The Thērion and you – a Foundation for Fiscal Holocaust, Part III

In the first 100 days of the second Trump Presidency, the President whipsawed threats and implementation of massive tariffs on friend and foe alike, possibly inching toward a foundation for a fiscal holocaust. In a thinly veiled effort to force the re-shoring or relocation of manufacturing to “make America great again,” President Trump tapped the 1977 International Emergency Economic Powers Act (IEEPA), which gives the President authority to address an “unusual and extraordinary threat.”

Here the President cites allegedly unchecked illegal fentanyl narcotic trafficking across the borders of Canada and Mexico – America’s largest trading partners – as the basis of an “national emergency” to justify the punishing tariffs.

The moves heralded in an age of fresh economic warfare, touching every part of the earth. How? All of this is made possible by the dominance of the U.S. dollar in a global economy. As Edward Fishman, a former top American sanctions official, writes: “It has rightly become commonplace to think of the dollar as the global reserve currency and U.S. Treasuries as the safest assets for investors worldwide…Central banks [worldwide] hold 60 percent of all foreign exchange reserves in dollars.”

Economic globalization and the dollar

Control of the dollar through global payment and access systems, including the Clearing House Interbank Payments System (CHIPS), the Federal Reserve’s Fedwire, and the SWIFT (Society for Worldwide Interbank Financial Telecommunication) exchange system provides an invisible critical infrastructure that makes punishing sanctions possible.

In place of direct military action, such harsh sanctions were levied against Russia – in concert with European nations – first in 2014 with the Russian invasion of Crimea and second, with the 2022 invasion of Ukraine itself. While not wholly effective, the painful sanctions forced Russia to both adopt a wartime economy (with bank interest rates topping 20%) and to successfully seek alternative economic partners – China and India.

An important point to consider? Economic warfare – together with often unintended consequences – is not new.

An ominous lesson from the ancient Mediterranean

Ancient Athens learned the lesson of unintended consequences the hard way. As infamous tensions between the then-dominant power of Athens ramped up with emerging Sparta, the leader of Athens decided to wage economic warfare against a nearby city-state, intending to cut trade and starve the people of Megara.

Why would this action in 432 BC be relevant in the 21st century? Regarded by leaders in the region as rash, the economic warfare led directly to the collapse of Athens and the ascension of Sparta.

Casting off diplomatic restraint, Athens used its formidable navy to block free trade with both the Athens market and the rich ports associated with Athens.

As economic pressure squeezed tightly, the people of Megara appealed to Sparta for emergency help against the autocratic degree of Pericles, the Athenian leader. While Pericles was trying to avoid a broader war, the unintended consequences actually inflamed the situation. Sparta deemed the actions of Pericles as reckless and came to a fateful conclusion: peaceful coexistence with Athens was not possible.

The tragic outcome? More than a quarter of century of devastating conflict.

The three-phase Peloponnesian War annihilated the once-mighty naval dominance of Athens and left in its wake widespread poverty and the subjection of the Athenian people. The course of the civilization was transformed.

Economic warfare restricting digital market access

Today, thanks to world-encircling computer-based financial systems, virtually all nations are presently dependent on access to the U.S. dollar as the standard for trade. The existence of Eurodollars, petrodollars and more – including the fact that oil sales are priced in U.S. dollars – underscore the convenience and more importantly, the vulnerability, of using the U.S. dollars as the basis for international transactions.

Whether they like or not, central banks have effectively enlisted in America’s fiscal army as economic infantrymen. The outcome? As Fishman, author of the 2025 Chokepoints, notes: “At the stroke of a pen, the U.S. President can impose economic penalties far more severe than blockades and embargoes of old.”

Ominously, cracks today fissure the financial infrastructure that makes possible American-led economic warfare. As the Trump administration depresses economic levers against friends in Europe, Canada, and Mexico, leaders protest. Many – friend and foe alike — now look for new, non-American-based alternatives.

A stable old order collapsing around an “unreliable” America?

In a major essay titled “Trump is overturning the world order that America built,” the Wall Street Journal warned that “As the president embraces [Russian leader] Putin, longtime allies are starting to view the U.S. not just as unreliable, but as a possible threat to their own security.”

Fishman, a long-time veteran of sanction development, warns of serious unintended consequences of the misuse of American economic power: “If used recklessly, they [economic sanction tools] could be broken forever or trigger unforeseen economic and political repercussions that could come back to haunt us” (emphasis added).

Where is this going? Repercussions accelerated in the second decade of the 21^st century: a growing number of nations today embrace the BRICS cabal, whose goal openly challenges the economic and political power of wealthier nations in North America and Western Europe. Initially comprised of Brazil, Russia, India, China, and South Africa, BRICS has expanded to include Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates, with more knocking on the BRICS door, potentially including Argentina and Saudi Arabia.

New menacing economic developments rattle previously stable economic platforms. As Chris Crowe wrote recently in an International Bar Association publication, “BRICS expansion into payment systems poses threat to dominance of US dollar,” adding the warning that the recent BRICS summit served “to advance the BRICS Pay initiative, a direct challenge to the SWIFT international payments network. SWIFT is the global standard for bank transactions, which are largely in US dollars.”

China and other nations openly call for the de-dollarization of the global economy, and serious talk of a new BRICS currency emerged in 2024. Why is this important? Backed by oil and resource dollars, a digital BRICS currency could upend the current dominant status of the U.S. dollar as the global reserve currency.

100% tariff threat

The possibility is so fearsome that President Trump twice openly threatened deadly serious consequences for such a move. Posting on his Truth Social account in late January, the President declared: “We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs.”

Why is there such concern over a new BRICS payment system or digital currency?

If BRICS or another consortium of nation were successful in upending the U.S. dollar as the global reserve currency, the effect would be nothing short of catastrophic. The fall of the dollar could leave America’s economy shattered and the nation unable to finance its colossal debt, already at a dangerous level.  Worst case? America could quickly resemble the 432 B.C. Athens of old.

That’s a troubling statement. Does it have any credibility? Why would that happen and what would that potentially look like? Perhaps most importantly, what would replace it?

This and more will appear in The Thērion and you – The Day the Dollar Dies, Part IV.

By Michael A. Snyder