I've been sitting with this essay for awhile, Ope, and have read it a few times. I wanted to come back to it when I had time to delve in because I think there's a critical point here, along with the many points on which I'm learning from you.
You write, "The current Hormuz sequence follows two decades of dollar-printing that accelerated hard after 2008 and again after 2020." As we know, the US gov't hasn't been allowed to print dollars since the banker cartel seized control in 1913. The US internal debt is a fictitious number. The GDP tracks taxable internal exchange.
The function of a gov't is to organize labor by issuing credit to those doing the work. They gradually collect it back as taxes after it changes hands for property, goods and services. OF COURSE there's going to be a deficit when the gov't has no ability to issue the credit but can only collect taxes on what the banks issue and siphon back out in mortgages. The banks are the functional gov't and organize all labor in their interests--whether it's their profits or the demolition and self-immolation of the prey when they're bored of playing with it.
Trade deficits are real. The petrodollar is imaginary money. That's the real problem they tried to fix by strong-arming Iran, preventing the change of the currency--which they've now ensured is happening. I don't know that they're 'playing 5D chess' and had this all figured out. Maybe.
BTW, somewhere you talk about the yuan being the currency allowed through Hormuz, and other times you say the renminbi. I thought the yuan was the external currency for int'l trade and the renminbi was for domestic trade in China--which is a model we should adopt!
The reason I'm looking to get the analysis right is because that determines strategy. Under my system of the caret for hyperlocal trade and housing, we only have to worry about dollar inflation for int'l trade. That's no small thing, since it includes fuel, but it protects our property and infrastructure. The more worthless the dollar becomes, the more valuable the caret is. We can let the federal debt inflate and float away--it doesn't effect us.
I think the model of two currencies can work for Africa too. BTW I had dinner last night with my daughter's politically savvy friend from Kenya. She told me their currency is the shilling. OMfG!
Tereza, this is such a rich, generous comment, and I’m grateful you sat with the piece long enough to ruminate on the foundations rather than just the surface framing.
On the “dollar-printing” line, you’re right that if we’re being precise, the post‑1913 issuer is the banking cartel via the Fed–Treasury nexus, not “the US government” as a sovereign printer in the classical sense. What I was trying to capture, maybe too shorthand, was the sequence: an issuer with a global reserve asset spends two decades expanding balance sheets and terming out obligations, then “discovers” an external shock that lets it reprice real-world inputs and quietly claw back the over‑issue in the form of higher living costs rather than explicit default. In other words, I agree with you that the US government is downstream of the banks; my argument is that energy‑driven inflation performs the same political function that overt monetary debasement would, while preserving the fiction of constraints.
On your point that the internal federal debt is fictitious while trade deficits are real: that’s exactly why I anchored the Hormuz toll to oil flows and not just to abstract macro. The flows that matter are where external claims meet physical throughput. The “petrodollar as imaginary money” language you use is very close to what I’m gesturing at when I say the Strait has been turned into a toll booth: the system only works as long as you can settle imaginary claims in real barrels on schedule. Metering that chokepoint forces a repricing of the entire hierarchy of claims without anyone ever announcing a default.
You’ve also caught a genuine sloppiness on my part with yuan vs renminbi. Strictly speaking, renminbi is the name of the currency and yuan is the unit; in practice, “yuan” tends to be used for pricing and international trade, while “renminbi” lives in more formal/constitutional language. You’re right to flag that if we’re talking about a dual‑currency structure for trade vs domestic flows, the labels and functions matter. In any future essay I should be explicit: what moves through Hormuz are barrels priced in units that sit on top of a domestic credit system, and that separation is the design space you’re working in with the caret.
Where your model really excites me is the strategic implication you spell out: if you can ring‑fence a local credit system for housing and everyday exchange, you can let the imperial unit float off into abstraction and only meet it at the border for fuel and imports. That’s the same intuition I have for Africa: a hard separation between a tradable settlement layer (for oil, chips, machinery) and a locally governed credit instrument that keeps land, shelter, and basic infrastructure insulated from the next “external shock.” Your Kenya anecdote is a perfect illustration of the absurdity: a whole country’s productive life denominated in a colonial unit whose name literally encodes the period of conquest also with Somali shilling, Ugandan shilling and we cannot forget the Egyptian pound!
