Michael Reid
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RUSSIA for the First Time uncovered and blew up Zelensky’s Underground Secret Headquarters in KIEV
******************************************************For example, immediately after the Russian defense ministry officially announced the destruction of two key enemy facilities in Kiev, sources confirmed that this referred to the data center ‘BeMobile’, which was responsible for storing and transmitting intelligence data. Moreover, this object supplied the Ukrainian army with network equipment and ensured its functionality. Sources have also confirmed the destruction of one underground facility in ‘Podolsky’ district of Kiev. Reports indicate that this underground facility was destroyed by two Kinzhal hypersonic missiles……………………………………………………………………………………………………………………………..
Prof. Steve Hanke: BRICS Declares Unilateral Sanctions ILLEGAL —New Delhi Declaration Eviscerates it
Trump and Israel’s Last Desperate Gambit Against Iran – guests Col. Larry Wilkerson and Patrick Henningsen
NEWS WIRE
Iran has now retaliated against the latest US aggression in the Strait of Hormuz, pummeling US military positions in Jordan, as well as unveiling new missile technology that could threaten US Navy assets in the Gulf of Oman and Indian Ocean. Does the Trump Admin have a real strategy for the extended war against Iran? All of this is happening as the US bond market continues to spiral downwards, and US debt and inflationary pressures put the squeeze on Uncle Sam’s etherial Magic Money Tree. What will happen next? All this and more.
Host Danny Haiphong discusses these latest developments with special guests Col. Larry Wilkerson and Patrick HenningsenIran has now retaliated against the latest US aggression in the Strait of Hormuz, pummeling US military positions in Jordan, as well as unveiling new missile technology that could threaten US Navy assets in the Gulf of Oman and Indian Ocean. Does the Trump Admin have a real strategy for the extended war against Iran? All of this is happening as the US bond market continues to spiral downwards, and US debt and inflationary pressures put the squeeze on Uncle Sam’s etherial Magic Money Tree. What will happen next? All this and more.
https://21stcenturywire.com/2026/09/09/trump-and-israels-last-desperate-gambit-against-iran-guests-col-larry-wilkerson-and-patrick-henningsen/The days of a unipolar world are numbered.
Humanity will finally live in an era of universal prosperity and peace.
The US asks Russia for HELP: Iran for the First Time wiped out USAF planes with MRBM ‘Qasem Bassir
The US asks Russia for HELP: Iran for the First Time wiped out USAF planes with MRBM ‘Qasem Bassir’
******************************************************Well, my dear truth seekers, it seems the United States’ worst nightmare is coming true. Iran’s main allies in the Middle East, Yemen’s Houthis, have launched a full-scale offensive and, over the past 48 hours, captured three major cities: ‘Mokha’, ‘Al Khawkhah’, and ‘Hays’. It is noteworthy that the day before, Iran attacked American warships in the Middle East. Tehran officially stated that this attack was Iran’s response to the United States’ aggressive actions against Iranian oil tankers. Moreover, as it turned out, during this attack, Iran for the first time used its latest electro-optical missiles..
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25 Years Later …
… defeated, confused and humiliated–this is how the US faces 25th anniversary of the 9/11 tragedy and of the so called GWOT.
“The Empty Throne
For six hundred years, every reserve currency had an obvious heir. The dollar doesn’t – and that changes everything.Jay MartinJun 27, 2026
When a king dies, nobody asks who’s next.They already know. The crown prince has been standing beside the throne his whole life. The succession was settled long before the old man stopped breathing. That is the entire purpose of a crown prince – to take the most dangerous moment in the life of a kingdom, the handoff of power, and make it feel boring and inevitable.
I have written many times that the U.S. dollar will eventually lose its place at the center of the world, and I am not going to re-litigate that today. Empires end. Reserve currencies end. Anyone who tells you the current arrangement is permanent has not read much history. That part I am comfortable with.
This is not alarmist. It is cyclical.
Here is the part that I have been thinking about a lot. Who is the crown prince?
For six hundred years, the crown has always had an heir.
Portugal handed off to Spain. Spain to the Dutch. The Dutch to France, France to Britain, and Britain to the United States. Roughly a century each. And in every one of those handoffs, you could see the successor standing in the wings. By the time London’s reign was ending, America was already the largest economy on earth and the world’s biggest creditor. The crown did not leap to a stranger. It went to the next-strongest power in the room – the one who already controlled the trade routes and the resources that mattered. That is how reserve currencies have always changed hands. The understudy was already in costume.
So I did what I always do. I went looking for the understudy.
And this is where it gets strange. If we pull back the curtain, the wings are empty.
Many people have an answer to this question, but almost nobody has actually checked their work. Let me walk through a few of the candidates that often come up in conversation.
The obvious answer that isn’t
Say “the dollar is finished” at any dinner party and someone will finish your sentence for you.
