Sell America to become fight America!

The "sell America" trade will likely end in war.

Is Trade War a precursor to Hot War?

US investors have learned something scary over the last few weeks - America is no longer the global safe haven. Historically speaking, when global investors were fearful they flew into dollars and Treasuries because they trusted the United States. However, after decades of reckless DC spending, weaponization of the dollar, and warmongering overseas the non-Western world has put America on notice. Unfortunately, the so-called “sell America” trade is likely to become a fight America conflict that unravels the US empire permanently.

Sky high Trump tariffs have combusted into a full on trade war with China. While Scott Bessent has repeated flimsy orthodoxy that importers win trade wars, tariffs have already backfired significantly on US markets. Predictably, tariffs crashed stocks but unpredictably to DC and Wall Street the dollar and Treasury bonds also fell simultaneously, the opposite of what has happened historically. Some of the selling was triggered by hedge fund antics (the Basis Trade) but much of the pressure is coming from foreigners, especially from Asia and Europe.

The reality is that the global financial system, what some people call the Eurodollar System is disintegrating. The two most important currencies in this system - Dollars and Yen - are losing value fast, disrupting normative capital flows around the world. While dollars are the lifeblood of global trade and lending (both CONUS and OCONUS), Japan is the largest holder of sovereign debt in the world, and it is the largest holder of US Treasuries, the essential collateral to the Eurodollar System. If Dollars or Yen breakdown it ripples through the entire macro-world.

Demand for US debt is now under immense pressure from all sides.

Demand for US debt is now under immense pressure from all sides. As inflation has taken hold in Japan the Bank of Japan has been forced to sell US Treasuries to buy Yen in order to prop up its value. Recently, Japanese pension funds attempting to rebalance portfolio exposure away from US assets (Treasuries and Agency debt) are also “selling America.” At the same time, Trump’s America First Investment Policy declared the PBOC a foreign adversary so Chinese investors have been selling US stocks and buying Chinese.

Selling pressure on Treasuries is also coming from China via Europe. According to Jim Bianco, China holds billions of US Treasuries in Luxembourg and Belgium where additional selling has come from. In response to Trump’s trade policies, China’s Ministry of Commerce said China will not back down from "unilateral bullying" so it is very possible the PBOC is indirectly selling Treasuries. So far selling has been calibrated and discreet, probably to prevent an indiscriminate fire sale that could sink the global economy.

What could make Beijing (or others) dump the mother load? It has been reported in the last few days that Israel is contemplating striking Iran with or without US permission. Remember, US forces have been beefed up in the region since President Trump deployed a second Carrier Strike Group to the Middle East in March while extending USS Harry Truman, already in theater. Air assets like B-2 stealth bombers have also been forwarded to Diego Garcia in the Indian Ocean. The escalation is directed at Iran.

Supposedly Donald Trump waived off a possible US-Israeli joint attack on Iran’s nuclear sites earlier this month but recent shakeups in the Defense Department suggest that may be short-lived. This week another media bomb was dropped on Defense Secretary Pete Hegseth for a second alleged open source leak of classified military information. That is almost certainly not the entire story.

Key members of the Secretary’s inner circle have been fired this week. The cover story for these firings is leakage of classified information but the deeper implication may be that Zionists inside Trump’s White House wanted Hegseth and his team removed because they opposed a US military strike on Iran.

Zionists inside Trump’s White House wanted Hegseth and his team removed because they opposed a US military strike on Iran.

The embattled Hegseth is scheduled to testify before Congress soon and will likely be defending his job when he does. The signal scandal notwithstanding, if Secretary Hegseth is fired in the coming weeks it will be because he opposed Trump’s Zionist team who desperately want war with Iran. If the Pentagon shakeup clears the path for war or Israel strikes unilaterally it will set off a Treasury fire sale.

The war will likely bring in Russia, who has already signed a security agreement with Iran, China and perhaps others from the Global South. These powers will ultimately conclude that the US is a belligerent who can only be stopped with unrestrained force, financial, economic and military. Note, US forces are already overstretched, poorly staffed, hobbled by logistical problems and industrial incapacity, never mind the tactical vulnerabilities of anachronistic US ships. (No doubt this is why Hegseth opposes strikes to begin with.)

War with Iran is a game changer that could explode “sell America” into fight America. It is a war no one on Wall Street nor Main Street expects, and it will shock markets accordingly. The Middle East is already a hot bed of conflict and fragile regimes from Egypt and Jordan to Turkey could fall, and key supply routes like the Straits of Hormuz and the Suez Canal could be disrupted indefinitely. Worse, if US naval forces take serious losses (ships are sunk) from advanced Iranian missile and drone attacks or Iranian proxies confidence in US markets will descend into panic as the world falls into recession.

If US naval forces take serious losses US markets will descend into panic as the world falls into recession.

Selling Treasuries will become indiscriminate, a fire sale will begin. China and foreign investors the world over will have no recourse except to liquidate USD denominated assets at scale, and selling will beget selling as fiscal chaos envelops DC. Interest rates will skyrocket and within weeks government costs will become unsustainable. At this point the Fed will be forced to step in but the damage will already be done; it will be too late.

Distrust in the US as the custodian of the global financial system runs deep. The “sell America” trade has simply made it obvious to comatose Wall Street elites and DC gerontocrats. Sanctions and confiscations of foreign assets on anyone Washington or Wall Street did not like and near constant warfare and CIA-induced regime change has broken that trust irreparably.

It has been a slow demolition. US industrial power began to sunset in the 80’s along with America’s middle class tax base. The 2008 Financial Crisis caused a global recession and foreigners began divesting from Treasuries shortly thereafter. Covid fractured the system further by uprooting supply chains and “friendshoring” key industry. Confiscating Russian sovereign assets (held by Euroclear) during the Ukraine War and now tariffs on China have set the bridge to the Orient ablaze. War with Iran will collapse the superstructure.

The emergence of the Multipolar Monetary World Order (MMWO) the schism between West and Non-West or North vs Global South is imminent.

In summary, the global financial system is unwinding and Trump’s tariffs are accelerating its demise. Trust in US markets is waning but it is the Zionist warmongers inside DC who will topple the US dominated financial system and military empire for good. The emergence of the Multipolar Monetary World Order (MMWO) and the schism between West and Non-West or North vs Global South is imminent as “sell America” flames into fight America.

Welcome to the end of cycle.

Say liquid, stay alert.