Trump between the Dollar and Bitcoin

Is Donald Trump's blackmail to force the world to trade in dollars incompatible with his promise to create a strategic reserve of bitcoins?

Quid pro quo?

Donald Trump's threats have been the talk of the town in recent days. The next US president warns that countries that reject the dollar should expect punitive tariffs:

“The idea that BRICS countries can distance themselves from the dollar while we sit back is over. We demand that these countries commit not to create a new currency, nor support another currency to replace the dollar, otherwise they will be subject to 100% tariffs. This means they will be able to say goodbye to their exports to the United States. Let them find themselves another pigeon! There is no chance that BRICS will replace the dollar in international trade. Any country that tries it will have to say goodbye to America. »

For some, these statements contrast with his promise to create a strategic reserve of bitcoins. This is the case of Professor Jeremy Siegel who sees this as a blatant antinomy:

“I find Donald Trump's tweet very curious in the sense that I think the biggest threat to the dollar as a reserve currency is bitcoin, of which Donald Trump is a strong supporter. So it seems a bit strange to prevent them from using an alternative reserve currency when many countries consider bitcoin as such. »

To see this more clearly, it is necessary to explain why the United States absolutely wants world trade to be carried out in its currency. This is so important that Washington is apparently ready to isolate itself from the BRICS.

[Notre article : « Bitcoin – Le coup de maître géopolitique des États-Unis »]

The exorbitant privilege

Donald Trump was not always aware of the colossal advantages that the dollar offers. He still believed in 2016 that the end of the gold standard had weakened the United States. Advisors in the Oval Office have since explained to him that the petrodollar system is actually the cornerstone of the empire.

It all started in 1974 when Henry Kissinger forced OPEC countries to sell their oil exclusively in dollars. Oil being already essential to any advanced industrialized economy, the dollar remained the pivotal currency despite the end of the Gold Standard (1971). The acceleration of globalization will further consolidate its hegemony. That is to say, the quantity of dollars kept in reserve by the whole world increased rapidly.

These reserves today reach nearly 7,000 billion dollars. This is as much money as the exporting nations do not convert into their own currencies. This results in the famous privilege of enjoying a chronically deficit trade balance without its currency collapsing.

The other advantage is the ease of getting into debt since foreign central banks place their reserves in US Treasury bonds to earn interest.

Fifty years later, 36% of global public debt is American. Knowing that Americans only represent 4% of the world population…

We must save the greenback

With light shed on the fat profits offered by the dollar, let's examine the balance of power before returning to bitcoin.

The BRICS represent almost half of the world's population (46%), compared to just under 10% for the G7 (United States, Canada, Japan, United Kingdom, Germany, France and Italy). Same trend regarding GDP:

Among other metrics, the club is responsible for approximately 25% of overall exports. It produces 43% of the world's oil and has 44% of the world's reserves. It is respectively 35.5% and 53% for gas. Another very interesting fact is that China is the leading trading partner of more than 120 countries.

In addition, Beijing has a monopoly on the extraction and processing of rare earths. If mineral extraction takes place almost everywhere around the globe (for example: 50% of nickel in Indonesia, nearly 75% of cobalt in DR Congo, more than 75% of lithium in Australia and Chile), China controls more than half of the world's refining of aluminum, lithium and cobalt. It is even 90% for rare earths and manganese, or even 100% for graphite.

In summary, even if the West has significant leverage through semiconductor technology, the BRICS have what it takes to fight back. Faced with Donald Trump's customs threat, the Russian embassy in Ethiopia tweeted:

“Go ahead, the resulting price rise will weigh heavily on Americans' purchasing power. America first? “.

Plan B

The BRICS are very worried since the “freezing” of several hundred billion belonging to Russia. Billions which, by the way, consist mainly of euros, and not dollars…

It is therefore the old continent which will be in the crosshairs if this money is not returned. This would be the final blow after having already cut off Russian gas to buy that of the United States, which is much more expensive.

China and other countries like Saudi Arabia fear they will be next in line. The Middle Kingdom still holds 800 billion US Treasury bonds.

The distrust of the American currency is such that the Wall Street Journal revealed in 2023 that Washington was actively seeking guarantees that Saudi Arabia would sell its oil in dollars – and not in Chinese yuan – as a condition for any normalization agreement with Israel.

But it is difficult to see how the BRICS could turn back. Sooner or later, China will buy Saudi oil in yuan. Faced with dedollarization, the United States will have no other choice than to reduce its trade deficit, which involves increasing customs taxes.

In this scenario, the world will need a new pivotal currency and bitcoin is increasingly becoming an obvious choice. Its advantages are numerous.

He is stateless. Using bitcoin as an international reserve currency would allow all nations to trade on equal terms. End of exorbitant privilege.

Bitcoin is also a currency as well as a two-in-one decentralized payment network. Impossible to confiscate the reserves of a nation that does not align with your foreign policy.

Finally, its monetary mass is capped at 21 million units. This technological breakthrough makes it the best store of value in the history of humanity.

Bitcoin is inevitable. Creating a reserve of bitcoins before anyone else would allow the United States to save face.

Donald Trump himself has said that he will use the appreciation of bitcoin to repay America's foreign debts.

Don’t miss our article: “American miners invoke bitcoin in the face of dedollarization”.

Nicolas T.

Reporting on Bitcoin, “the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy”.