Right now, as I’m writing this, the Strait of Hormuz is effectively closed, and nobody knows when or how it reopens. Here in the U.S., everyone seems to be asking: ”How expensive is my gas going to get?!”
That… is the wrong question.
The better question — the one we need to be talking about right now — is what’s happening to the dollar, and what the frick is up with money in general. I’m not the only one who feels like things are going off the rails, right? Like life is being held together with some kind of financial duct tape and luck? Like we’re all one misstep away from a giant frickin’ catastrophe?
Yeah, me too. That’s why this week we gotta talk about money.
If you’ve ever felt like money is kind of… mysterious… like, “Where does it come from?” and “Why do some people have so much and others none?” and “Is the system just completely and totally rigged?” — well, today we’re going to make sense of all this.
Warning: this article is a little longer than usual. Today’s topic is a big one, and it might be the most important I’ve done so far.
Money Is A Promise
Let’s start with the most important thing I can tell you about money.
Most people think money is a thing. Gold had value because it was scarce and shiny. Paper money had value because it represented gold, I think. Digital money has value because… it represents paper money… maybe? And I’m pretty sure crypto is just.. fairy dust? As money gets more abstract, our mental models get fuzzier until it feels like we have to just sort of accept it all on faith.
Let’s clear this up.
Money, of any kind, as we know and use it today isn’t best described as a “thing.” It’s best described as a promise.
Specifically, money is a promise that someone, somewhere, will accept this “paper” or this “phone ding” in exchange for something real. When you hold a dollar you’re not holding a “thing,” you’re holding a promise, backed by trust that the other party will honor their promise in the exchange.
So, the global economy is really just a vast, incomprehensibly complex web of promises layered on top of promises.
Nine articles ago we started this conversation about money, when we talked about debt being a promise you make to provide your future labor. That’s still true.
But it’s not the whole story.
Because promises always have two sides.
When a bank lends you $100,000, two things happen simultaneously in their accounting system.
On one side of the ledger: you owe them $100,000. That’s your debt. The promise of your future labor. Your liability.
But on the other side of the ledger, they are now owed $100,000. That’s their asset.
Same $100,000. Same promise. Just written down twice from opposite perspectives.
The bank’s asset IS your debt. They are not two different things. They are one thing — one promise — experienced differently depending on which side of it you’re standing on.
Someone’s debt is someone else’s asset. It’s simple, but quite profound. The debt and the asset are inseparable because they are the same promise.
Now scale that up.
The $39 trillion U.S. national debt sounds terrifying when we call it debt. But flip it around. Because that’s someone’s asset. The U.S. debt is also simultaneously $39 trillion dollars of Treasury bonds sitting in pension funds, foreign exchange reserves, investment portfolios, and savings accounts around the world. It’s not just a liability the U.S. owes. It’s an asset the world holds.
When politicians say “We must pay down the national debt for our grandchildren!” they’re implicitly saying “We must eliminate trillions of dollars worth of assets that someone else currently holds!” And those grandchildren they’re supposedly worried about? Many of them will inherit those Treasury bonds.
That’s a little bit oversimplified, and I’m not saying debt doesn’t matter, just that the debt conversation is always incomplete without asking what sits on the other side of it.
The promise runs both directions.
Almost all money in the world is like this — has debt attached to it — meaning someone borrowed it into existence.
There’s one main exception: money that governments create directly. Which raises an obvious question: why don’t governments just make more money? Why does debt matter at all?
The answer is one word: inflation.
Demystifying Inflation
Let’s take a moment to demystify inflation. This applies to countries who print their own currencies.
Imagine a small town with 10 apples and 10 dollars. (It’s a very small town.) Each apple costs a dollar. Now the government prints 10 more dollars. There are still only 10 apples. Now each apple costs two dollars. The money doubled. The apples didn’t. So the money is worth less, or more accurately, the cost of the apples went up.
That’s inflation; the term is in relation to the thing you want to buy. The price of those apples inflated.
This is the real constraint on money creation: the simple fact that if we create more money than there are real things to buy with it, the money becomes worth less and the cost of stuff inflates.
So — and this part is VERY important — it turns out the amount of debt, even if it’s in the many trillions like the U.S., isn’t the most important part. The most important part is what we spent the debt money ON.
