash
to buy the food to get the strength to go to work to get the cash to
buy the food to get the strength to go to work to get the cash to buy
the food…' became reality. The World Bank was pauperizing the
countries that it had been designed in theory to assist."

By the 1980s, the U.S. had achieved, as Hudson writes, “what no
earlier imperial system had put in place: a flexible form of global
exploitation that controlled debtor countries by imposing the
Washington Consensus via the IMF and World Bank, while the Treasury
Bill standard obliged the payments-surplus nations of Europe and East
Asia to extend forced loans to the U.S. government.”

But threats still remained, including Japan. Hudson explains how in
1985 at the Louvre Accords, the U.S. government and IMF convinced the
Japanese to increase their purchasing of American debt and revalue the
yen upwards so that their cars and electronics became more expensive.
This is how, he says, they disarmed the Japanese economic threat. The
country “essentially went broke.”

On the geopolitical level, super imperialism not only helped the U.S.
defeat its Soviet rival — which could only exploit the
economically-weak COMECON countries — but also kept any potential
allies from getting too strong. On the financial level, the shift from
the restraint of gold to the continuous expansion of American debt as
the global monetary base had a staggering impact on the world.

Despite the fact that today the U.S. has a much larger labor force and
much higher productivity than it did in the 1970s, prices have not
fallen and real wages have not increased. The “FIRE” sector (finance,
insurance, and real estate) has, Hudson says, “appropriated almost all
of the economic gains.” Industrial capitalism, he says, has evolved
into finance capitalism.

For decades, Japan, Germany, the U.K., and others were “powerless to
use their economic strength for anything more than to become the major
buyers of Treasury bonds to finance the U.S. federal budget deficit…
[these] foreign central banks enabled America to cut its own tax rates
(at least for the wealthy), freeing savings to be invested in the
stock market and property boom,” according to Hudson.

The past 50 years witnessed an explosion of financialization. Floating
currency markets sparked a proliferation of derivatives used to hedge
risk. Corporations all of a sudden had to invest resources in foreign
exchange futures. In the oil and gold markets, there are hundreds or
thousands of paper claims for each unit of raw material. It is not
clear if this is a direct result of leaving the gold standard, but is
certainly a prominent feature of the post-gold era.

Hudson argues that U.S. policy pushes foreign economies to “supply the
consumer goods and investment goods that the domestic U.S. economy no
longer is supplying as it post-industrializes and becomes a bubble
economy, while buying American farm surpluses and other surplus
output. In the financial sphere, the role of foreign economies is to
sustain America’s stock market and real estate bubble, producing
capital gains and asset-price inflation even as the U.S. industrial
economy is being hollowed out.”

Over time, equities and real estate boomed as “American banks and
other investors moved out of government bonds and into higher-yielding
corporate bonds and mortgage loans.” Even though wages remained
stagnant, prices of investments kept going up, and up, and up, in a
velocity previously unseen in history.

As financial analyst Lyn Alden has pointed out, the post-1971
fiat-based financial system has contributed to structural trade
deficits for the U.S. Instead of drawing down gold reserves to
maintain the system like it did during the Bretton Woods framework,
America has drawn down and “sold off” its industrial base, where more
and more of its stuff is made elsewhere, and more and more of its
equity markets and real estate markets are owned by foreigners. The
U.S., she argues, has extended its global power by sacrificing some of
its domestic economic health. This sacrifice has mainly benefitted
U.S. elites at the cost of blue-collar and middle-income workers.
Dollar hegemony, then, might be good for American elites and diplomats
and the wider empire, but not for the everyday citizen.

Data from the work of political economists Shimson Bichler and
Jonathan Nitzan highlights this transformation and shines a light on
how wealth is moving to the haves from the have-nots: In the early
1950s, a typical dominant capital firm commanded a profit stream 5,000
times the income of an average worker; in the late 1990s, it was
25,000 times greater. In the early 1950s, the net profit of a Fortune
500 firm was 500 times the average; in the late 1990s, it was 7,000
times greater. Trends have accelerated since then: Over the past 15
years, the eight largest companies in the world grew from an average
market capitalization of $263 billion to $1.68 trillion.

