The Collapse of The Dollar & The Nixon Shock 2.0
The Dollar Loses 10% in the First Six Months of 2025 Presaging the Coming Reset
It doesn’t start with a bang—it starts with a gradual slide. Then, all at once, it becomes a collapse.
In the first half of 2025, the dollar has surrendered more than 10 % of its purchasing power—its sharpest six-month fall since 1973, during the collapse of the Bretton Woods system. A financial reset in its own right, which began when President Nixon slammed the gold window shut in August 1971, severing the greenback’s remaining link to real money. Overnight, America had defaulted on hundreds of billions of dollars worth of U.S. Treasuries—obligations that had, until that moment, been “exchangeable for gold” at a fixed $35 per ounce.
No more. Foreign central banks legal claims for gold were transformed into paper claims, for yet more paper.
The default triggered a mass exodus by investors out of dollar-denominated assets and into gold bullion, sending the price 425 % higher in four years while the dollar itself collapsed a staggering 40 % during the same time frame. Faith in the greenback as the world’s reserve currency should have ended there and then—and perhaps it did, but Washington didn’t care. They had a geopolitical masterstroke up their sleeve: the creation of the petrodollar, a strategy that would bind oil purchases to dollars, ensuring another generation of dollar dominance.
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The rest of the world was quickly put back in check by the American empire. As Treasury Secretary John Connally quipped in 1971;
"The dollar is our currency, but it’s your problem."
And U.S. had no plans to alter that relationship, but by 2000, the contradictions of the petrodollar system had become obvious. America’s national debt had exploded fifteen‑fold since 1970, and the entire world economy was now tethered to a single currency. Dollar holdings as a percentage of central bank reserves had hit a staggering 75 %. Meanwhile, nations who had a trade-surplus with the U.S. like Saudi Arabia and China, effectively had a binary choice: recycle their excess dollars into overpriced U.S. equities—or buy into the ever-expanding pile of American debt in the form of Treasuries.
They did both—fueling a mega-bubble in dollar-denominated debt and the stock market.
The Dot‑Com crash was an inevitable come‑to‑jesus moment that could have easily ended the petrodollar and toppled America as global leader. But again, the financial engineers rushed to the rescue. While the NASDAQ fell close to 80 % peak to trough, the velocity of money in America nosedived, echoing a phenomena last seen during the Great Depression. A multi-decade deflationary bust seemed imminent.
Then something miraculous happened...