Let me say this another way: when we create money, we need to be damn sure we’re creating real things with real value, or things will get more expensive.
Roads, schools, clean energy, healthcare — things that make the future substantively better — those are apple-making investments because eventually they grow more apples. Fine to fund with new money.
Tax cuts for billionaires and endless wars — those are apple-wasting investments because they don’t make new apples. Those are the ones that will eventually cause real problems.
And the grandchildren thing?
Our grandchildren won’t be crushed by the “number” on the debt clock. They’ll be crushed if we spent huge piles of money on stuff that didn’t build anything worth having, leaving them with a broken climate, crumbling infrastructure, and a dysfunctional economy.
That’s the real inheritance problem. Not the number itself.
And here’s something almost nobody talks about: there are actually multiple ways to manage inflation.
There’s one we always use, and it’s the only one you hear about: raising interest rates. This works by cooling the economy and costing workers their jobs.
Wait… that’s not the way they say it on the news… why do I say it this way?
When the Fed raises interest rates, it makes borrowing more expensive, which slows down spending, which cools inflation. Sounds neutral, right?
It’s not. Why?
Let’s go a layer deeper. WHO is forced to slow down spending when borrowing gets expensive?
It’s not the person with multiple houses and a robust stock portfolio. It’s the worker who was about to buy their first home. The small business owner who needed a loan to expand. The mid-size company that was about to hire a bunch of new roles.
Raising interest rates fights inflation by making life disproportionately harder for people who were already living closer to the edge. That’s the mechanism. That’s who pays.
But there are actually two other ways to manage inflation that you almost never hear about.
First option: tax wealthy people.
And when I say “tax wealthy people,” I don’t mean doctors or lawyers or lifetime savers with a paid-off house and a great retirement account. I mean people whose primary income isn’t a paycheck but from money making more money. Dividends. Capital gains. Returns on assets. Capital class, not Labor class. The people for whom labor is optional because their portfolio does the work for them. That’s actual wealth. And that’s what’s barely taxed compared to the wages of someone who has to show up and work every day.
Remember the apples? This kind of wealthy person basically has warehouses full of apples, sitting there, serving absolutely no one. Also, their demand on the economy is usually enormous — private jets, superyachts, multiple mansions, and consumption at a scale that might literally kill you from shock.
Taxing that demand would reduce pressure on productive capacity without touching a single worker’s job or anyone’s ability to buy groceries. The inflation would cool because the people doing the most consuming are doing a little less of it. And believe me; they would still live a lifestyle you can only dream of.
This isn’t the dominant approach used today, of course, and I’m pretty sure you know why you don’t hear about it (remind me who owns most media outlets again? oh right!). But economically, this is the first alternative option for controlling inflation we never hear about.
Second option: intentionally shrink wasteful industries to free up resources for useful ones.
Right now we have enormous production capacity tied up making things the planet can’t afford — oversized vehicles, disposable fashion, single-use… everything.
Meanwhile: we have a housing crisis. A healthcare infrastructure crisis. A crumbling public transit crisis. An energy crisis.
What if we redirected those factories, that labor, those supply chains toward things we actually need? We have the factories. We have the workers. We have the supply chains. We have the engineers and the designers.
What we don’t have, yet, is the collective will to point our vast resources at the right problems.
We could redirect our money toward affordable housing, community health clinics, clean water infrastructure, mobility projects, and clean energy. Same economy. Same workers. Very different output.
This is the second alternative option for controlling inflation you never hear about, and you can probably guess why we don’t hear about this one, too. (Hint: it’s the wealthy who decide what gets made, and oversized vehicles, disposable fashion, and single-use everything are all enormously profitable.)
The problem we’re talking about is the same — inflation — but the solutions are wildly different, with VERY different winners and losers. And guess what: right now you always get to be the loser, because our leaders choose the one option that protects capital and costs YOU.
More than anything else, I want you to understand this: our monetary system isn’t neutral. It’s a set of rules about who gets to make promises — and who has to keep them.
OK, let’s recap.
So far we understand that money is a promise that almost always has two sides: someone’s debt is someone else’s asset.