Inflation, Bichler and Nitzan argue, became a “permanent feature” of
the 20th century. Prices rose 50-times from 1900 to 2000 in the U.K.
and U.S., and much more aggressively in developing countries. They use
a staggering chart that shows consumer prices in the U.K. from 1271 to
2007 to make the point. The visual is depicted in log-scale, and shows
steady prices all the way through the middle of the 16th century, when
Europeans began exploring the Americas and expanding their gold
supply. Then prices remain relatively steady again though the
beginning of the 20th century. But then, at the time of World War I,
they shoot up dramatically, cooling off a bit during the depression,
only to go hyperbolic since the 1960s and 1970s as the gold standard
fell apart and as the world shifted onto the Treasury bill standard.

Bitchler and Nitzan disagree with those who say inflation has a
“neutral” effect on society, arguing that inflation, especially
stagflation, redistributes income from workers to capitalists, and
from small businesses to large businesses. When inflation rises
significantly, they argue that capitalists tend to gain, and workers
tend to lose. This is typified by the staggering increase in net worth
of America’s richest people during the otherwise very difficult last
18 months. The economy continues to expand, but for most people,
growth has ended.

Bichler and Nitzan’s meta point is that economic power tends to
centralize, and when it cannot anymore through amalgamation (merger
and acquisition activity), it turns to currency debasement. As Rueff
said in 1972, “Given the option, money managers in a democracy will
always choose inflation; only a gold standard deprives them of the

As the Federal Reserve continues to push interest rates down, Hudson
notes that prices rise for real estate, bonds, and stocks, which are
“worth whatever a bank will lend.” Writing more recently in the wake
of the Global Financial Crisis, he said “for the first time in history
people were persuaded that the way to get rich was by running into
debt, not by staying out of it. New borrowing against one’s home
became almost the only way to maintain living standards in the face of
this economic squeeze.”

This analysis of individual actors neatly mirrors the global
transformation of the world reserve currency over the past century:
from a mechanism of saving and capital accumulation to a mechanism of
one country taking over the world through its growing deficit.

Hudson pauses to reflect on the grotesque irony of pension funds
trying to make money by speculating. “The end game of finance
capitalism,” he says, “will not be a pretty sight.”

There is surely a case to be made for how the world benefited from the
dollar system. This is, after all, the orthodox reading of history.
With the dollar as the world reserve currency, everything as we know
it grew from the rubble of World War II.

One of the strongest counter-theories relates to the USSR, where it
seems clear that the Treasury bill standard — and the unique ability
for the U.S. to print money that could purchase oil — helped America
defeat the Soviet Union in the Cold War.

To get an idea of what the implications are for liberal democracy’s
victory over totalitarian communism, take a look at a satellite image
of the Korean peninsula at night. Compare the vibrant light of
industry in the south with the total darkness of the north.

So perhaps the Treasury bill standard deserves credit for this global
victory. After the fall of the Berlin Wall, however, the U.S. did not
hold another Bretton Woods to decentralize the power of holding the
world’s reserve currency. If the argument is that we needed the
Treasury bill standard to defeat the Soviets, then the failure to
reform after their downfall is puzzling.

A second powerful counter-theory is that the world shifted from gold
to U.S. debt simply because gold could not do the job. Analysts like
Jeff Snider assert that demand for U.S. debt is not necessarily part
of some scheme but rather as a result of the world’s thirst for
pristine collateral.

In the late 1950s, as the U.S. enjoyed its last years with a current
account surplus, something else major happened: the creation of the
eurodollar. Originally borne out of an interest from the Soviets and
their proxies to have dollar accounts that the American government
could not confiscate, the idea was that banks in London and elsewhere
would open dollar-denominated accounts to store earned U.S. dollars
beyond the purview of the Federal Reserve.