“China.”
It is the reflex. China is the world’s factory, the world’s largest exporter, and the second-largest economy on the planet. Of course, it is next.
I understand the reflex. But I have learned to be suspicious of any answer the whole room arrives at too quickly. So let me give you three reasons the obvious answer is wrong – and notice that none of them are opinions. They are factual observations.
One. You cannot be the world’s banker while the doors of your bank are locked.
A reserve currency has to be something the world can hold freely – buy it, sell it, move it across borders at three in the morning without asking permission. The dollar does that. So did Sterling. So did the Dutch guilder before it. Reserve currencies require deep, liquid, trusted markets and a high degree of convertibility. That is not a feature. It is the whole job.
China has been the world’s number-two economy and its number-one exporter for decades. And after all that time, here is where its money stands: the yuan makes up roughly 2% of the savings that the world’s governments hold in reserve, and only about 3% of the payments that cross borders. The U.S. dollar is about 58%. That is not a gap. That is a canyon.
And the canyon is there on purpose. China does not let its money move freely. By law, an ordinary Chinese person can take only about $50,000 out of the country in a year, and big companies need the government’s blessing to send money abroad at all. Picture an engineer in Shenzhen who has done well and wants to move her savings into dollars and park them somewhere safe overseas. She cannot, not really. She hits the fifty-thousand-dollar ceiling by spring, and the rest of her money stays home, where Beijing can see it. China also refuses to let the market decide what the yuan is worth – every morning, the government sets the price and lets it drift only about 2% from there. Why all the rules? Because if money could leave freely, savers could pull their cash out all at once and crash the whole system – and the value of the yuan would be set by the world instead of by Beijing. That is the control China will never give up.
And here is the part that surprises people. China does not seem to want the job in the first place.
Back in 2009, the man running China’s central bank said something remarkable. He argued that the whole world had a problem: it leaned too heavily on one country’s money. His fix was not “use ours instead.” It was that the world should run on a neutral kind of money that belongs to no single nation – not America’s, and not China’s either. Think about that. He had the perfect moment to make the case for the yuan, and instead he said no country should hold this kind of power, including his own. That is not a man reaching for the crown. That is a man saying the crown is dangerous.
The experts who study this say the same thing. Eswar Prasad, a Cornell economist, laid it out in his book Gaining Currency: The Rise of the Renminbi. His point is plain: as long as China keeps its money walled off, the yuan can win a slice of the world’s trade, but it can never become the money the world saves in. And China keeps the wall up by choice. It has relaxed a few of the rules over the years – but only slightly, and only in ways where it can still track and approve every dollar that moves.
So the usual story has it backwards. China is not a hungry challenger straining for a crown just out of reach. China is the favourite who keeps refusing to enter the race – because the prize comes with a bill it has no intention of paying.
Two. To be the world’s banker, you have to send your money out into the world. China was built to pull it in.
This is the part almost everyone misses, so slow down with me.
Back in 1960, an economist named Robert Triffin pointed out a trap at the heart of being the reserve currency. If the world runs on your money, you have to supply the world with your money – and the only way to do that is to send more of it out than you take in. You have to run deficits. Permanently. The reserve issuer is the buyer of last resort for everyone else’s stuff. America has played that role for eighty years, and the trade deficits people complain about every election cycle are not a bug in the dollar system. They are the rent the United States pays to keep the crown.
Now look at China. In 2025, it ran a current-account surplus of $735 billion – a record, and on the trade side, the largest surplus any nation has ever run. China’s entire rise was built on selling to the world and banking the proceeds. It is the workshop, not the buyer. To become the world’s reserve issuer, China would have to flip that on its head: import more than it exports, run deficits for decades, and hand its currency to foreigners by the trillions. It would have to dismantle the exact machine that made it strong.
Strength is earned by playing to your advantage, not by abandoning it. Britain ran deficits to be the world’s banker. America flipped from creditor to debtor to take the throne. China has looked at that bargain and said, politely, no thank you. And I do not blame them.
Three. China is aging before it is finished climbing.
When America took the crown in 1944, it was young, growing, and the world’s largest creditor. Every previous successor was the same – population on the way up, not the way down, at the moment of the handoff. Demography was wind in the sails.
China’s population peaked in 2022 at around 1.4 billion and is now shrinking. Its working-age population has been falling since 2015. The U.N. projects that China will have 1.26 billion people by 2050, roughly 40% of whom will be over the age of 60, and that its population could fall to 633 million by the end of the century. That is not a slowdown. That is a society growing old before it has finished growing rich.
But isn’t China just early?
Here is the obvious rebuttal: didn’t every great power start as a workshop? The Dutch built and traded their way to riches, then began lending their winnings to a rising Britain. Britain built the factories, got rich, and became the world’s banker just as America took over the building. America did the same, then shipped its own factories to China. The workshop becomes the bank – it has happened over and over. So maybe China is simply early, and its turn is still coming.
