Dear Subscribers,
Izzy here. Writing from “burnout leave”. Dario is holding the fort for now, but I am acutely conscious that subscribers have only had one properly drafted newsletter from me this year.
I just wanted to reassure you all that I will be back in normal operating mode the first weekend of March. Until then I thought I would share 10 things I currently “think I think” to stay connected with you all. For those who have missed my contributions, I’m also engaging with the TBS Discord group pretty regularly, largely because it’s the best place to stay informed, and everyone there is so nice and civilized, and proper debate can be had without any psychological fallout.
The caveat is, I have genuinely tried to detach from the relentless news flow for a bit. As a result, I am not fully on top of all the minutia. I have, in fact, been depending increasingly on sourcing info the old school way: via human interaction.
Structuring the note in this speculative way allows me to get my thoughts and instincts about what’s going on out without the rigmarole of extensive supporting research or reporting. But I warn you, it’s entirely possible I’ve missed key developments that might undermine the views below, in which case feel free to let me know (ideally by email at [email protected]).
Also, I’m conscious that while we were ahead of the curve on a number of stories last year, among them the news that Trump was looking to create a Bitcoin strategic reserve, we chickened out from assertively trumpeting our scoops due to how some of our peers responded to the news when we shared it with them. [“Don’t be ridiculous, he’s never going to do that” was the vibe]. I’m annoyed about this as I knew the sources were good and could be trusted, and I shouldn’t have second-guessed myself.
We still beat everyone in referencing it, but weren’t as explicit as we should have been. Same goes for the idea of the Mar-a-Lago Accord, which was originally floated by Zoltan Pozsar in mid 2024. So the purpose of the below is also to get ahead of a few things, albeit within a “caveat emptor” context.
So without further ado, here are 10 things I currently think.
1. — Everyone is misdiagnosing Trumpian economic policy.
This is a view I recently expressed in an oped for Politico in January. I argued that for some reason Europe was illogically anticipating significant industrial policy from Trump, when really the whole point and purpose of his tariffs was to ring-fence the U.S. system to protect it from the effects of other nations’ distortive industrial policy while allowing it to recalibrate around free-market and competitive norms.
2. — What we’re dealing with is a managed U.S. “restructuring”, or even U.S. bankruptcy/unwind.
That may sound extreme, but I do think this is what’s going on. Of course, due to the central role the U.S. economy plays in global finance, the world can’t just call in the IMF. There are clearly also extreme and opposing views on how this sort of thing should be handled. The Democrats, under the influence of the incumbent security state, were going with a Confederate State-style dollar printing binge to fund conflicts they thought would help avoid the inevitable. The Trump plan — seemingly being orchestrated by the dissident security state (aka PayPal mafia/Thiel network) — seems to be focused on “art of the dealing” a new global accord without the need for conflict.
The latter see themselves as “reformers” to the Democrats’ hardliners. The reformers are prepared to make concessions that cede power and influence in some areas and regions, while accumulating stronger influence in other “closer to home” areas. This is understandably not being received well.
But there’s likely even more to this story than people appreciate, especially with respect to NATO and USAID commitments. Dario is more the expert here, and I like his argument that Trump’s NATO pullback may be about ending U.S. over-extension, rather than disloyalty to Europe.
Viewed through this prism, what we have is a scenario where the U.S. is following in the footsteps of Britain. The cost of maintaining U.S. global influence and “empire“ is now prohibitive and must be given up so that domestic factors are taken care of first. That’s not to say the U.S. won’t remain first among equals in the global hierarchy for a long while yet. But it will have to achieve a much better distribution of wealth domestically if it’s to sell its vision beyond its borders.
3. — Trump’s American Sovereign Wealth Fund idea may not be what it seems.
Read Alphaville and you’ll get lots of simplistic “boss man” takes on this idea of a Trumpian SWF. But this just doesn’t gel with the bigger Trumpian and Bessent economic picture in my opinion. A sovereign wealth fund, as is explained here, is usually either funded with surpluses derived from natural resource endowments or from large foreign exchange reserves accumulated via other comparative advantages.
The U.S. currently doesn’t have either, so the SWF term is a bit of a misnomer. Of course, the latter can also be derived from mercantilist policy or devaluation a la China. In China’s case, however, such surpluses were traditionally channeled into external rather than domestic investments. Trump’s “SWF”, however, aims to direct proceeds back into the domestic economy in a way that potentially emulates government-directed industrial policy. But industrial policy, as explained above, is not the Trumpian vibe at all.