Sitting in banks like Moscow Narodny in London or Banque Commerciale
pour L’Europe du Nord in Paris, these new “eurodollars” became a
global market for collateralized borrowing, and the best collateral
one could have in the system was a U.S. treasury.

Eventually, and largely due to the changes in the monetary system
post-1971, the eurodollar system exploded in size. It was unburdened
by Regulation Q, which set a limit on interest rates on bank deposits
in the U.S. Eurodollar banks, free from this restriction, could charge
higher rates. The market grew from $160 billion in 1973 to $600
billion in 1980 — a time when the inflation-adjusted federal funds
rate was negative. Today, there are many more eurodollars than there
are actual dollars.

To revisit the Triffin dilemma, the demand for “reserve” dollars
worldwide would inevitably lead to a draining of U.S. domestic
reserves and, subsequently, confidence in the system breaking down.

How can a stockpile of gold back an ever-growing global reserve
currency? Snider argues that the Bretton Woods system could never
fulfill the role of a global reserve currency. But a dollar unbacked
by gold could. And, the argument goes, we see the market’s desire for
this most strongly in the growth of the eurodollar.

If even America’s enemies wanted dollars, then how can we say that the
system only came into dominance through U.S. design? Perhaps the
design was simply so brilliant that it co-opted even America’s most
hated rivals. And finally, in a world where gold had not been
demonetized, would it have remained the pristine collateral for this
system? We’ll never know.

A final major challenge to Hudson’s work is found in the discourse
arguing that the World Bank has helped increase living standards in
the developing world. It is hard not to argue that most are better off
in 2021 than in 1945. And cases like South Korea are provided to show
how World Bank funding in the 1970s and 1980s were crucial for the
country’s success.

But how much of this relates to technology deflation and a general
rise in productivity, as opposed to American aid and support? And how
does this rise compare differentially to the rise in the West over the
same period? Data suggests that, under World Bank guidance between
1970 and 2000, poorer countries grew more slowly than rich ones.

One thing is clear: Bretton Woods institutions have not helped
everyone equally. A 1996 report covering the World Bank’s first 50
years of operations found that “of the 66 less developed countries
receiving money from the World Bank for more than 25 years, 37 are no
better off today than they were before they received such loans.” And
of these 37, most “are poorer today than they were before receiving
aid from the Bank.”

In the end, one can argue that the Treasury bill standard helped
defeat Communism; that it’s what the global market wanted; and that it
helped the developing world. But what cannot be argued is that the
world left the era of asset money for debt money, and that as the
ruler of this new system, the U.S. government gained special
advantages over every other country, including the ability to dominate
the world by forcing other countries to finance its operations.

In Enlightenment philosopher Immanuel Kant’s landmark 1795 essay
“Toward Perpetual Peace,” he argues for six primary principles, one of
which is that “no national debt shall be contracted in connection with
the external affairs of the state”:

    “A credit system, if used by the powers as an instrument of
aggression against one another, shows the power of money in its most
dangerous form. For while the debts thereby incurred are always secure
against present demands (because not all the creditors will demand
payment at the same time), these debts go on growing indefinitely.
This ingenious system, invented by a commercial people in the present
century, provides a military fund which may exceed the resources of
all the other states put together. It can only be exhausted by an
eventual tax-deficit, which may be postponed for a considerable time
by the commercial stimulus which industry and trade receive through
the credit system. This ease in making war, coupled with the warlike
inclination of those in power (which seems to be an integral feature
of human nature), is thus a great obstacle in the way of perpetual

Kant seemingly predicted dollar hegemony. With his thesis in mind,
would a true gold standard have deterred the war in Vietnam? If
anything, it seems certain that such a standard would have made the
war at least much shorter. The same, obviously, can be said for World
War I, the Napoleonic Wars, and other conflicts where the belligerents
left the gold standard to fight.