I’d actually love to dig into your caret design in more detail: how are you thinking about who issues and retires it, and what prevents it from being captured by the same banking logic you’re trying to escape?
Your response is as generous as my comment, Ope. This is an important conversation. I wasn't trying to catch you on the yuan/ renminbi difference, I've just been trying to understand it. I often hear people (in the tiny circles that know something about economics) talking about China's model of issuing the currency for projects they want to do. I'd assumed that was renminbi and the yuan from int'l trade went into their treasury. They could issue as much renminbi as they wanted without causing inflation if it was backed by yuan (under my misunderstanding that it was a different currency) at a different exchange/ tax rate for int'l imports.
So their own labor and the products from it are free to the society as a whole. It's only products from other countries that require payment that's good for an equal value of exports from the receiving society. The last time we had a dual monetary system was when we were colonies: https://thirdparadigm.substack.com/p/05-the-short-eventful-life-of-sovereign money. I think this is the most important chapter to read from my book.
I was surprised to read that the US supplied 50% of global exports at the end of WWII. The same source, I think, also said that the fuel crunch wouldn't hit the US as hard because we were self reliant in energy. I call bunk on that. As we've seen, if LNG gets a higher price in Europe (after blowing up the Nordstream) US tankers will turn around mid-ocean and head there. We're not getting that gas.
You write, "an issuer with a global reserve asset spends two decades expanding balance sheets and terming out obligations, then “discovers” an external shock that lets it reprice real-world inputs and quietly claw back the over‑issue in the form of higher living costs rather than explicit default." I'm not sure I understand this, do you mean the US? The petrodollar is a global reserve currency but not asset. The $2M toll isn't going to the US, it's on top of the new price per barrel. I think the US is digging itself a deeper hole, not clawing back more by changing US consumers more. We got no more to give, no matter how hard they squeeze.
I did have an insight I think you'll like. Due to gov't shutdowns, TSA isn't being paid but the procedures haven't been loosened. Instead there are masked ICE-agents in full riot gear standing around watching the cameras while the line snakes out the door. I think this is to discourage travel without admitting they fucked up the supply chain for fuel. We could skip the TSA and go back to metal detectors, no problem. But then they'd have to come out and forbid us to fly instead of making it so hard we just give up.
I love that you're excited by the implications of my caret system and want to dig in! You write, "That’s the same intuition I have for Africa: a hard separation between a tradable settlement layer (for oil, chips, machinery) and a locally governed credit instrument that keeps land, shelter, and basic infrastructure insulated from the next external shock.” However, we shouldn't dignify the imperial currencies by calling them trade; they're extraction mechanisms.
I envision a future in which we could have commonwealth-to-commonwealth trade in sibling communities on different continents. A relationship between specific like-sized regions with edu-travel tourism and cultural exchanges between them. Not strangers. But that's for a time after the imperial currencies fail and the alternative is providing everything for ourselves.
The first step is taking back our own labor and housing. Explain more what you mean by 'what prevents it from being captured by the same banking logic you’re trying to escape?' What banking logic do you mean? The purpose of the banking system is to monopolize ownership in as few hands as possible--they do this very well. The purpose of the caret system is to distribute the ability to make a living equal to the cost of housing as widely as possible. It prioritizes natives and long-term residents. It gives the maximum amount of choice to producers and consumers.
So I don't think the bankers' logic is flawed, but their foundational purpose. I just put together all my episodes on the details of my caret system. I can't wait to talk about how it could be applied to Africa: https://thirdparadigm.substack.com/p/rules-and-tools-of-the-caret.
A lot of good info here. Fox News is not reporting that the Strait is open for those with Chinese money. I get the Zionist propaganda even though I do not seek it out.
Thanks Yulia! I actually know him! met him a few years back and we were on the verge of building a project, did not pan out but he's a resourceful and smart man!