This is why it’s best to see the SWF as more of a means to an end, than an end in and of itself.
4. — Trump’s true objective is achieving an American restructuring without having to give up too much autonomy or strategic assets, or imperial reach for the “free world”.
The creation of a U.S. sovereign wealth fund is better understood as a geoeconomic gambit to counter China’s ability to weaponize its $3 trillion dollar surplus. As it stands, China sits at a point where it must convert Treasury holdings into strategic U.S. acquisitions — from tech firms to infrastructure — or risk being exposed to an American default. Thus far, CFIUS has blocked such deals (e.g., China’s 2018 bid for Qualcomm), but this risks rendering Chinese dollar reserves “unspendable” in the U.S. beyond passive bonds or consumer goods. That might not be a direct default, but it’s not good for credibility either.
Funding a “sovereign wealth fund” with the proceeds of tariffs or levies offers a tempting solution to the problem. It would, in theory, neutralize surplus Chinese dollars by forcefully turning them into U.S.-controlled dollars that can be invested into domestic industries that undermine China’s comparative advantage (and thus its economy). The strategy ironically mirrors China’s own 1970s-1980s playbook.
But while the policy would be effective, it would also put the U.S. on a war path with China, even if on more level terms than if it defaulted directly. It seems far more likely, therefore, that the SWF is merely a threat to enable a negotiation rather than a crude protectionist ploy outright.
The SWF’s deeper purpose lies in addressing a vulnerability China exposed decades ago: the strategic control of critical assets.
As a reminder, China’s model had two layers. Long before the China Investment Corporation (CIC) came into being in 2007, Beijing enforced strict rules for inbound foreign investment: Joint ventures (JVs) requiring local majority stakes in sectors like autos (e.g., Volkswagen’s 1980s JV with SAIC) and telecoms. These policies ensured foreign capital flowed in without ceding control. The CIC — a $200 billion sovereign fund launched to channel surplus dollars into external acquisitions (e.g., stakes in Blackstone, Canadian energy) — by contrast, applied similar logic outwardly, partnering with foreign firms (e.g., Teck Resources in 2009) to secure resources and tech while minimizing political backlash.
Trump’s SWF proposal merges these concepts. By directing tariff revenue into domestic industries (e.g., semiconductors, rare earths), it would replicate China’s inbound investment restrictions — blocking foreign acquisitions while subsidizing homegrown capacity.
5. — The real aim of the SWF is nudging China towards a mutual selective default with the U.S.
Trump’s tariffs arguably serve a dual purpose. By restricting China’s market access while funneling revenue into reshoring, the U.S. is signaling a willingness to escalate toward a “mutual selective default” with China. Yes. Really.
Under the “mutual selective default” scenario, China’s historic default would finally be recognized by the CCP. In exchange, trade relations between China and the U.S. would be rebooted from scratch but on more level terms.
If my reading is right, Trump doesn’t really want to amass dollars in a Sovereign Wealth Fund to implement government-directed industrial policy that competes with China. He just wants to show that he can do so if he wishes.
If the bluff fails, I still seriously doubt that a Sovereign Wealth Fund would operate in anything other than a market-neutral way. I also doubt that it would be funded via tariff revenues for the long term (since I also think that most trade partners will eventually bend the knee to the new protocols of free trade that Trump desires). The much more likely candidate for the seed funding of a SWF would be proceeds from gold stock revaluation as ascribed to the build-up of a strategic bitcoin reserve. In fact, the SWF may end up looking more like a giant stablecoin Tether structure, acting in part as a strategic bitcoin reserve and a financing vehicle.
Alternatively, think more Alaska model than Middle Eastern or Norwegian model.
That means deploying a diversified strategy for the purpose of generating dividends that can be directly apportioned to U.S. citizens to express market opinions and purchases with. It could even amount to the makings of a fully funded universal basic income.
Remember, the Alaska Permanent Fund is somewhat unique in how it shares a portion of its returns directly with eligible residents.
6. — The goal is to force a negotiation and a rebalancing.
