Samuel Hammond 🦉@hamandcheese
This is not an endorsement, but I think the "Trump just likes tariffs"-take is missing the forest for the trees.
I think there's a p(=30%) chance that we are instead witnessing the first (albeit somewhat clumsy) phase of a deliberate strategy for controlled de-dollarization.
People will dismiss this as 5D-chessing Trump's economic ignorance, but I've been in or around this world (libertarian-populist fusionism) for over a decade, know many of the relevant thinkers and theories, and have a reasonable track record at interpreting the context clues.
I've had o1 summarize a steel-manned version of what I think might be going on (again, 70% chance I'm totally wrong / I'm right but they hit a political wall):
A steel-manned version of this strategy would argue something like the following:
1) Immediate Shock to the System (Tariffs)
- By imposing universal tariffs, the US intentionally undermines the stability of the dollar as a trade currency and signals that global partners can’t rely on “business as usual.”
- This short-term shock (“raising entropy”) is precisely the point: disruption forces other countries to reduce dollar holdings or consider alternative reserve arrangements, setting the stage for a monetary reset.
2) Controlled De-Dollarization & Fiscal Retrenchment
- Once international partners start pivoting away from the dollar, the US simultaneously slashes spending and raises tariffs to build fiscal resilience.
- This is meant to head off the classic “fiscal theory of the price level” risk—i.e., that ballooning debt would trigger an inflationary spiral when faith in Treasuries falters.
- By being the first mover, the US can control the pace of de-dollarization and mitigate the risk of a full-on default or hyperinflation event.
3) Future Phase: Capital Flow Controls
- Merely using tariffs might not be enough to pry the world away from entrenched dollar reliance, so the US steps up to more powerful levers: capital flow restrictions, transaction taxes, or “market access charges.”
- That further discourages foreign entities from holding US assets while bolstering domestic funding channels (or pushing the US to self-finance more of its debt).
- Though draconian, these measures accelerate the pivot to a new monetary arrangement by removing the implicit promise that foreigners can freely invest or transact in dollars.
4) Reset to a “Harder” Monetary Standard
- After orchestrating the initial storm, the US reveals a new, more disciplined monetary regime (for instance, a partial gold- or commodity-backed system) or at least a big Bretton Woods–style conference.
- The aim is to restore credibility by showing that, under the new rules, neither Congress nor the Fed can perpetually run deficits or inflate away debt.
- This new system, by design, makes it harder for the US to finance endless military adventures or large domestic deficits through reserve currency status—tying policymakers’ hands in the future.
5) Reindustrialization & Domestic Reset
- As the dollar eventually depreciates once its “exorbitant privilege” fades, US manufacturing becomes far more competitive internationally.
- Lower real wages and cheaper assets (in dollar terms) entice domestic investment in industrial capacity. Over time, that fosters a base of production and skilled labor that the US has struggled to retain in a dollar-dominant environment.
- Yes, US consumers face immediate pain through higher import costs and austerity, but the steel man argument says the country emerges with a more balanced external account and healthier industrial sector.
In short, the “positive spin” is that deliberate chaos now forestalls a worse forced collapse later, and that by preemptively engineering the demise of the dollar standard, the US can steer toward a monetary regime less prone to endless deficits or foreign entanglements—and ultimately emerge with a revitalized industrial base. The next key phase (if tariffs alone fail) would likely be direct controls on foreign capital flows, culminating in an overt reset to a “harder” standard meant to restore confidence post–de-dollarization.
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Me again: To reiterate, I'm not endorsing this strategy or even its internal coherence. This is just an educated guess at the underlying method to the madness, and a potential interpretive framework for understanding the admin's actions going forward (including things like dismantling USAID, etc).