But look at how each of those turns actually happened, because it lines up with the three reasons above. Every one of those countries made the leap while it was opening its doors, still young, and on its way to becoming rich. China is the reverse on all three: keeping the wall up, aging fast, and not yet wealthy the way the others were. It may be the first workshop in history to grow old and stay locked up before it ever became the bank. And there is a clock problem – this kind of turn takes a generation, but the dollar’s troubles are here this decade. Even if China could one day make it, it would not be ready in time. The crown may move long before China can catch it.
The shorter conversations
Once you set China aside, the bench gets thin in a hurry.
The euro? After the dollar, the euro is the most widely held reserve currency on earth – about 21% of the world’s reserves. So it earns a serious look. But it carries a flaw the dollar does not: the euro is a currency without a country. Twenty nations share it, and each one still borrows on its own, at its own interest rate. There is no single “Europe” bond for the world to buy – you have to choose one country’s debt over another’s. When the world parks its savings, it wants one big, safe, trusted place to put them. The euro offers twenty smaller ones instead. We watched that arrangement nearly tear itself apart during the European debt crisis from 2009 to 2012, when tiny Greece almost brought the whole project down. And after more than twenty-five years, the euro’s share of world reserves has barely moved. A currency that cannot agree on a single government bond is not going to replace the dollar.
The yen? The Japanese yen and the British pound come next on the list, at about 6% and 5% of world reserves. But neither is a contender – they are warnings. Take Japan. Its government owes more than twice the country’s annual output, the heaviest debt load in the developed world. To keep from drowning in interest payments, the Bank of Japan holds interest rates down by force, and it has bought up nearly half of its own government’s debt to do it. That long squeeze has pushed the yen’s value down for years. Add a population that is both shrinking and growing older, and you do not have a country reaching for the crown. You have a country showing the rest of us what the end of the road looks like. The British pound is the same story in a smaller size – a former empire carrying heavy debt and a shrinking place in the world.
A BRICS currency? This is the one I get asked about most, and history is blunt about it: monetary unions without political union do not survive.
The Latin Monetary Union, which tied France, Belgium, Italy, and Switzerland together starting in 1865, fractured and was gone by the 1920s. The Scandinavian Monetary Union of Sweden, Denmark, and Norway, founded in 1873, met the same end by 1924. And those were neighbours – shared borders, shared culture, shared history – and they still came apart at the first real shock.
Now look at BRICS. India and China fought a deadly clash in the Galwan Valley in 2020 and remain open strategic rivals. India has stated plainly that it does not want a common currency. The bloc spans democracies and autocracies, creditors and debtors, with no shared central bank, law, or treasury. A common currency is a marriage. It requires you to trust your partner with your savings for the rest of your life. BRICS is not a marriage. It is a networking event with a group photo.
What about stablecoins?
There is one more candidate people raise, and it deserves a real answer: stablecoins. Many of you are bullish on them, and you are not wrong to be – they may be the most important monetary innovation in a generation.
So let me start with what one actually is. A stablecoin is a digital token meant to always be worth one dollar. A private company issues the tokens, and for every token it sells, it holds one real dollar – or one dollar’s worth of U.S. Treasuries – in reserve to back it.
The advantage? It is as “stable” as a U.S. dollar, but as mobile as a cryptocurrency.
You can send stablecoins to anyone in the world in seconds, as easily as a text message, without a bank in the middle. That is the appeal, and it is a real one.
But the same design that makes them work carries a cost. Because private companies issue the stablecoins and keep the record of who holds them, that company can also freeze anyone’s coins – on their own or through government order.
The dollars backing those tokens still sit inside the U.S. financial system, where they can be frozen as well. So a stablecoin does not remove your dependence on the United States and its banks. It adds a second party you have to trust on top of them. If your fear is having your money switched off, a stablecoin can be switched off more easily than paper dollars, not less.
Which is why stablecoins, for all their promise, do not answer the question we are asking. A stablecoin is still a dollar – a faster, smarter way to hold and move dollars, but not a replacement for the dollar, and not an escape from depending on the country behind it.
Stablecoins may extend the dollar’s lifespan, but they do not replace it.
So what is left?
This is the moment I kept arriving at, and kept resisting, because it sounds stranger than it is.
What if we have been asking the wrong question this whole time?
Every answer history has ever handed us was a country. A flag. A capital city with a mint. And so we go looking for the next flag, come up empty, and conclude that nothing can replace the dollar because no country is ready to.
But the rule was never really “it has to be a nation.” The rule was “it has to be something the whole world trusts to settle its debts.”
Because there is one asset that belongs to no government, carries no one’s promise, cannot be printed by a rival, cannot be frozen by an enemy, and has been accepted everywhere on earth for longer than any of these flags have existed. It does not need a central bank, a fiscal union, or a happy marriage between India and China.