As per Margaret Thatcher’s negotiating ploy over Hong Kong’s return in 1997 — which used access to U.K. markets and its eurodollar clearing system as the carrot to get China to pay off its defaulted debt — the U.S. will use tariffs to initiate a similar negotiation. The likely proposal will be that China retains consumer market access but halts strategic acquisitions, while the U.S. avoids full decoupling.
The sovereign fund debate isn’t about tariffs or factories. It’s about who sets the terms of the new financial order. Just as China used state capital to open its economy without surrendering control, Trump’s U.S. seeks to leverage financial innovation and coercive tools to pressure Beijing into liberalizing — a transactional “win-win” where concessions replace conflict. Success hinges on balancing credibility with coercion. In global finance, after all, confidence is the ultimate currency. And both sides benefit from a win-win outcome which avoids war.
7. — Breton Woods III (aka the “Mar-a-Lago Accord”) will center on crypto keeping the new powers in check.
Trump and Bessent have the creative ingenuity to re-engineer the financial system in such a way that China loses out either way.
Key to this are proposals that stand to dilute Chinese dollar leverage, which China ultimately still needs if it’s to engage in Western markets in the context of its current economic model.
The focus is currently all on gold revaluation (worth noting, that is a conversation we’ve already had with the National Bank of Poland with respect to Poland‘s gold), but the far more interesting development pertains not just to a China/U.S. debt swap but also to the way bitcoin might be used to establish the new monetary order. Again, yes really.
While a “bitcoin standard” remains speculative, the intent is clear: preempt future abuse of the new monetary system by command economies that fail to comply with the rules of the game (because they are prepared to engage in tactical devaluation) by locking everything into a bitcoin balancing asset.
But by and large everyone commenting on the Mar-a-Lago Accord seems to miss this vital piece of the puzzle.
Where we should be looking now is to the precedent set by Javier Milei’s disastrous Libra memecoin fiasco — a coin that was ostensibly launched to enable the “growth of the Argentine economy”. Milei’s original endorsement pumped the coin’s value to $4.5 billion after which point it duly crashed, igniting claims the whole thing was a scam. Both Milei and the project are getting a lot of grief now, with Milei even facing an investigation for enabling the whole thing.
However, this analysis is naive. A memecoin to power the restructuring of the Argentine economy was not a terrible idea in and of itself, even if the way it was communicated and executed was terrible. Some might say the whole thing was unfairly politicized and thus sabotaged. Others might even say Milei was set up in a bid to undermine similar endeavors gaining traction in the U.S.
What matters is that the idea of individual-sponsored “growth” memecoins by political personas is out there, and that all indicators are that something much more formalized of that flavor is coming to the U.S. soon.
8. — Memecoin philanthropy to save the West?
Everyone knows that one of the problems Trump has in launching a strategic bitcoin reserve or in restructuring the finances of the U.S. system, or even in launching a SWF, is the need for congressional approval at all levels.
But this is why, if he’s to get it done quickly and avoid U.S. default, bypassing that need is essential.
Naturally, succeeding on this front raises all sorts of concerns about congressional and democratic accountability. Most people are horrified by the notion.
And yet, from the perspective of the “dissident security state” (which leans ideologically libertarian) reducing such accountability is a feature, not a bug.
Their bible “The Sovereign Individual” by Lord William Rees-Mogg and James Dale Davidson, which was first published in 1997, explicitly foresees a future in which the nation-states will be so discredited they will no longer be able to fund themselves via taxes. Instead, they will have to adapt to more decentralized and honest “opt-in” means of financing.
In fact, they foresee governments having to compete for funds in the market more broadly, and/or being subject to self-negotiated taxes.
As they noted about the impact of the information age on politics: “Governments will not only lose their power to tax many forms of income and capital; they are also destined to lose their power of compulsion over money.”
No direct funding raised by taxes, however, means no congressional oversight is technically needed. It’s all opt-in.
And this may be precisely the point of $TRUMP coin.
To avoid total speculation, at this point I will simply state what I would do if I was Trump and my agenda as U.S. President was restructuring the U.S. financial system without being derailed by congressional oversight.
- I would use the threat of tariffs to engage in a debt swap with China that generated approximately $1 trillion more of fiscal head room.
- I would revalue the gold stock of the country, and use a share of the proceeds to invest in bitcoin to slowly digitize the gold stock — which would sit in a dedicated sovereign wealth fund against which digital bitcoin-backed dollar certificates could be issued against if necessary.
