🏭 The world is rapidly saying goodbye to free trade and cheap goods. The era of globalization is being replaced by hard-nosed economic statecraft, hello, Trump style, and neo-mercantilism.
This means that a state's primary goal is shifting toward reshoring manufacturing, securing control over critical resources, and bolstering national security.
🚨 Came across an insightful interview with macro strategist Michael Every. Here are the most pressing issues that will affect each of us in the coming years:
1. The New Economic Statecraft
🟠 The abandonment of globalization. The US is dismantling the very global architecture it built, pivoting toward neo-mercantilism (active state intervention to protect domestic capital). The goal of state policy is no longer maximizing corporate quarterly profits at all costs, but rather reshoring factories and strengthening national power.
🟠 Economic statecraft entails the state leveraging every available tool, tariffs, regulations, sanctions, and monetary mechanisms, to achieve geopolitical objectives.
2. The Geopolitics of Stablecoins
🟠 US Treasury nominee/official Scott Bessent has pushed an approach of buying back long-term debt by issuing short-term Treasury bills (T-bills). This helps suppress long-term interest rates and finance the budget deficit.
🟠 The Genius Act and Clarity Act are laying the groundwork for stablecoins (such as Tether and Circle) to achieve mainstream adoption. Because stablecoins must be backed by safe, highly liquid assets, their issuers will effectively be compelled to absorb trillions of dollars in US T-bills.
🟠 Stablecoins will become an instrument of the "with us or against us" doctrine. The US will present emerging economies with a choice: conduct cross-border trade using regulated US dollar digital tokens (benefiting the US financial system) or face restricted access to global markets. Stablecoins generate non-inflationary liquidity that gets absorbed within the US financial system, allowing Americans to continue securing tangible goods from around the world affordably.
3. Energy Realism and the Priority of the Physical World
🟠 For the past 40 years, the financial sector sat on a pedestal. In this emerging paradigm, digital ledger entries cannot build physical infrastructure or pump crude. Physical constraints are primary. The world is not suffering from a shortage of crude oil per se, but rather a bottleneck in refinery capacity. The US is facing a severe refining deficit.
🟠 To secure heavy crude for domestic refineries in the event of a closure of the Strait of Hormuz, the US has redirected up to half of Venezuela's oil output, which previously went to China, toward itself.
🟠 The US is waging full-scale economic warfare against Iran, aiming to choke off its oil exports entirely to cut off state revenue funding the military and regional proxies. As a result, inflation in Iran has surpassed 80%, and its currency is collapsing. Further US-led escalation is anticipated following the midterms.
Part 2 coming next 👇
