Trump’s Dirty Little Secret

 

Trump’s Dirty Little Secret

by Germanico Vaca

Why would Japan sell $61 billion in U.S. securities, followed by China selling $53 billion shortly thereafter? Other nations are following suit. The answer may lie in a high-stakes geopolitical gamble. Many suspect that Russia is positioning itself for a potential windfall: the unfreezing of $300 billion in Russian assets that President Biden froze after the invasion of Ukraine.

If Donald Trump, known for his affinity for Vladimir Putin, returns to power, there’s speculation that he might release these funds to appease the Russian leader. Putin has long hinted at possessing leverage over Trump—what some speculate to be a "dirty little secret." Should Trump unfreeze Russia’s assets, it is likely Russia would immediately dump those funds into global markets, triggering a cascade of economic chaos. Other nations, wary of this scenario, appear to be preemptively reducing their exposure to U.S. treasuries, setting the stage for a seismic economic shift.

The Decline of Dollar Dominance

For decades, the U.S. dollar has served as the backbone of global trade and finance. However, the economic manipulations of the U.S.—from the abandonment of the Bretton Woods gold standard in 1971 to unchecked quantitative easing—have eroded trust in the dollar. Under Bretton Woods, the dollar was backed by gold reserves, giving it intrinsic value. When the U.S. abandoned gold backing under Nixon, the dollar became a fiat currency. More recently, the Federal Reserve’s massive money printing during quantitative easing has further devalued the dollar, making it appear to many as little more than a tool for economic manipulation.

Countries like China and Russia have responded by stockpiling gold and silver, laying the groundwork for a post-dollar world. The BRICS nations (Brazil, Russia, India, China, and South Africa) are advancing plans for a resource-backed currency, signaling a significant shift in global financial dynamics. In Latin America, the idea of a regional trading bloc has gained traction. Considering the region accounts for over 50% of U.S. imports and exports, any move to trade outside the dollar could accelerate its decline.

Preparing for Global Realignment

The international response to America’s "America First" policies has been strategic and calculated. Trade agreements in local currencies—particularly among BRICS members—are rapidly reducing reliance on the dollar. Simultaneously, regional trade blocs like the African Continental Free Trade Area (AfCFTA) are gaining momentum, further diminishing the dollar's role.

While Americans may be unaware, the rest of the world seems to be preparing for a global realignment. The consequences of a tipping point, such as a sudden loss of confidence in U.S. Treasuries or a catastrophic economic event, could be swift and devastating.

Domestic Fallout: The Cost of Trump’s Policies

Domestically, Trump’s policies could trigger a cascade of economic disasters. Consider his mass deportation agenda. Deporting millions of undocumented immigrants would cost an estimated $500 billion. This doesn’t account for the ripple effects:

• Real Estate Collapse: Nearly 6 million undocumented immigrants own homes. Their deportation would lead to mass foreclosures, tanking the housing market and wiping out trillions in home equity.
• Economic Impact on Latin America: Remittances—money sent by immigrants to their home countries—constitute up to 24% of some Latin American economies. Deportation would devastate these economies, reducing their capacity to import American goods and sparking retaliatory tariffs.
• Loss of Consumer Demand: Undocumented immigrants contribute significantly to U.S. consumer spending. Their removal would shrink demand, harming industries reliant on their purchasing power.

Now factor in Trump’s proposed border wall, with an estimated price tag of $500 billion, and you begin to see the outlines of a fiscal disaster. While the rest of the nations are triggering a dollar collapse. 

A Perfect Storm

Here’s a grim calculation of the potential outcomes:

• Mass Deportation: -$500 billion
• Building the Wall: -$500 billion
• Housing Market Collapse: A 50% drop in home values due to foreclosures
• Reduced Dollar Demand: Declining reliance on the dollar in global trade
• Hyperinflation: A possible outcome of reckless fiscal policies

The cumulative effect? A dollar collapse, soaring inflation, and massive disruption to American industries.

The Road Ahead

The signs of de-dollarization are undeniable. Nations are positioning themselves for a future where the U.S. dollar no longer reigns supreme. Whether through BRICS’ efforts to create a new currency or the rise of regional trade agreements, the global economic landscape is shifting.

Trump’s policies—rooted in short-term populism—threaten to accelerate this decline. By alienating allies, undermining global trust, and ignoring the interconnectedness of economies, his approach risks setting off a chain reaction that could fundamentally alter the global order.

America must act swiftly and strategically to rebuild trust, embrace multilateralism, and stabilize its economic foundations. Failing to do so could usher in a new era—one where the dollar is no longer king and the U.S. faces unprecedented economic challenges.