- I would launch personal memecoins based on my own brand power, highlighting that the coins were “INTENDED TO FUNCTION AS AN EXPRESSION OF SUPPORT FOR, AND ENGAGEMENT WITH, THE IDEALS AND BELIEFS EMBODIED BY THE SYMBOL “$TRUMP” AND THE ASSOCIATED ARTWORK (THE “ARTWORK”)”.
- I would then use the proceeds from the memecoins I just launched to invest in bitcoin, on behalf of the Fight Fight Fight LLC that owns the wealth at hand.
- I would remind the world about the $1 trillion dollar coin debate, which posited that the Treasury could print a $1 trillion coin and deposit it at the Federal Reserve, creating fiscal headroom without new borrowing and that many economists favored it as a legal workaround to prevent default and ensure government spending continuity.
- I would then assert (once all the other moving parts were in play) that the value embedded in Trump memecoins had unlimited upside, and just like my personal brand would “vary based on mood” or “whatever people are willing to pay” — and could be as much as $1 trillion on a good day. But also that, due to its reinvestment into bitcoin, the initiative was at least partially fully funded.
- I would then make clear that it was my intention to bequeath the ownership of Fight Fight Fight LLC “to the people” via a special arm’s length from Congress arrangement. The act of doing so would inject a significant wedge of bitcoin into the coffers of the U.S. Treasury, upping the fiscal headroom of the country by whatever the go-to valuation of the memecoin LLC was (based on the value of the underlying bitcoin).
- I would promise this was a one-off “money printing” event for the purpose of funding the restructuring and ordered privatization of the economy, a fact that would be underpinned by the future linkage of the dollar to bitcoin.
- I would also remind the world that, unlike the $1 trillion dollar book entry idea, this one-off money inflation was at least partially funded by those “patriots” who believed in the ideals and beliefs embodied by Trump.
- Unlike the privatization vouchers dished out to the citizens of former communist states, entitling them to shares of national companies, I would ensure any future dividends were distributed equally to citizens for the purposes of consumption or for personal investment in existing corps or would-be challenger start-ups. Incumbent state-owned monopolies, such as the Post Office, would thus not be transferred to new oligarch owners, but be disrupted by new entrants.
The strategy behind Milei’s memecoin conversely wasn’t to reinvest the proceeds in bitcoin and use the setup to restructure Argentina, but rather to leverage 50 percent of the funds raised to provide cheap financing to entrepreneurs in a far more classic financial arrangement. This would not have escaped existing regulatory frameworks. Unfortunately, the details of how it really planned to operate were sparse and thus scam-like, claiming only that it aimed “to boost the Argentine economy by funding small projects and local businesses”.
The question is whether its failure will now impact any Trump equivalents?
9. — Trump is emulating the Roman transition from Republic to Empire, with one important twist.
I’ve already written on X, that the Trump memecoin reminds me of Augustus’ Battle of Actium coin, a coin the emerging Roman emperor printed to pronounce his victory over Antony at Actium to mark the beginning of a new age of rehabilitation, renewal and peace.
But what Roman comparisons miss (speaking as someone who read Ancient History and whose dissertation was on the role of Apollo in consolidating Augustus’ power) is that the financing of the new Roman empire wasn’t exclusively tax-funded. Augustus contributed a significant wedge of personal wealth to kick-start Roman renewal. We know about this “philanthropy” via his own proclamations in the Res Gestae.
For example, Augustus systematically bypassed the Senate’s control over Rome’s finances by creating parallel institutions that concentrated wealth and decision-making in his hands.
While the Senate nominally retained oversight of the Aerarium, the traditional treasury, Augustus established the Fiscus, a separate imperial treasury that controlled revenues from his provinces, particularly the lucrative territories of Egypt, Gaul, and Syria.
Egypt, the crown jewel of his financial empire, was placed under his direct rule, ensuring its vast grain supply and tax revenues flowed exclusively to him. To further marginalize the Senate, he restructured taxation, replacing corrupt private tax farmers with salaried imperial administrators (procuratores), making tax collection more efficient while eliminating the Senate’s influence.
He further professionalized state finances by creating permanent financial offices under his authority, including the Aerarium Militare, a dedicated military treasury funded by inheritance and sales taxes, securing a stable pension system for his legions without relying on senatorial approval.
