The global economy is undergoing a profound shift from neo-liberalism to mercantilism, a transition driven by the dominance of the US Dollar and Euro as reserve currencies. Since 1980, these two currencies have accounted for about 80% of global trade, with the Dollar's share dropping from 67% to 57% and the Euro's share ranging between 15%-22%. This concentration of power has created an 'exorbitant privilege' for the US and Europe, allowing them to print unbacked money and purchase real and financial assets worldwide.
Countries outside this system have struggled to balance their imports and exports, leading to income distribution gaps and harsh working conditions. Efforts to counter this dominance, such as the creation of the Euro, local currency swap networks, and the launch of the Petro-Yuan, have only slowed the growth of the Dollar and Euro. Cryptocurrency, initially seen as a potential disruptor, was diluted and rendered ineffective by the establishment.
The transition to mercantilism is already underway, marked by central banks selling Western paper bonds and stockpiling physical gold. Other indicators include chip wars, export bans on strategic minerals, and the redrawing of supply chains based on national security rather than profitability. This shift represents a return to a protectionist doctrine focused on accumulating real assets and state capitalism.
In the new multipolar order, power will be determined by ownership of gold reserves, critical supply chains, and production corridors, rather than limitlessly printed currencies. As the reign of paper and illusion ends, the era of real assets and state capitalism begins.