At the end of 2008, this asset accounted for about 9% of global reserves. A single-digit afterthought. By 2024, it had risen to about 16%. And by the end of 2025, it had climbed to roughly 27% – passing U.S. Treasuries as the largest single holding in the world’s central banks.
By now, you have probably guessed what it is. It is gold. And I know the reflex – the moment a writer says “gold,” half the room rolls their eyes at the “gold bug” and stops reading.
And I get it. Because gold is useless. You cannot eat it. It pays no interest. It is a soft metal that sits in a vault and does nothing. Its entire value rests on a belief – a shared agreement that the stuff is worth something. Strip away the belief, and you are holding a rock.
But if we are going to be consistent, we have to run that same test on everything else central banks hold.
The dollar is also just a belief. So are the euro, the yen, and the yuan. You cannot eat any of them either. A dollar is worth a dollar only because we all agree it is – and because we trust the government printing it not to print too many. Every form of money is a story we have agreed to believe. Money has always been a story.
So the real question was never “which money has real value.” None of them do.
The real question is: whose story are you trusting – and what does the storyteller want?
To believe in the dollar, you must trust Washington – not to print away your savings, not to freeze your account when you fall out of favour. To believe in the yuan, you must trust Beijing. Every national currency hands the pen to a single author, and every one of those authors carries its own self-interest, its own debts, its own enemies, and its own reasons to rewrite the story at your expense.
So yes – gold is also a belief. But it is the one belief on that list that an author cannot spontaneously print more of or confiscate.
And this is not my opinion. In 2022, the U.S. and its allies froze over $300 billion of Russia’s reserves in response to the invasion of Ukraine. That afternoon, every finance minister on earth learned the same lesson: an asset held inside someone else’s system is not really your asset.
That same year, central banks bought more gold than in any year since 1950.
No central banker actually wants this. Gold is inconvenient – it must be guarded, it is costly to ship, and it settles slowly. It will never be a first choice. But as alliances wobble, trade deals tear up mid-sentence, and currencies get turned into weapons, the conversation shifts from the currency of choice to the asset of last resort.
“We’re at a unique moment geopolitically, and I could see in the next few years that we are going to have some kind of a grand global economic reordering, something on the equivalent of a new Bretton Woods or the Treaty of Versailles, there’s a very good chance that we are going to have to have that over the next four years.” – Scott Bessent, 6/6/24, prior to becoming U.S. Treasury Secretary
Global central banks may or may not be forecasting a formal new Bretton Woods, but their balance sheets show they are preparing for a grand global economic reordering.
Where does that leave us?
Not, I think, with a coronation. I am not here to tell you gold is the new king – that is the gold bug’s sermon, and it misreads what is happening. Gold is not the heir who finally steps out of the wings. Gold is what the world reaches for when it looks at the wings and finds them empty.
And the first thing an empty stage tells you is the opposite of doom. A king with no rival does not get overthrown next Tuesday. Because there is no successor currency ready, and no country willing to do the job, the dollar is likely to hold its place far longer than the loudest pundits claim. That is exactly why I am not ringing alarm bells. The dollar does not fall off a cliff. It dies by inches.
But the people who manage the world’s money see the empty stage too. They know there is no successor – but they no longer trust the incumbent either. So they are doing neither: not betting on a new currency, because there isn’t one, and not fully trusting the old one. They are stepping offstage for now. And in the language of money, stepping off the field means gold.
So let me be clear about what gold is and is not. It is not the solution, and it is not the future. Gold will never be the world’s reserve or trading currency, for one plain reason: it is slow, and the world needs money that moves in seconds. Gold is not the next act. It is the intermission.
What comes after the intermission is, most likely, a hybrid – trade priced in several currencies at once, balances settled in part by a neutral asset no government controls. The shape is already faintly visible: central banks hold dollars, euros, and gold side by side today; China’s own central banker called for a neutral money back in 2009; and “a new Bretton Woods,” the phrase the U.S. Treasury Secretary keeps using, describes exactly this – the first Bretton Woods was itself a hybrid, currencies anchored to gold. But I am not going to dress that up as a forecast you can act on. It is a direction, not a destination. Nobody is rewriting the system tomorrow.
So here is what I actually expect: not a crash, but a long intermission. The dollar slowly losing altitude, with gold held as the placeholder, until something new and concrete finally takes the stage.
For six hundred years, the question was always the same: which country is next? The strange thing we have to sit with is that this time, the honest answer might be none – at least not for a long while. No crown prince. No next flag. The throne simply stays empty, and gold is the name we give to an empty throne.