By monopolizing the production of gold and silver coinage, he controlled the empire’s monetary supply, leaving the Senate with authority only over minor bronze denominations.
Critically, he also lavished Rome with public works, games, and the grain dole (the UBI of its day), solidifying his role as the empire’s benefactor while making the masses dependent on his largesse rather than the Senate’s. Philanthropy was key to the public accepting this new arrangement.
Through these mechanisms, Augustus shifted Rome from a Republic where the Senate controlled wealth and governance to an empire where all financial power ultimately rested with him, ensuring his dominance while preserving the illusion of senatorial authority.
The path of least resistance is now for Trump to do exactly the same thing. This includes emulating Augustus in real-estate deal-making that endows not just America with exemplary infrastructure but potentially also the world (think the Gaza development plan).
But there is an important twist. Trump’s emergence as “emperor” in this new order is far more likely to take the shape of “first among equals” in a pantheon of other magnates that keep checks on him than it is to be a totalitarian takeover.
Furthermore, in the new digital neo-medievalist system, all the top magnates will still be held to account by market forces (rather than democracy) as expressed by the voting power of individuals operating in the economy. UBI will play a key part in this, as it will provide the equitable means — via dividend payments — to redress market concentration issues. At least one would hope, otherwise it really will be a disaster.
10. — Trump’s power is likely to reside in “leased sovereignty”, hence the rise of the “technate” idea.
Returning to the Sovereign Individual literature that has influenced a key part of this movement, it’s clear that at the heart of the financial restructuring coming our way will be the idea of “leased sovereignty”. This idea results from the acknowledgment, even by the most steadfast libertarians, that a centralized authority is still required to protect orderly trade, contract, and life within a free system, usually by some threat of force or incarceration.
Borders will therefore be defined not by historic boundaries, but by citizens who agree to voluntarily submit to such authorities based on the values they espouse.
Citizens that do so will benefit from the authority’s protection if they promise to comply with what the authority stands for. But authorities will also have to compete among themselves in terms of the rules and values that appeal most to the public at large. The system in that sense will be chivalric. Hence, if you want to benefit from the free trade of the new U.S. authority, you are welcome to, but only if you ascribe to its key values. Doing so will also entitle you to military protection, albeit on a new more decentralized and feudalistic basis, where various private militaries club together when threats emerge, to ensure the protection of the bigger systems. But in times of peace, they remain decentralized and fragmented to limit coercion on the civilian population.
But the key thing about “leased sovereignty” is that it may not matter where you are in the world to benefit from it. If you operate and act like an American/Anglosphere citizen, and pay your dues, you will benefit from its protection.
And that can be on an individual basis if the sovereignty is practiced digitally, on a commercial basis if protected by special deals such as free-trade zones (think the UAE) or on a national basis entirely (think the potential absorption of Greenland or Canada or even Mexico into the U.S. system). Dues themselves won’t be taxes as much as the provision of military or cultural services when needed (be they psyop propaganda related or physical), tribute or donations to the centralized authorities purse on a self-determined basis.
For an idea of how this might work do check out the Polish Netflix medieval comedy 1670, and specifically the linked scene where the tax rate is negotiated.
The main question that needs addressing is what happens if you don’t care for American values and don’t want to participate in these new systems but live in a territory dominated by those who do? Well, according to the Sovereign Individual, some nation-states may be inclined to cede sovereignty over small enclaves and remote areas to entirely new affinity groups and virtual communities. Small autonomous zones may emerge as a result. But the condition for such sovereignty will be self-sufficiency, which means — guess what — no more US aid or development.
What is clear is that what will not be tolerated anymore is free-riding on any superior system without adherence to the rules and values.
As a cheeky bonus, here is one more thing I think I think.
Some think reshoring manufacturing to the U.S. won’t work because there’s too much of a labor shortfall. But the AI revolution provides for a unique one-off opportunity to reshore manufacturing on a far less labor-intensive basis. Unlike China’s labor-intensive model, America has the opportunity to leap frog its way to lights-out manufacturing immediately. And yes, China is adapting too, but the abundance of low-skilled workers in the country and its economic model’s dependence on financial repression, means the path to a stable transition is likely to be longer and/or more precarious.
FWIW I make no judgment on whether any of this is good or bad. I am merely recounting what I believe is unfolding.
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