“The unique ability of the U.S. government,” Hudson says, “to borrow
from foreign central banks rather than from its own citizens is one of
the economic miracles of modern times.”

But “miracle” is in the eye of the beholder. Was it a miracle for the
Vietnamese, the Iraqis, or the Afghans?

Nearly 50 years ago, Hudson writes that “the only way for America to
remain a democracy is to forgo its foreign policy. Either its world
strategy must become inward-looking or its political structure must
become more centralized. Indeed since the start of the Vietnam War,
the growth of foreign policy considerations has visibly worked to
disenfranchise the American electorate by reducing the role of
congress in national decision making.”

This trend obviously has become much more magnified in recent history.
In the past few years America has been at war in arguably as many as
seven countries (Afghanistan, Iraq, Syria, Yemen, Somalia, Libya and
Niger), yet the average American knows little to nothing about these
wars. In 2021, the U.S. spends more on its military than do the next
10 countries combined. Citizens have more or less been removed from
the decision-making process, and one of the key reasons — perhaps the
key reason — why these wars are able to be financed is through the
Treasury bill standard.

How much longer can this system last?

In 1977, Hudson revisits the question on everyone’s mind in the early
1970s: “Will OPEC supplant Europe and Japan as America’s major
creditors, using oil earnings to buy U.S. Treasury securities and
thereby fund U.S. federal budget deficits? Or will Eastern Hemisphere
countries subject the U.S. to a gold-based system of international
finance in which renewed U.S. payment deficits will connote a loss of
its international financial leverage?”

We of course know the answer: OPEC did indeed fund the U.S. budget for
the next decade. Eastern hemisphere countries then failed to subject
the U.S. to a gold-based system, in which payments deficits marked
loss of leverage. In fact, the Japanese and Chinese in turn kept
buying American debt once the oil countries ran out of money in the

The system, however, is once again showing cracks.

As of 2013, foreign central banks have been dishoarding their U.S.
treasuries. As of today, the Federal Reserve is the majority purchaser
of American debt. The world is witnessing a slow decline of the dollar
as the dominant reserve currency, both in terms of percentage of
foreign exchange reserves and in terms of percentage of trade. These
still significantly outpace America’s actual contribution to global
GDP — a legacy of the Treasury bill standard, for sure — but they are
declining over time.

De-dollarization toward a multi-polar world is gradually occurring. As
Hudson says, “Today we are winding down the whole free lunch system of
issuing dollars that will not be repaid.”

Writing in the late 1970s, Hudson predicts that “without a
Eurocurrency, there is no alternative to the dollar, and without gold
(or some other form of asset money yet to be accepted), there is no
alternative to national currencies and debt-money serving
international functions for which they have shown themselves to be

Thirty years later, in 2002, he writes that “today it would be
necessary for Europe and Asia to design an artificial, politically
created alternative to the dollar as an international store of value.
This promises to be the crux of international political tensions for
the next generation.”

It’s a prescient comment, though it wasn’t Europe or Asia that
designed an alternative to the dollar, but Satoshi Nakamoto. A new
kind of asset money, bitcoin has a chance to unseat the super-imperial
dollar structure to become the next world reserve currency.

As Hudson writes, “One way to discourage governments from running
payments deficits is to oblige them to finance these deficits with
some kind of asset they would prefer to keep, yet can afford to part
with when necessary. To date, no one has come up with a better
solution than that which history has institutionalized over a period
of about two thousand years: gold.”

In January 2009, Satoshi Nakamoto came up with a better solution.
There are many differences between gold and bitcoin. Most importantly,
for the purposes of this discussion, is the fact that bitcoin is
easily self-custodied and thus confiscation-resistant.

Gold was looted by colonial powers worldwide for hundreds of years,
and, as discussed in this essay, was centralized mainly into the
coffers of the U.S. government after World War I. Then, through
shifting global monetary policy of the ’30s, ’40s, ’50s, ’60s, and
’70s, gold was demonetized, first domestically in the U.S. and then
internationally. By the 1980s, the U.S. government had “killed” gold
as a money through centralization and through control of the
derivatives markets. It was able to prevent self-custody, and
manipulate the price down.