We also now understand that the amount of money we can create has limits based in reality. We stretch those limits too far and we get inflation, which someone has to pay for.
The wealthy should pay, but they usually don’t, because the monetary system is NOT a natural system, but a bunch of made up rules… usually made up by the people with the money.
Seeing some problems here? Yeah… we’re just getting started.
Bretton Woods To The Petrodollar
In the spirit of “who makes the rules,” I want to tell you a story. It starts at the end of World War II. It’s July 1944. The war isn’t over yet but everyone can see it’s heading that direction.
Representatives from 44 Allied nations gather at a hotel in Bretton Woods, New Hampshire, to design the post-war monetary system.
The world needs a new financial architecture because the old one, based on the gold standard, hadn’t exactly caused the Great Depression, but it did turn a bad recession into a nightmare. How? Basically, the gold standard made it impossible for countries to do the one thing a collapsing economy needs: a way to spend your way out.
By 1944, everyone in that room had lived through the Depression AND a world war that grew partly out of the economic desperation the Depression created. They weren’t just redesigning finance. They were trying to make sure this never happened again.
Two visions compete.
The first is from economist John Maynard Keynes, representing Britain. Keynes proposes something called the bancor — a neutral unit of accounting that sits above all national currencies, and which contains a brilliant built-in mechanism: it penalizes both extremes. Countries exporting far more than they import get penalized. Countries importing far more than they export get penalized. This makes the goal not to “win trade,” but healthy circulation. Money and goods flowing, nobody hoarding, nobody drowning. The penalty funds would flow into a shared global pool, used to help struggling nations get back to a functional economic balance and to fund development in poorer countries building infrastructure and stability.
It’s elegant. It’s fair. It’s designed for global stability rather than national advantage.
The second vision is from Harry Dexter White, representing the United States. His proposal is simpler and considerably more self-serving: make the dollar the world’s reserve currency. Every other currency gets pegged to the dollar. The dollar gets pegged to gold at $35 an ounce. The U.S. — which at this point holds most of the world’s gold and is basically the only major economy left standing — becomes the center of the global financial system.
Now, you have to understand: in 1944, the U.S. was basically an arsenal of exports, sending out way more than we bought. Under Keynes’s system, that excess exporting would have been taxed in a big way. So like a good businessman with a lot of leverage, White looked at that proposal and said: “Helllll no.”
In other words, the guy whose country would have been penalized most got to decide whether the penalty system existed. (This kind of crap drives me crazy.) Keynes loses. White wins. The bancor dies in that hotel in New Hampshire.
And for the next 27 years, the system mostly works. Countries hold dollars. Dollars are redeemable for gold. The U.S. is the anchor of global stability.
Then comes August 15, 1971.
By the late 1960s the U.S. is spending heavily — on Vietnam, on the Great Society programs — printing more dollars than it has gold to back. France starts demanding gold for their dollars. Other countries follow. The U.S. gold reserves are draining.
So, Richard Nixon goes on television on a Sunday night in August and does something that stuns the world. He unilaterally closes the gold window. Dollars are no longer redeemable for gold. Just like that. No negotiation. No international agreement. The U.S. simply changes the rules of the global monetary system because it can.
This becomes known as the Nixon Shock. And it leaves the dollar backed by… well, basically by stately Uncle Sam vibes and the full economic and political weight of the United States.
So the obvious question: if dollars aren’t backed by gold anymore, why does anyone in the world want them, besides us? You hear a lot about the dollar in global finance conversations, right? There’s a reason for that.
Enter the petrodollar.
In 1974, Nixon sends Treasury Secretary William Simon to Saudi Arabia with a secret deal. The terms: the U.S. will guarantee Saudi military protection and weapons sales. In exchange, the Saudis move to pricing oil in dollars and recycle their oil profits — which are enormous — back into U.S. Treasury bonds. By 1975 every OPEC member follows.
For the U.S., the genius outcome of this arrangement is breathtaking.
If you want oil — and every country on earth does — you now need dollars first. Which means every country on earth has to maintain dollar reserves. Which means demand for dollars is now structurally guaranteed not by gold, not by treaty, but by energy.
If you’re a country, you can’t grow your economy without energy. You now can’t buy energy without dollars. Therefore it’s become very difficult to run your economy without dollars. The U.S. has just made itself the global toll booth for any country on the road to modern civilization.