Which means the rising price of gold is not really a story about gold. It is a thermometer. And the temperature is climbing fast: gold has more than doubled since 2022, from about $1,800 an ounce to more than $4,000 today. That is not a metal becoming more useful. It is trust draining out of the system – and as long as that number keeps climbing, the world has not yet agreed on what comes next. That is the gauge to watch: not because gold is the destination, but because it tells you how far we still are from a real one.
Honest question – let me know in the comments: what am I missing?
That’s it for today,
Jay Martin
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The upcoming collapse
China Doesn’t Need to Win the AI Race
It only needs to slow it down. 2008 showed us what happens next.Jay MartinAug 04, 2026
It Was Never About the HousesEveryone remembers 2008. Almost nobody remembers 2006.
2008 is the year with the name. Lehman Brothers collapsed. Markets fell apart. Governments rescued banks. But by the time any of that happened, the outcome had already been decided. The year that actually matters is 2006 – the year the whole structure quietly died while every headline said things were fine.
Stay with me, because the details of what happened in 2006 are a timeless lesson that we will inevitably learn again.
In the early 2000s, the most popular mortgage sold to riskier American borrowers was called a 2/28. It worked like this: for the first two years, you paid a low, easy rate. Then, for the remaining twenty-eight years, the rate jumped to something much higher – something most of these borrowers could never afford.
That sounds like a trap, but here’s the thing: nobody expected to pay the higher rate. Not the borrower. Not the bank. The plan – the openly understood plan – was that your house would be worth more in two years. You would take a new loan against the higher value, pay off the old loan, and start a fresh two-year window of cheap payments.
By the end of 2006, nearly four out of five of these loans written in 2003 had already been refinanced; the system worked great.
The loans were never built to be repaid. They were built to be replaced.
Now, here is the part almost everyone remembers backwards. House prices did not crash in 2006. They were at record highs. What changed was the speed at which prices were climbing. Price gains that had been running in the mid-teens started shrinking – still positive, still climbing, just climbing slower.
And in that same year, 2006, with prices near their all-time peak, borrowers started missing payments in growing numbers.
Why?
A borrower whose house went up eight percent instead of fifteen could not pull out enough new value from their home equity to replace the old loan. Remember, the new loan had to be big enough to pay off the entire old loan plus the fees – and banks would only lend against value the house had actually gained over and above the existing loan – so when the gains shrank, the new loan came up short. The loan replacement chain broke.
The crash in prices came a year later, and the panic came two years after that. The real estate crash was the echo, not the boom.
That part is very important to understand: The loans did not fail when prices fell. The loans failed when prices stopped rising fast enough.
Demand for housing was never the problem: people needed houses before 2008, during 2008, and after 2008. The problem was that a financial structure had been built on top of housing that only worked if prices rose faster every single year. The real economy – families needing a place to live – was healthy. The financial economy stacked on top of it needed something no real economy can deliver forever: acceleration.
The Bills Get Paid With the Next Round
Now let me show you where I see this same structure today.
OpenAI, the maker of ChatGPT, is the most valuable startup in history. Here is its price tag over the last two and a half years:
In early 2024, investors valued the company at $86 billion.
By October 2024, $157 billion.
By March 2025, $300 billion.
By October 2025, $500 billion.
And this past March 31, it closed a $122 billion funding round – the largest private raise ever recorded – at a valuation of $852 billion.
Now the other side of the ledger. OpenAI brought in roughly $20 billion in revenue in 2025. That is real money, and it tripled from the year before. But the company spends far more than that – on computing power, on staff, on research – and loses tens of billions of dollars a year. It has never earned a profit.
So ask the obvious question: how does a company that loses tens of billions a year pay its bills?
It raises new money. OpenAI signed its giant computing contracts months and years ago – and as those bills come due, each new funding round is what pays them. Meanwhile, the higher valuation convinces the next group of investors to fund the round after that. Investors keep writing bigger checks for one reason: the price keeps going up. Fast.
Each round from 2024 through 2025 valued the company at roughly 1.7 to 1.9 times the round before it.
For OpenAI, the rising valuation is not a scoreboard. It is the income. The company pays yesterday’s bills with today’s higher price – by raising cash against the gain in asset value, exactly the way a 2/28 borrower paid off the old mortgage with the new appraisal.
And the bills are enormous, because of how AI computing is bought. OpenAI has signed contracts promising to pay for computing power years into the future – hundreds of billions of dollars’ worth – whether it ends up using that power or not. These are called take-or-pay contracts: you take the product, or you pay anyway.
The companies supplying the computing power – Microsoft, Oracle, Google, Amazon – are set to receive those hundreds of billions, and they record them as ‘backlog ‘: guaranteed future revenue, signed and locked in.
Oracle’s backlog now stands at $638 billion, up 363% in a single year. Microsoft’s stands at $625 billion. Across the four big platforms, the total contracted backlog is roughly $2.1 trillion.
Here is a detail that is very important. Analysts who have traced those contracts estimate that about half of that $2.1 trillion is owed by just two companies – OpenAI and Anthropic – neither of which earns a profit.
