The End Of Pax Americana
In a Nutshell
The video argues that US wars in the Middle East are accelerating the end of Pax Americana and the petrodollar system, as Iran (controlling the Strait of Hormuz), Russia, and China build a gold-yuan alternative for oil trade, evidenced by surging Swiss gold exports to GCC nations and US gold shipments to settle trade deficits. High interest rates, $9.4T private credit stress, collapsing job creation, and rising 10-year Treasury yields (up significantly since the Iran conflict) signal bond market pain, stock valuation compression, and potential credit crisis. Three outcomes range from quick war resolution (dollar weakens in multipolar world) to prolonged conflict triggering 2008-style crash or hyperinflation; protect with cash/short-term Treasuries (40% allocation), gold/silver, debt elimination, Bitcoin, and supplies.
These notes were generated by AI and may contain inaccuracies.
United States went to war in the Middle East to protect the petrodollar system, the most powerful system on earth. Theory that US may have accidentally or intentionally started the process of destroying it.
We are facing a real shock that is probably beyond what we can imagine at the moment. And what we're seeing is what some people are calling the end of Pax Americana.
History in the future will look back at the year 2026 and mark it as the beginning of the end of Pax Americana. No matter how you define Pax Americana, Pax Americana is coming to an end.
Six countries in the middle of this chess match over energy, which runs the entire world. Depending on how the next few weeks play out, couple different outcomes possible.
Interest rates high for longer than expected, breaking things in the economy. $9.4 trillion shadow banking system called private credit (companies like Blackstone, Apollo, Blue Owl) lent money to businesses, pension funds, everyday retirement accounts. Investors want money back, system can't return it. Private credit stocks collapsing in share price.
Jobs and AI: Jerome Powell states net zero job creation in private sector for last year.
Effectively, there's zero net job creation in the private sector. This is not good.
Companies using AI as excuse to lay off thousands or not hire.
National debt: Government spending more than making, especially with Middle East situation.
What's clear is that our debt is growing much faster. The federal government debt is growing substantially faster than our economy. It will not end well if we don't do something fairly soon.
Long-term bond rates going up, meaning interest rates and borrowing costs may rise.
War in Iran might set off economy if it doesn't end soon.
Player 1: United States wants to preserve global hegemon status, keep oil priced in dollars, world borrowing in dollars and putting profits into US treasuries (bond market), maintain military and financial dominance since 1945.
Player 2: China wants to dethrone dollar, control cheap energy, become price setter for global commodities without wars.
Player 3: Russia has oil, weapons, commodities; seeks allies paying in non-freezable currency after 2022 freeze. Biggest winner currently, helping Iran pressure West, expanding influence via infrastructure.
Player 4: Iran wants to survive; using asymmetric warfare (cheap drones vs expensive missiles) to defend Strait of Hormuz. Doesn't need to win militarily, just pressure global economy until wallets hurt. Conflicting data daily: Trump on negotiations vs fighting, Iran denies. Market and oil volatile, profitable for those with right info. Example: $1.5 billion futures contract placed minutes before Trump peace announcement, made $60 million in <20 minutes.
Every day Strait closed, global economy suffers, giving Iran leverage. Wants security guarantee, US military out, repayment for damages.
Player 5: GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE) wants stability/protection, hedging between petrodollar and new system.
Player 6: Us (401ks, gas prices, jobs, food, savings) in the middle.
Game about control of oil and gold. Theory: Iran, Russia, China building alternative system to petrodollar.
- Iran: Controls Strait of Hormuz (20% world oil). Offer: Pay oil in Chinese yuan, ships pass safely.
- Russia: Alternative oil supply in yuan/rubles. Japan calls Russian oil vital for energy security; South Korea considering imports; US backing off sanctions.
- China: Payment rails. Yuan not freely traded; get via selling gold to China. Transaction: Sell dollars for gold, gold to China for yuan, yuan to Iran for oil.
China sets gold-oil exchange rate, decides dollar value.
Evidence:
- Swiss gold exports to Saudi Arabia up since 2022 (US froze Russia reserves).
- Chinese exports to Saudi Arabia up; Saudi buying Chinese goods/gold while selling oil.
- Swiss gold exports to Gulf countries (GCC) up since 2022.
- US shipping non-monetary gold (physical bullion, coins) as biggest export by dollar value last 3/4 months; settling trade deficit in gold (Wall Street Journal).
Iran toll booth paid in yuan (via gold). Oil market $4.1 trillion/year vs gold market $485 billion (oil 9x bigger). Fraction of oil via gold = massive demand shock, gold price surges.
Bond market sets future borrowing costs. Start of 2026: Consensus rates down, soft landing, stocks up (JP Morgan, Goldman). Opposite happened: Long-term bond rates up since Iran war; 10-year US Treasury yield up significantly.
US true interest expense (social security, Medicare, health, debt interest): Feb 2026, $48 billion spent vs $313 billion tax receipts (obligations exceed taxes by 30%). Pre-war; now Pentagon wants $200 billion more, Trump $1.5 trillion military budget.
Bond investors demand higher pay amid spending, invasion, supply chains. 10-year term premiums way up. UK 2-year yield biggest move since Oct 2022 Liz Truss moment (Bank of England intervened to save pensions).
Europe/UK own 40% foreign US treasuries; hurting for energy, sell treasuries for food/gas, pushes US yields higher.
Rising long-term bond rates compress stock valuations: Why risk stocks for 4-5% risk-free bond return amid AI layoffs, private credit stress?
Capital rotates to bonds, commodities.
US job openings vs S&P 500 (2000+): Moved together 25 years (jobs up = spending/profits up). Now decoupled: Job openings collapsing, S&P up. Market bets AI boosts profits despite poorer customers/fewer jobs.
Lines reconnect two ways: AI creates jobs (optimistic) or kills them, drags stocks down.
Past 20 years: Credit spreads blew out near S&P highs → bear market every time (3/3). Now happening again.
Fed trapped if oil up: Cut rates → worsens oil inflation; raise → recession/stagflation.
Outcome 1 (Best): War ends soon, Iran gets security guarantee, no US presence, settlement. Strait opens, oil down, Fed cuts, stocks up. But pro-gold/yuan system persists; multipolar world accelerates, dollar weaker.
Outcome 2: War 3-4 more weeks → breaks irreversible. UK/Europe bonds crack, sell US treasuries → yields up, stocks down, credit crisis like 2008, layoffs. Protect: cash short-term, gold midterm.
Outcome 3 (Worst): War longer → bond markets break, yields unaffordable. Fed/Treasury yield curve control/big print amid oil spike (unprecedented). Inflates everything → hyperinflationary sovereign debt crisis, stagflation. Protect: cash, gold, maybe Bitcoin.
Fourth option: Government reprices gold higher to control inflation (see other video).
Rotated to cash and short-term treasury bonds (~40% net worth). Kept dividend portfolio, cautious on S&P. Did this at conflict start.
Okay missing gains if war ends. Pessimistic view now.
Expect 5-10 years: capital rotation stocks → commodities (silver, gold, physical assets). Gold outperforming S&P already.
No meaningful gold/silver yet, hopes to buy.
Eliminated debt (no credit card, mortgage; sold rental at peak).
Bitcoin: Bought more at mid-60s, more below 60s.
Stocking extra house supplies for supply chain risks.
Do your own research. Find portfolio to track investments.
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I'd love to hear your thoughts and theories and what you're personally doing to prepare. But as always, I hope you have a wonderful rest of your day. Smash the like button, subscribe if you haven't already. I'd love to see you back here next week. I'll see you soon. Bye-bye.
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