Bitcoin, however, is notably easy to self-custody. Any of the billions
of people on earth with a smartphone can, in minutes, download a free
and open-source Bitcoin wallet, receive any amount of bitcoin, and
back up the passphrase offline. This makes it much more likely that
users will actually control their bitcoin, as opposed to gold
investors, who often entered through a paper market or a claim, and
not actual bars of gold. Verifying an inbound gold payment is
impossible to do without melting the delivery bar down and assaying
it. Rather than go through the trouble, people deferred to third
parties. In Bitcoin, verifying payments is trivial.

In addition, gold historically failed as a daily medium of exchange.
Over time, markets preferred paper promises to pay gold — it was just
easier, and so gold fell out of circulation, where it was more easily
centralized and confiscated. Bitcoin is built differently, and could
very well be a daily medium of exchange.

In fact, as we see more and more people demand to be paid in bitcoin,
we get a glimpse of a future where Thier’s law (found in dollarizing
countries, where good money drives out the bad) is in full effect,
where merchants would prefer bitcoin to fiat money. In that world,
confiscation of bitcoin would be impossible. It may also prove hard to
manipulate the spot price of bitcoin through derivatives. As BitMEX
founder Arthur Hayes writes:

    “Bitcoin is not owned or stored by central, commercial, or bullion
banks. It exists purely as electronic data, and, as such, naked shorts
in the spot market will do nothing but ensure a messy destruction of
the shorts’ capital as the price rises. The vast majority of people
who own commodity forms of money are central banks who it is believed
would rather not have a public scorecard of their profligacy. They can
distort these markets because they control the supply. Because bitcoin
grew from the grassroots, those who believe in Lord Satoshi are the
largest holders outside of centralised exchanges. The path of bitcoin
distribution is completely different to how all other monetary assets
grew. Derivatives, like ETFs and futures, do not alter the ownership
structure of the market to such a degree that it suppresses the price.
You cannot create more bitcoin by digging deeper in the ground, by the
stroke of a central banker’s keyboard, or by disingenuous accounting
tricks. Therefore, even if the only ETF issued was a short bitcoin
futures ETF, it would not be able to assert any real downward pressure
for a long period of time because the institutions guaranteeing the
soundness of the ETF would not be able to procure or obscure the
supply at any price thanks to the diamond hands of the faithful.”

If governments cannot kill bitcoin, and it continues its rise, then it
stands a good chance to eventually be the next reserve currency. Will
we have a world with bitcoin-backed fiat currencies, similar to the
gold standard? Or will people actually use native Bitcoin itself —
through the Lightning Network and smart contracts — to do all commerce
and finance? Neither future is clear.

But the possibility inspires. A world where governments are
constrained from undemocratic forever wars because restraint has once
again been imposed on them through a neutral global
balance-of-payments system is a world worth looking forward to. Kant’s
writings inspired democratic peace theory, and they may also inspire a
future Bitcoin peace theory.

Under a Bitcoin standard, citizens of democratic countries would more
likely choose investing in domestic infrastructure as opposed to
military adventurism. Foreigners would no longer be as easily forced
to pay for any empire’s wars. There would be consequences even for the
most powerful nation if it defaults on its debt.

Developing countries could harness their natural resources and borrow
money from markets to finance Bitcoin mining operations and become
energy sovereign, instead of borrowing money from the World Bank to
fall deeper into servitude and the geopolitical equivalent of
subsistence farming.

Finally, the massive inequalities of the past 50 years might also be
slowed, as the ability of dominant capital to enrich itself in
downturns through rent-seeking and easy monetary policy could be

In the end, if such a course for humanity is set, and Bitcoin does
eventually win, it may not be clear what happened:

Did Bitcoin defeat super imperialism?

Or did super imperialism defeat itself?

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