Economists have a word for currency-control benefit: seigniorage. In this case, it means the U.S. gets to print dollars, spend them on goods and military and debt, export them to the world — and the world has to absorb them because the alternative, not having dollars, is worse. It’s essentially a global tax that every other country pays to the U.S. simply by participating in the global economy.
This is the petrodollar. And it’s been the invisible architecture of global power for fifty years.
Remember, we’re talking about money here, so let’s put this back in promise-based language: the U.S. essentially put itself on the asset side of the promise. Everyone else got to be on the debt side.
In other words, remember this from the Debt episode — there are essentially two camps: Capital and Labor. You wish you were Capital, but you’re probably Labor.
This is basically that, but at planetary scale. The U.S. is Capital… and it made everyone else Labor.
The Promise Is Cracking
But now, back here in 2026, things are getting uncomfortable.
And urgent.
Because the petrodollar system is showing serious cracks.
Saudi Arabia has started accepting Chinese yuan for some oil sales. The BRICS countries — Brazil, Russia, India, China, South Africa, and a growing list of others — are actively building alternatives to dollar-denominated trade. When the U.S. froze Russia’s dollar reserves after the invasion of Ukraine, it sent a message to every country on earth: the U.S. will weaponize the dollar system against you if it decides to. That message landed. Hard. Countries that had never seriously considered dollar alternatives started quietly building them.
These are early signals — not a collapse — but the direction is a big deal.
And then there’s something harder to quantify but impossible to ignore.
Trust.
Money, as we’ve established, is a promise. And a promise is only worth something if the other side trusts you to keep it.
The U.S. dollar has been the world’s reserve currency for 80 years partly because of oil, partly because of military power, but also because of those stately Uncle Sam vibes. The U.S. was seen as stable. Predictable. Governed by rules and institutions. The kind of counterparty you could trust to honor its commitments.
What’s happening now? Well, when our President governs by chaos — imposing tariffs by tweet, threatening allies, questioning the independence of the Federal Reserve, making the U.S. feel erratic and unpredictable — he’s not just causing quirky “diplomatic awkwardness.”
He’s making everyone else on earth wonder if the promise is still good.
And that question — once it’s in the air — is really hard to un-ask.
Think about it from the perspective of a foreign central bank. For decades the answer to stability questions was obvious: hold dollars. The U.S. is stable. The promise is safe. Now you’re watching the U.S. threaten its closest allies, freeze adversaries’ reserves as a weapon, and govern by whim.
You don’t have to hate the U.S. to start quietly asking: should we hold fewer of their promises?
And here’s the terrifying feedback loop this creates.
The more countries diversify away from dollars, the weaker dollar demand becomes. The weaker dollar demand becomes, the more it costs the U.S. to borrow. The more it costs to borrow, the more pressure on U.S. finances. The more pressure on U.S. finances, the more erratic the political response. The more erratic the political response, the more countries diversify away from dollars.
There’s a concept in finance called “risk-free.” U.S. Treasury bonds are called risk-free assets because the assumption is the U.S. will always honor them. That assumption is so foundational that much of the entire global financial system is built on top of it.
What happens when “risk-free” gets a big fat asterisk put next to it?
Nobody knows. Because it’s never happened before.
Welcome to the Chaos Window, my friends. Not just geopolitically. Monetarily. The promise that held the post-war world together is visibly fraying.
And while that’s happening at the planetary scale — at the level of nations and currencies and oil — the exact same logic has been playing out for the individual people who learned how to game the system.
It’s time to talk about billionaires.
The Billionaire Is The Proof
We can’t do a money episode and not talk about billionaires! Our gleaming exemplars of what it means to get all the money and to win capitalism! Our heroes, emblazoned eternally on the covers of Forbes…! Anyway…
Before we go there, I want to be very clear about one important point: I am not against capitalism for things we want. I am against it for things we need.
Let me explain.
Capitalism is extraordinary for producing things people want. iPhones, streaming TV, quirky restaurants, innovative software. The profit motive, competition, and price signals work remarkably well when the thing being produced is optional. When you don’t need it, the market is great at pricing it. When you can walk away, the exchange is fair. People can be adults, experience freedom in their choices, work harder for extra things they want… all good!