I've been sitting with this essay for awhile, Ope, and have read it a few times. I wanted to come back to it when I had time to delve in because I think there's a critical point here, along with the many points on which I'm learning from you.
You write, "The current Hormuz sequence follows two decades of dollar-printing that accelerated hard after 2008 and again after 2020." As we know, the US gov't hasn't been allowed to print dollars since the banker cartel seized control in 1913. The US internal debt is a fictitious number. The GDP tracks taxable internal exchange.
The function of a gov't is to organize labor by issuing credit to those doing the work. They gradually collect it back as taxes after it changes hands for property, goods and services. OF COURSE there's going to be a deficit when the gov't has no ability to issue the credit but can only collect taxes on what the banks issue and siphon back out in mortgages. The banks are the functional gov't and organize all labor in their interests--whether it's their profits or the demolition and self-immolation of the prey when they're bored of playing with it.
Trade deficits are real. The petrodollar is imaginary money. That's the real problem they tried to fix by strong-arming Iran, preventing the change of the currency--which they've now ensured is happening. I don't know that they're 'playing 5D chess' and had this all figured out. Maybe.
BTW, somewhere you talk about the yuan being the currency allowed through Hormuz, and other times you say the renminbi. I thought the yuan was the external currency for int'l trade and the renminbi was for domestic trade in China--which is a model we should adopt!
The reason I'm looking to get the analysis right is because that determines strategy. Under my system of the caret for hyperlocal trade and housing, we only have to worry about dollar inflation for int'l trade. That's no small thing, since it includes fuel, but it protects our property and infrastructure. The more worthless the dollar becomes, the more valuable the caret is. We can let the federal debt inflate and float away--it doesn't effect us.
I think the model of two currencies can work for Africa too. BTW I had dinner last night with my daughter's politically savvy friend from Kenya. She told me their currency is the shilling. OMfG!
Tereza, this is such a rich, generous comment, and I’m grateful you sat with the piece long enough to ruminate on the foundations rather than just the surface framing.
On the “dollar-printing” line, you’re right that if we’re being precise, the post‑1913 issuer is the banking cartel via the Fed–Treasury nexus, not “the US government” as a sovereign printer in the classical sense. What I was trying to capture, maybe too shorthand, was the sequence: an issuer with a global reserve asset spends two decades expanding balance sheets and terming out obligations, then “discovers” an external shock that lets it reprice real-world inputs and quietly claw back the over‑issue in the form of higher living costs rather than explicit default. In other words, I agree with you that the US government is downstream of the banks; my argument is that energy‑driven inflation performs the same political function that overt monetary debasement would, while preserving the fiction of constraints.
On your point that the internal federal debt is fictitious while trade deficits are real: that’s exactly why I anchored the Hormuz toll to oil flows and not just to abstract macro. The flows that matter are where external claims meet physical throughput. The “petrodollar as imaginary money” language you use is very close to what I’m gesturing at when I say the Strait has been turned into a toll booth: the system only works as long as you can settle imaginary claims in real barrels on schedule. Metering that chokepoint forces a repricing of the entire hierarchy of claims without anyone ever announcing a default.
You’ve also caught a genuine sloppiness on my part with yuan vs renminbi. Strictly speaking, renminbi is the name of the currency and yuan is the unit; in practice, “yuan” tends to be used for pricing and international trade, while “renminbi” lives in more formal/constitutional language. You’re right to flag that if we’re talking about a dual‑currency structure for trade vs domestic flows, the labels and functions matter. In any future essay I should be explicit: what moves through Hormuz are barrels priced in units that sit on top of a domestic credit system, and that separation is the design space you’re working in with the caret.
Where your model really excites me is the strategic implication you spell out: if you can ring‑fence a local credit system for housing and everyday exchange, you can let the imperial unit float off into abstraction and only meet it at the border for fuel and imports. That’s the same intuition I have for Africa: a hard separation between a tradable settlement layer (for oil, chips, machinery) and a locally governed credit instrument that keeps land, shelter, and basic infrastructure insulated from the next “external shock.” Your Kenya anecdote is a perfect illustration of the absurdity: a whole country’s productive life denominated in a colonial unit whose name literally encodes the period of conquest also with Somali shilling, Ugandan shilling and we cannot forget the Egyptian pound!