More than half of Oracle’s entire backlog traces back to OpenAI alone.
And it goes one step further, just like it did in 2006. The tech giants like Microsoft and Oracle are not simply waiting to collect on these promises. They are borrowing against this guaranteed future revenue – raising debt to pour concrete and fill buildings with chips, with the signed contracts serving as proof to lenders that the money is coming…
Their construction spending has gone from $150 billion in 2023, to $226 billion in 2024, to $410 billion in 2025, to roughly $725 billion planned for this year. And this year, for the first time, that construction bill is bigger than all the cash these companies collect from their entire businesses combined. Every additional dollar of building is now funded by borrowing.
Follow the chain slowly, because this is the whole picture:
OpenAI promises to make future payments it can only fulfill by raising new money.
It can only raise that new money if its valuation keeps climbing.
The tech giants count those future payments as guaranteed revenue.
Then they borrow real money against that guarantee.
Wall Street calls this backlog “locked-in future demand.” Traced to its source, it is a $2 trillion loan to borrowers with zero income.
Thirty Years of One-Time Events
So what could slow the climb?
For that, we need to talk about some recent news out of China – and about a pattern that is now thirty years old.
In the 1990s, China took over furniture, textiles, and toys. Analysts called it cheap labour, nothing more. In the 2000s, it took steel and shipbuilding. A one-off, the same analysts said. Then solar panels – today China makes roughly eight out of every ten in the world. Then batteries. Then electric vehicles. Tesla, which once dominated the Chinese EV market, now holds only a single-digit share, while BYD, its former student, sells more electric cars than any company on earth.
Every single time, the American reaction followed the same script: dismiss it as an isolated event, right up until the industry was gone. Nobody connected the dominoes.
On July 16, 2026, a Chinese AI lab called Moonshot released a model named Kimi K3. Within a day it took the number one spot on a widely watched coding leaderboard, beating the best models from Anthropic and OpenAI in blind tests – at roughly forty percent lower cost. Eleven days later, Moonshot gave the model away: anyone, anywhere, can now download it and run it on their own computers, free.
The White House AI czar, David Sacks, called it what it is: “This is concerning.”
The usage numbers say it is more than concerning. On OpenRouter – a marketplace where businesses shop for AI models the way you shop for flights – American models handled about 70% of the traffic a year ago. Today they handle about 30%. The single most-used AI provider on the platform is now Chinese.
Now connect this to the structure we just walked through.
The Chinese models do not need to be better than American ones. They need to be nearly as good and nearly free – and they are. That pulls some customers away entirely, and it forces down the prices American labs can charge the customers who stay. Both forces push on the same number: the speed of American AI revenue growth.
And the speed is the collateral. Remember the funding ladder: every OpenAI round from 2024 to 2025 came in at 1.7 to 1.9 times the round before. The next step the structure is counting on – a public share offering at more than $1 trillion – would be a step of barely 1.2 times. The smallest jump ever, at the exact moment free Chinese models are attacking the growth that justifies it. The offering was expected this year.
It is reportedly slipping.
China does not need to beat American AI. It only needs to slow it down – because a structure financed on acceleration does not break on decline. It breaks on “slower.”
House prices in 2006 didn’t have to crash to kill the machine. They only had to rise eight percent instead of fifteen.
The Catfish Comes Home
Last October I wrote about the catfish effect — the strategy China has run for twenty-five years. Beijing invited the world’s strongest companies into its market on purpose: Google, Facebook, Uber, Tesla. The foreign competition forced Chinese firms to get better, faster. And when the students had learned enough, the rules tightened, and the teachers went home. Baidu, WeChat, Didi, and BYD came out of those waters stronger than anything that swam in.
Now look at what Washington is debating this month: banning Chinese AI models from the American market.
Sit with the symmetry for a second. China used competition to grow strong. America is preparing to use protection to grow weak.
Because a ban does not fix anything. Ban the Chinese models, and millions of American businesses lose access to a nearly-free tool their competitors in the rest of the world keep using — while the protected American labs, guaranteed their home market, lose the pressure that forces improvement. Allow the models in, and the growth curve keeps bending, and the trillion-dollar structure built on that curve keeps straining. There is no third door. When every available move makes things worse, it means the real mistakes were made years earlier — one dismissed domino at a time.
What Makes This Domino Different
There is a third borrower in this story, and it is the biggest one of all.
The United States government also spends more than it earns. Over the last twelve months, the gap was $1.6 trillion. It covers that gap the only way a borrower without profits can: by raising new money (treasuries) from lenders around the world. And here is the part most people never think about. America does not pay off its old debt, either. When an old treasury comes due, the government sells a new treasury to pay back the old one. Roughly $12 trillion of existing debt must be replaced this way before the end of next year.