But capitalism has a catastrophic track record with providing things people need.
Housing. Healthcare. Education. Water. Energy. Food.
These aren’t optional. You can’t walk away. You can’t refuse to participate in this month’s drinking water. And when you can’t refuse to participate, it’s no longer like dealing with a market, it’s like dealing with a monopoly.
This is why I said in the Debt episode that surplus gets squeezed out of labor’s hands. It’s not malice. It’s just capitalism doing what capitalism does: optimizing for maximum capital.
The challenge is when capitalism invades the things we need to live, it’s like a cancer cell infecting our biology — left unchecked, the endless extraction eventually kills the host.
Now take this idea and zoom out. Stick with me; we’re about to tie everything together that we’ve talked about and get back to billionaires.
The petrodollar is extraction of needs happening at a planetary scale. Why? Because energy is the most fundamental need of a modern economy. We just talked about this a couple weeks ago: energy and what we want to build are completely interconnected.
Because of the petrodollar, for fifty years the U.S. basically extracted a global tax from every country that needed to participate in the modern economy. They maybe didn’t want dollars, but they needed them, because they needed oil.
At the top of the mountain of resources this system created — personal extraction through debt, national extraction through dollar dominance, global extraction through energy pricing — sits, you guessed it, the billionaire.
A billionaire is not just a monetarily-successful person. A billionaire is someone who has accumulated an incomprehensible quantity of promises from other human beings. A billion dollars is a billion claims on human time, human energy, human labor — and because of interest, it’s not just sitting there, but it’s also generating more claims automatically, forever… without the billionaire having to keep any real promises in return.
That’s not “success,” my friends.
That’s the endpoint of an extractive system designed to concentrate promises upward at every level.
And here’s the part that ought to alarm even the most committed capitalist: this system will inevitably destroy itself.
We talked about this in “Who Buys Your Stuff, Robots?” If the system extracts surplus from labor so completely that workers can’t consume — if housing costs so much that people spend their entire surplus servicing mortgages, if healthcare is so expensive that one illness wipes out a decade of savings, if education is only possible by borrowing against decades of future labor — then the consumer base that the entire system depends on is hollowed out, and the billionaire’s foundation becomes a sinkhole.
The billionaire needs customers. Customers need surplus. But our current system is eliminating surplus. And when endless extraction enters the zone of “needs,” it doesn’t just harm the people being extracted from, but eventually destroys the system itself. It’s a cancer cell, not a healthy cell.
So billionaires aren’t exemplars of a healthy system, but a rotting one. They’re the result of a monetary system that abuses promises and designs systems for one-sided gain.
They’re the individual equivalents of the petrodollar, the inevitable endpoints of a system so asymmetrical that it will eventually self-destruct under the weight of its own unfairness.
What A Great Promise Would Look Like
So what do we actually want? Let’s utilize the O.G. A.I. (Appreciative Inquiry) approach and ask:
If we were to create a GREAT global monetary system, what would it look like?
Well, I may be from the U.S., but I do not support our behavior at Bretton Woods. I want a monetary system designed around shared global success. I believe a better definition of “economy” is “our shared global household” — I talked about this in the Economics episode — and it’s time we started acting like it.
Keynes had things directionally correct in 1944. His idea for a neutral supranational unit of accounting, controlled by no single country, with built-in mechanisms penalizing both excessive surpluses AND excessive deficits makes a tremendous amount of sense. I believe we now have 80 years of evidence proving Keynes mostly right, and if I’m right about the coming Crisis, we’re going to get an opportunity to try this again.
So let’s define what great would look like. A genuinely good global monetary system would do at least four things:
- The new system should not grant any single country outsized global monetary privilege. Reserve assets should be genuinely multilateral. Yes, this means the U.S. gives something up. Yes, that will be really difficult. We should do it anyway.
- The new system should be decoupled from military power. The current system requires roughly 750 global U.S. military bases. That’s not a monetary system, it’s an empire with a side of accounting.
- The new system should have a built-in bias toward balance. Countries running persistent surpluses through exports are putting pressure on the system just as surely as countries running persistent deficits through imports. Both should face incentives to rebalance.