I’d actually love to dig into your caret design in more detail: how are you thinking about who issues and retires it, and what prevents it from being captured by the same banking logic you’re trying to escape?
Your response is as generous as my comment, Ope. This is an important conversation. I wasn't trying to catch you on the yuan/ renminbi difference, I've just been trying to understand it. I often hear people (in the tiny circles that know something about economics) talking about China's model of issuing the currency for projects they want to do. I'd assumed that was renminbi and the yuan from int'l trade went into their treasury. They could issue as much renminbi as they wanted without causing inflation if it was backed by yuan (under my misunderstanding that it was a different currency) at a different exchange/ tax rate for int'l imports.
So their own labor and the products from it are free to the society as a whole. It's only products from other countries that require payment that's good for an equal value of exports from the receiving society. The last time we had a dual monetary system was when we were colonies: https://thirdparadigm.substack.com/p/05-the-short-eventful-life-of-sovereign money. I think this is the most important chapter to read from my book.
I was surprised to read that the US supplied 50% of global exports at the end of WWII. The same source, I think, also said that the fuel crunch wouldn't hit the US as hard because we were self reliant in energy. I call bunk on that. As we've seen, if LNG gets a higher price in Europe (after blowing up the Nordstream) US tankers will turn around mid-ocean and head there. We're not getting that gas.
You write, "an issuer with a global reserve asset spends two decades expanding balance sheets and terming out obligations, then “discovers” an external shock that lets it reprice real-world inputs and quietly claw back the over‑issue in the form of higher living costs rather than explicit default." I'm not sure I understand this, do you mean the US? The petrodollar is a global reserve currency but not asset. The $2M toll isn't going to the US, it's on top of the new price per barrel. I think the US is digging itself a deeper hole, not clawing back more by changing US consumers more. We got no more to give, no matter how hard they squeeze.
I did have an insight I think you'll like. Due to gov't shutdowns, TSA isn't being paid but the procedures haven't been loosened. Instead there are masked ICE-agents in full riot gear standing around watching the cameras while the line snakes out the door. I think this is to discourage travel without admitting they fucked up the supply chain for fuel. We could skip the TSA and go back to metal detectors, no problem. But then they'd have to come out and forbid us to fly instead of making it so hard we just give up.
I love that you're excited by the implications of my caret system and want to dig in! You write, "That’s the same intuition I have for Africa: a hard separation between a tradable settlement layer (for oil, chips, machinery) and a locally governed credit instrument that keeps land, shelter, and basic infrastructure insulated from the next external shock.” However, we shouldn't dignify the imperial currencies by calling them trade; they're extraction mechanisms.
I envision a future in which we could have commonwealth-to-commonwealth trade in sibling communities on different continents. A relationship between specific like-sized regions with edu-travel tourism and cultural exchanges between them. Not strangers. But that's for a time after the imperial currencies fail and the alternative is providing everything for ourselves.
The first step is taking back our own labor and housing. Explain more what you mean by 'what prevents it from being captured by the same banking logic you’re trying to escape?' What banking logic do you mean? The purpose of the banking system is to monopolize ownership in as few hands as possible--they do this very well. The purpose of the caret system is to distribute the ability to make a living equal to the cost of housing as widely as possible. It prioritizes natives and long-term residents. It gives the maximum amount of choice to producers and consumers.
So I don't think the bankers' logic is flawed, but their foundational purpose. I just put together all my episodes on the details of my caret system. I can't wait to talk about how it could be applied to Africa: https://thirdparadigm.substack.com/p/rules-and-tools-of-the-caret.
A lot of good info here. Fox News is not reporting that the Strait is open for those with Chinese money. I get the Zionist propaganda even though I do not seek it out.
Fox News eh? i bet the narrative is, "we are winning!" lol
You might want to read and converse with Richard Werner.
Thanks Yulia! I actually know him! met him a few years back and we were on the verge of building a project, did not pan out but he's a resourceful and smart man!
holy crap