The debt is never repaid. It is replaced. Where have you heard that before?
So ask about America the exact question we asked about OpenAI: how does a borrower that spends more than it earns, and never repays its old loans, stay operational? The same way. Only as long as people keep lending. And why do people keep lending? Not because they expect the money back – America has not run a meaningful surplus in a quarter century. They lend because they believe there will always be another lender behind them: that American growth will keep the whole structure credible, forever.
The 2/28 borrower ran on rising house prices. OpenAI runs on a rising valuation. The US Treasury runs on the world’s unshaken belief in American growth. Three borrowers, one requirement: the next check must always be bigger than the last.
And these structures are not sitting side by side. They are stacked, each standing on the one below. The belief in American AI holds up the S&P 500. The S&P 500 holds the world’s savings in American markets. And the world’s savings fund the Treasury’s next auction – at a moment when the national debt is $39.8 trillion and the interest alone now costs over $1 trillion a year, more than the entire military.
In 2008, when everything broke, frightened money poured into US government bonds, because the fear was pointed at the banks. Nobody doubted the US government. So when investors yanked their money out of everything else, they needed a safe place to put it – and they lined up to buy government bonds. A huge crowd of eager lenders meant Washington could offer tiny interest rates and still borrow trillions. The panic itself handed the government cheap money for the rescue.
Now run the next crisis. This time the fear would not be pointed at the banks. A crash in the AI trade is a crash in the belief that America owns the future of technology – the very belief that keeps the world lending to Washington in the first place. The scared money doesn’t line up to buy American bonds this time. Some of it walks away to other markets. And a government that spends $1.6 trillion more than it earns cannot stop borrowing while lenders hesitate. It has to keep selling treasuries to a thinner crowd, which means offering higher and higher interest to get the same money.
It’s Not the Economy, Stupid
People needed houses before 2008, during 2008, and after 2008. People will use AI before, during, and after whatever comes next. The technology is real. The demand is real. That was never the question – and anyone arguing about whether AI is “real” is answering a question nobody needed to ask.
In 2006, the only number that mattered was not “are house prices high?” It was “are house prices still rising faster than last year?” The moment the honest answer became no, everything that followed was just arithmetic working itself out – quietly for a year, then loudly for two.
So don’t ask whether American AI is impressive. It is. Ask the 2006 question: what happens to a $2 trillion promise when the growth slows down?
We already know the answer. We just don’t like remembering it.
So What Do I Do, Jay?
Here is how I think about a setup like this.
Start with what you cannot do: you cannot time it. The gap between “the growth slowed” and “the structure broke” lasted almost two years last time. The people who saw the mortgage problem in 2006 looked wrong – publicly, painfully wrong – for month after month while prices kept printing record highs.
Anyone who tells you the date this breaks is guessing. The mechanism is knowable. The calendar is not.
What you can do is watch the right number. This whole essay comes down to one lesson: the headline numbers will look wonderful right up to the end. House prices were at record highs while the loans underneath them were dying. So don’t watch the records. Watch the speed. Does OpenAI’s next raise price above the last one, and by how much? Do the backlogs keep growing, or just stay large? And watch for one moment in particular: the first time a tech giant announces it is cutting its construction spending – and its stock goes up on the news. The day the market rewards a company for leaving the race is the day the race is over.
Next, know what you actually own. Roughly forty percent of the S&P 500 is ten companies. If your retirement sits in an index fund, you are not spread across five hundred businesses – nearly half of your savings is a bet on one single belief, the same belief this entire essay has been about. That’s not a reason to panic. It is a reason to know it. Most people don’t.
Then ask the question this essay has been circling the whole way through. Everything in it – the mortgage, the funding round, the backlog, the bond – is the same object: a promise that only holds if a bigger promise arrives behind it. So look at each thing you own and ask: does this depend on somebody else’s promise staying believed? Some things do. Some things don’t. There’s a reason that in every era where paper promises came under question – the 1970s, 2008, today – the world’s savings drifted toward things that are nobody’s IOU. I’ll let you draw your own conclusion there.
And finally – manage your mind, because this is where most people actually fail. Not in the analysis. In the waiting. If the structure holds for another year of record highs, the crowd will tell you that you were wrong, that this time is different, that the skeptics missed the greatest boom in history. That pressure breaks more investors than any crash does. The people who came through 2008 intact were not the ones who predicted Lehman’s date. They were the ones who understood the machine, positioned themselves so its breaking wouldn’t break them, and then had the discipline to look wrong until they were right.
Be patient. Trust your process. And keep your eye on the only number that has ever mattered: not how high, but how fast.
Honest question – let me know in the comments: what am I missing?
That’s it for today,
Jay Martin
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The new world order which punishes Americans is helped get off the ground by Trump
Contact us: info@strategic-culture.suWhat’s the joke Putin, Xi and Modi? Well, Trump actually – whose childish antics are making us all rich.
