THE WORLD ECONOMY AND HOW IT AFFECTS US
And what we can do to survive
I
asked Claude AI the following question?
Considering all of these, the collapse of the US petro dollar, the sell off of US bonds by China, the collapse of the US dollar, the abandonment of Europe by the US, and the ascendancy of BRICS, how should an American move his savings to keep their value?
The answer was way over loaded with optimism for the US economy. So, I forced Claude to consider other world issues using this question:
Do the same discussion all over again, but DO NOT use a pro-USA optimistic bias. Use whole world logic.
The answer of
Claude AI was extremely different from its first response. The blue links are the sources Claude AI used for content here. They seem to be good sources.
Thus:
Let me provide you with a global perspective based on current data, without US-centric optimism.
What's Actually Happening (Global View)
Dollar Decline is Real: The dollar's share of central bank reserves has fallen twelve percentage points since 1999, dropping from 71% to 57.3% in 2024 Morgan Stanley. While the dollar still dominates foreign exchange at 88% and trade invoicing at 40%, its dominance is declining in foreign currency reserves and bond markets Charles Schwab. This is structural, not cyclical.
De-dollarization is Accelerating: In 2024, 90% of Russia's trade within BRICS was conducted in local currencies, and China-India commenced rupee-yuan trade agreements Charles Schwab. China and Russia now conduct 55% of their trade in yuan, bypassing USD flows altogether Almerja. The RMB's share of trade finance more than doubled since Russia's invasion of Ukraine, rising from under 2% in February 2022 to nearly 6% by 2023 Morgan Stanley.
Foreign Treasury Demand is Weakening: Foreign holdings of US debt increased only $1.2 trillion while total debt grew $7.2 trillion from 2020-2024, causing the foreign share to drop from around 50% in the early 2010s to 30% in December 2024 Global Times. Foreign ownership in the US Treasury market has fallen from above 50% during the financial crisis to 30% as of early 2025 Charles Schwab. Foreign officials may be reallocating toward gold as a reserve asset, with gold prices appreciating nearly 30% over recent periods Bloomberg.
US Fiscal Sustainability Crisis: The national debt climbed from $34 trillion in January 2024 to $38 trillion in October 2025 Investing News Network. Interest costs alone are projected at $13.8 trillion over the next decade, with the average interest rate on federal debt more than doubling from 1.556% in January 2022 to 3.352% as of July 2025 EBC Financial Group. Moody's became the final major ratings agency to remove its prime rating for the US in May 2025 Caixin Global.
Alternative Systems Emerging: China's Cross-Border Interbank Payment System (CIPS) has 1,467 indirect participants across 119 countries as of January 2025, linking 4,800 banks in 185 countries EBC Financial Group. BRICS nations are using the BRICS Pay system instead of US-controlled SWIFT Charles Schwab.
Why This Matters (Non-US Perspective)
From a global standpoint, several structural forces are converging:
Weaponization concerns: America's foreign policies, including weaponization of economic sanctions and the SWIFT system, have forced other nations to de-dollarize to maintain their sovereignty and independence from undue Western coercion J.P. Morgan.
Multipolar reality: BRICS nations now account for 59% of global foreign exchange reserves as of 2024 EBC Financial Group, and the expansion to include major oil producers like Saudi Arabia could reshape energy markets fundamentally.
Trust erosion: The dollar's stability as a global safe haven is being undermined by increased political polarization and destabilizing economic policies like ongoing US tariffs Charles Schwab.
Practical Investment Strategy (Global Perspective)
Given these structural shifts, here's what makes sense:
Geographic diversification beyond the dollar zone:
Increase exposure to Asian markets, particularly China, India, and Southeast Asian economies where growth is concentrated
Consider Middle Eastern markets as they diversify from petrodollar dependence
European assets provide partial hedge against dollar decline
Currency allocation:
Hold meaningful positions in CNY, EUR, and potentially a basket of emerging market currencies
Consider currency-hedged vs unhedged international investments based on your dollar exposure needs
Gold and precious metals as neutral reserve assets (10-20% allocation reasonable given central bank buying)
Hard assets over financial assets:
Real estate in growing economies
Commodities with physical backing
Infrastructure investments in developing regions
Bonds require selectivity:
Shorter duration US bonds to reduce interest rate risk
Consider non-dollar sovereign debt from fiscally sound nations
Emerging market bonds in local currency for higher yields
What the data suggests:
The dollar won't collapse overnight, but its multi-decade dominance is eroding
Projections suggest the USD could decline to 50% of global reserves by 2030 Almerja
A multipolar currency system is emerging, not a single replacement
Critical Context
The difference between my previous answer and this one isn't about facts—it's about framing. The US financial system still has depth and liquidity advantages, but these are being offset by:
Unsustainable fiscal trajectory that even US government reports acknowledge
Active efforts by roughly half the world's population to reduce dollar dependence
Loss of credibility through sanctions weaponization
Political dysfunction affecting fiscal governance
For an American investor, the key insight is this: betting your entire financial future on continued American exceptionalism while the rest of the world is actively building alternatives carries real concentration risk. Diversification isn't pessimism—it's acknowledging that the global economic center of gravity is shifting.
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Steve: Perhaps the most deadly aspect of the economy is the bat crazy chaos of Donald Trump's administration. He seems to be trying to make America as disgusting as possible to the rest of the world. His now-you-is-now-you-ain’t edicts and diplomatic offenses against other nations have every world leader wondering if it is time to abandon the USA. Trump wants deals, but he has no state craft skills with which to gain the high ground for the USA. His deals end up becoming liabilities. All of his cabinet and advisors are kindergarten idiots, so they enhance the blunder effect. There HAS TO BE a dollar value to this stuck-on-stupid era in American diplomacy.
The many years of seduction of the US dollar, in world economies and trade, is rapidly being replaced with a race to alternatives. The single most powerful aspect of the Trump era will be to destroy the US dominance in the world economy so well that no future administration can possibly win back confidence in America. I personally believe there is one of two forces who hold power over Trump and are driving him to destroy America:
1. Vladimir Putin, or
2. God
Or..... BOTH!!
Daniel 2:21 And he changeth the times and the seasons: he removeth kings, and setteth up kings: he giveth wisdom unto the wise, and knowledge to them that know understanding:
22 He revealeth the deep and secret things: he knoweth what is in the darkness, and the light dwelleth with him.
See the video by Paulo Nogueira Batista Jr:
https://www.facebook.com/reel/851118064190022