- The new system must account for ecological limits. This is the piece that makes it genuinely new, and accounts for some really essential things we’ve learned about life in the last 8 decades. Essentially: our next system needs to penalize ecological destruction and reward regeneration.
All this might sound far-fetched. It’s not. It’s basically what Keynes proposed 80 years ago, just updated for the 21st century. And for what it’s worth, when we get to redesign this thing, I vote we toss the “bancor” name. I think we name the new system Pax. Peace. A pact. And a pointed replacement for the “Pax Americana” that got us here.
If you’ve been watching this show, you know I believe a Reorganizing Crisis is coming. We’re not exactly sure what is going to break, yet — it could be A.I. related, it could be geopolitical, it could be energy costs, it could be a larger war, we don’t know — but something big is coming.
Whatever it is, it’s going to crack the foundation of our current system in a large enough way that it galvanizes and mobilizes huge numbers of people to do collective things that now, in this moment, feel completely impossible. After the Crisis, these things will be possible.
The goal of this show is to get more of us thinking about what we want to build next.
I hope now you have some ideas for what needs to come next for money.
Leadership Lens
Time for this week’s Leadership Lens. My leader friends, here’s what all of this means for you.
First, I want you to remember that the monetary system you and your organization operate inside is not neutral. It is designed to concentrate promises (money) upward. The pressures you feel — to cut costs, reduce headcount, optimize margins, extract maximum value from every transaction — are not just competitive pressure. It’s the system expressing its logic through you. Don’t let that make you feel powerless, or stop trying to make a difference; let it make you feel like an insurgent rebel fighting the good fight.
Second, I want you to audit where your organization sits on the wants/needs spectrum. Are you selling things people want or things people need? If you’re in the “needs” space — healthcare, housing, education, energy, food — you have a specific responsibility to resist the extraction logic. Remember: this is actually the structurally-sound choice for your organization, because extraction around needs will eventually destroy the consumer base you depend on.
Third, I want you to pay attention to what’s happening to the dollar. If you operate internationally, the monetary transition we discussed today is not an abstract geopolitical story. It’s a currency risk, a supply chain risk, a financing risk. The companies that pay attention and plan accordingly will have a significant advantage over those that don’t.
When you understand that money is a promise, and you clearly see the system you’re operating inside, you will navigate what’s coming far better than those who don’t.
The Optimistic Rebellion
Now, for ALL of us Optimistic Rebels…
My friends, remember: the system isn’t broken, it’s doing what it was designed to do. It’s concentrating promises (money) upward, at every scale, from the personal to the planetary.
Your financial stress isn’t a personal failure. Raising interest rates isn’t the only way to fight inflation. The billionaire’s net worth isn’t proof of exceptional merit. And our monetary system isn’t neutral, but a set of rules about who gets to make promises and who has to keep them.
But these promises can be redesigned.
They have been redesigned before. Bretton Woods redesigned them in 1944. Nixon redesigned them in 1971. The petrodollar redesigned them in 1974. These events weren’t Acts Of God. They were decisions made by people absolutely no smarter than you or me.
The next redesign is coming. The Crisis is on the way. And the question, as it always is on this show, is whether we show up to that redesign with a vision, or whether we let the same people who designed the current system design the next one.
This week my Optimistic Rebellion challenge is to name the money promises in your life. Your mortgage, your student loans, your credit cards, etc. Look at them not as “personal failures” or just the “cost of living,” but as promises you’ve made about your future labor.
Some of those promises we chose freely. Some of them the system made very hard for us to avoid. We probably can’t renegotiate most of them overnight, if at all. That’s real, and I won’t pretend otherwise.
But here’s what we can do today: stop treating our financial stress as a personal failing. It isn’t. It’s the system working exactly as designed. I challenge you to look a little deeper at the assumptions and expectations that put you in whatever financial position you’re in. Try your best to see the invisible systems that pushed you down one path or another.
We do this because this is where change will come from: the people who understand the system well enough to demand a different one. Bringing more intentionality and awareness to our personal money practices is healthy and grounding, and prepares us to have larger, civilization-level conversations.
The promises that hold the world together are being renegotiated right now, whether we participate or not.
I vote we participate.