What was the joke? When leaders of China, Russia and India huddled together recently at the meeting of the Shanghai Cooperation Organisation (SCO), they had a funny moment for a few seconds, captured by world media and shared on social media extensively. The SCO was initially just China, Russia and some former Central Asian Soviet states, but in recent years has expanded its membership to Iran, Pakistan and India – making it a formidable bloc. The joke Putin, Xi and Modi shared might have been at Donald Trump’s expense, as the more that the U.S. president does internationally, the more of a joke he becomes universally around the world. The U.S. president is literally a comic figure – a clown who amuses world leaders who are embracing a new multipolar world which has found a new system of global trade that bypasses the U.S. altogether. Like BRICS, the SCO is growing all the time and now planning to have its own development bank, as these countries totally abandon the U.S. dollar, the U.S. banking system, and now the IMF and World Bank.
The joke, possibly, is that it is Trump and his erroneous policy decisions which accelerate the growth of both the SCO and BRICS each day – as Trump’s ideas are so firmly rooted in a period of time in the second half of the 20th century where the U.S. was the dominant superpower and could bully everyone on the planet with its foreign policies. In the old days, huge foreign policy failures like Korea and Vietnam mattered less, as America was always the 600-pound gorilla who could sit wherever it wanted to sit when it entered a room. Having said that, the Vietnam war was hugely expensive and cost the American economy heavily – which is why Nixon decoupled the dollar from gold, so that future wars could be fought with freshly minted dollars with no side effects. In reality, subsequent wars – certainly Iraq and Afghanistan – were fought using money which was essentially borrowed from Global South countries, even China, through treasury bonds – basically loans given to countries backed by the U.S. government. But in recent weeks, with the real story of the Iran war emerging, some economists are wondering how much longer America has in this new system of endless borrowing from the Global South. With the rapid acceleration of both SCO and BRICS, borrowing money from the U.S. treasury might simply become an outdated idea – and a surplus of dollars around the world which not many people want only means one thing: inflation.
Inflation would come about, economists argue, as the price of the U.S. dollar would have to be weakened – which at a glance doesn’t look like a bad thing (and something that Trump actually wants). A cheaper dollar gives a shot in the arm to U.S. manufacturers, but it also makes foreign goods more expensive, which drives inflation. Leaders like Trump, who don’t really understand international trade, don’t get the downside to a weaker dollar – which is an argument that only works when you have real control over the world’s economies and their central banks, like in Nixon’s day. “It may be our dollar, but it’s your problem,” one of Nixon’s advisors is quoted as saying to Europeans in the early seventies at a conference which explained how he planned to weaken the U.S. dollar and keep the hegemony.
Trump can’t do both. And the more he messes with foreign policy – like a disgruntled, privileged brat who is used to his tantrums getting attention – the more the U.S. economy and its once-hegemony sinks. Perhaps this is what Putin, Xi and Modi were laughing about. Their economies are literally being advanced by Trump’s stupidity and every poor decision he makes based on nursing his own wounded ego. The recent attack by U.S. forces on an island in the Persian Gulf must have made all three laugh their socks off, as it will cost the U.S. dearly. Did Trump do it so he could lie to U.S. reporters and claim to have attacked Kharg Island instead? Does he even understand the basic unwritten rule of escalation in the Middle East? Iran now has to hit U.S. troops and bases twice or three times harder just to retain its political capital. Can the U.S. sustain such a beating when its own arsenal is down to worrying levels never seen before, in particular interceptor missiles like THAAD?
The delusional antics of Trump are leading America to ruin at a speed most thought was unimaginable. While few – if any – U.S. presidents, unlike U.S. soldiers, understand how poor the U.S. military is (all it ever does is lose wars it starts and has to retreat in embarrassment), it is telling how out-of-date Trump is when it comes to global economics and where the U.S. stands in the world. His recent campaign against India was pathetic – singling out an old ally with sky-high tariffs which will force Modi to forget the U.S. market altogether and look elsewhere for its exports. India has no choice when it comes to Russian oil, which is the lifeline of its economy, and now secondary sanctions which Trump is imposing on countries that do business with Iran are also hitting Delhi. But does America come out of it even looking like a winner when it has to block India’s exports of rice to Iran? America’s delusional views about where it stands in the world today are seen in the same prism as bags of rice. Trump can’t stop Iran selling oil to China, but it can block bags of rice from being loaded onto ships or trucks headed towards Iran. This is not a superpower flexing its muscles – but more of a former empire struggling to cope with the new pecking order which has pushed it down the line. Maybe the joke in Tianjin was: “How can we fix the U.S. elections so Trump comes back for a third term?”
The views of individual contributors do not necessarily represent those of the Strategic Culture Foundation.
The new world order which punishes Americans is helped get off the ground by Trump
