GenX Turns Fifty

The old breakup line from our youth coming back but this time it’s the United States breaking up with the Global Order.

Here’s a Gen X classic video that fits beautifully:

The new US tariffs are just the beginning of the final unwinding of globalization that was initiated by the Americans starting in 1944, through the Bretton Woods System https://en.wikipedia.org/wiki/Bretton_Woods_system?wprov=sfti1#

That system was designed to set up a monetary alliance between the US, Europe, Canada, Australia, and initially the Soviets, who did not ratify the final agreement.

At the end of WWII, the Americans held most of the world’s gold as to payments for post-war rebuilding. When President Nixon stopped the conversion of dollars to gold in 1971, it took five more years for a new agreement to be written.

The Jamaica Accords were ratified pricing gold to float against the US dollar, creating the current debt-based fiat monetary system. https://en.wikipedia.org/wiki/Jamaica_Accords?wprov=sfti1#

Money is now created when money is borrowed and the money supply dictates inflation. When loans are paid, money is destroyed through monetary policy. https://www.investopedia.com/ask/answers/100314/whats-difference-between-monetary-policy-and-fiscal-policy.asp

Fiscal policy is taxing and spending of the government to support or restrict the nation’s economic activity.

The Problem is the spending and spending on domestic and international programs without any regard to balanced budgets or increased income.

Tariffs will increase income to the government in lieu of increased taxes of the citizens. The stock market is reacting negatively to potentially less profit for companies. This will ultimately reduce holdings of investors which will affect the rich and upper classes more negatively than the middle and lower classes.

It may be possible for both rates and inflation to drop allowing borrowers (to include the US Government) to borrow and/or refinance at lower interest rates. Also by bringing manufacturing back to the United States, will allow investors to get in as economic growth returns.

Four decades later from Bretton Woods and now four decades from today, the Plaza Accord of 1985 forced a coordinated effort to weaken the US Dollar against other major currencies. Meanwhile Europe and the BRICS nations (and specifically the EU) has moved to create competition in opposition to US dollar. Of course, a lot of that problem is related to the use of the SWIFT Banking System and recent sanctions handed out to Russian and Chinese assets https://www.investopedia.com/articles/personal-finance/050515/how-swift-system-works.asp

We need a new system based on new technology. Enter the “Mar-a-Lago Accord” https://invezz.com/news/2025/02/27/the-mar-a-lago-accord-explained-trumps-ultimate-plan-to-reshape-the-dollar-and-americas-debt/

Will this strategy work? Hard to tell this early but if it does, it may allow the US dollar to dominate for next 20-30 years due to the demand for the dollar, the US economy and sovereign wealth as backing.

One thing we do know, the past is being left in the past. And for the world, the US is saying “Bye, Bye, Bye” (one for the Millennials).

It’s You (EU), Not me.