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Could a Rip-Your-Face-Off Rally in the Dollar Trigger a Global Financial Crisis? October 21, 2025
Is this scenario guaranteed? No, of course not. But that doesn't mean it's excluded from the realm of possibility.
We all know the end-game when currencies are inflated as an expedient measure to stave off insolvency: devaluation eventually has consequences as the debauched currency is eventually replaced, a process that wipes out everyone holding or using the devalued currency. It's natural to assume this is a linear process and therefore predictable, as that's what it looks like when looking back at the broad sweep of history. But the process isn't inherently linear; it's non-linear as the dynamics around "money" and "risk" are emergent, meaning that the sum of the parts have qualities of their own that are not predictable. Which brings us to the question: could the much-maligned, guaranteed-it's-going-to-zero US dollar USD) stage a rip-your-face-off rally that wipes out those shorting the USD by generating a mad rush for scarce--yes, scarce--USD? The Federal Reserve measures the supply of US dollars via M2: basically cash in various accounts. As you can see on the chart below, M2 Money Supply is about $22 trillion after a $6 trillion rocket-boost in the Covid stimulus phase. That may sound like a lot, but consider the global bucket of financial assets is worth $480 trillion. Global Asset Monitor: Public (sovereign bonds, etc.) $232.4 trillion, Private (stocks, RE) $246.8 trillion: $479.2 trillion total. So M2 Money Supply is 4.6% of global financial assets. US dollars in circulation, i.e. Federal Reserve notes/Greenbacks, is around $2.4 trillion. The US dollars held in time deposit accounts in banks outside the US are called Eurodollars. I am not an expert on the eurodollar market, but it appears to have experienced a decline in volume since 2016. As this article from the Federal Reserve Bank of New York explains, changes in banking regulations led to selected deposits on the books of US banks replacing the majority of eurodollars volume. Who Is Borrowing and Lending in the Eurodollar and Selected Deposit Markets? "Selected deposits are unsecured U.S. dollar deposits that also tend to have an overnight maturity, similar to Eurodollars. However, unlike Eurodollars, but like fed funds, selected deposits are booked at bank offices in the U.S." 
The conventional view is that eurodollars are advantageous because they are not regulated by US agencies or the Federal Reserve and so much of the activity is opaque, qualifying as "shadow banking." Eurodollar Secrets: The Hidden Engine of Global Finance (tradingview.com) "The Eurodollar system is one of the greatest financial innovations--and enigmas--of modern capitalism. Born from geopolitical necessity, it evolved into a vast offshore network that creates and circulates U.S. dollars beyond U.S. borders. Its power lies in its invisibility: it influences global liquidity, shapes monetary policy, and fuels international trade, all without direct oversight. However, with great power comes great risk. The Eurodollar market's opacity and lack of regulation mean it can amplify crises when liquidity dries up." As I understand it, a non-US bank holding $100 million in eurodollar deposits can issue loans denominated in USD based on the USD on deposit. In this case, the quantity of USD is increased not only by the Federal Reserve or US banks but by non-banks holding eurodollars. There were an estimated $13.8 trillion eurodollars in 2016. I haven't found any more recent estimates that aren't paywalled. Back of the envelope, let's say there are around $17-$20 trillion in eurodollars floating around, which would put total USD in the global financial system around 8% ($38 trillion) or 9% ($43 trillion). Here is the chart of M2 Money Supply, courtesy of the Federal Reserve: 
Why would anyone need USD? The usual reason is to service or pay off USD-denominated debt. As credit tightens--which happens when global markets shift from risk-on to risk-off--loans denominated in USD issued by non-US banks (i.e. eurodollar credit) mature and the lender demands payment in full rather than roll the debt into a new loan. The borrower must then buy dollars to pay off the loan. Just because there are a lot of dollars in existence doesn't mean there are an abundance of dollars available. When a loan denominated in dollars is paid off, those USD that were borrowed into existence go to Money Heaven. So the total supply of dollars can shrink in a risk-off crisis as loans are called and liquidated. Much of the supply of USD is tied up and not available for borrowing. In risk-off crises, dollars are hoarded, reducing the supply available for lending. Given the enormous size of the global financial assets bucket--and the unknown but estimated to be gigantic market of USD-linked derivatives such as currency swaps--the demand for dollars could far exceed the amount available to desperate borrowers and those at the end of derivative chains that eventually lead back to some form of USD-denominated collateral. This is one scenario for a rip-your-face-off rally in the US dollar that wipes out dollar shorts (those betting on a decline in the relative value of the USD against other currencies), bankrupts borrowers who were unable to secure enough dollars, and forces eurodollar lenders into insolvency when the USD-denominated loans they issued are not paid back. In systems terms, a risk-off global crisis is a self-organizing criticality that can trigger a phase change much like an avalanche--a dynamic I describe in my new book Investing In Revolution: "These dynamics of complex systems are illustrated in the Sand Pile analogy: as grains of sand drop out of a hopper, they form a pile which grows in size until it reaches a point of instability, and the sand pile collapses in an avalanche. Which grain of sand will trigger the instability cannot be predicted, and neither can the size of the avalanche. The sand pile is an example of self-organized criticality, a self-organizing system that hovers between instability and stability. At a critical point/tipping point, a phase transition occurs--the avalanche. Avalanches / instabilities follow a power law distribution: for every 100 small avalanches, there will be 10 that are considerably larger, and one gigantic one that takes down the entire system." And that's how a rip-your-face-off rally in the guaranteed-it's-going-to-zero US dollar triggers an avalanche that topples multiple lines of dominoes stretching throughout the global financial system. All sorts of collateral would be liquidated to raise funds to buy dollars, and that's how the world ends up with a global financial crisis few thought possible. Is this scenario guaranteed? No, of course not. But that doesn't mean it's excluded from the realm of possibility. My new book Investing In Revolution is available at a 20% discount ($16 for the paperback, $20 for the hardcover and $7.95 for the ebook edition) through Wednesday October 22, 6 pm EST. Introduction (free) New podcast: Anti-Progress, Reverse Leverage and the Hot-Potato Economy (45 min) Check out my updated Books and Films. Become a $3/month patron of my work via patreon.com Subscribe to my Substack for free My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. THE REVOLUTION TRILOGY: Investing In Revolution Ultra-Processed Life The Mythology of Progress Systemic Problems/Solutions Investing In Revolution (2025) Introduction (free) The Mythology of Progress (2024) Introduction (free) Global Crisis, National Renewal (2021) Introduction (free) Money and Work Unchained (2017) Introduction (free) A Radically Beneficial World (2015) Introduction (free) What You Can Do Yourself Ultra-Processed Life (2025) Introduction (free) Self-Reliance in the 21st Century (2022) Introduction (free) When You Can't Go On: Burnout, Reckoning and Renewal (2022) Introduction (free) Get a Job, Build a Real Career and Defy a Bewildering Economy (2014) Intro (free) Novels The Adventures of the Consulting Philosopher Intro (free) The Secret Life of an Asian Heroine First chapters (free) Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free Investing In Revolution print $16, (Kindle $7.95, Hardcover $20 (145 pages, 2025) 
Only now do we see that we've been investing in revolution for decades--not the revolutions we thought we were investing in, revolutions in technology and finance, but in the social revolution made inevitable by the extremes that we've reached in our single-minded pursuit of private gains.
The pendulum that we've pushed to an extreme will swing to the opposite extreme, and the artifices that have propped up a facade a stability for decades will accelerate the disorder rather than reverse it. We now stand at the point of decision, and this book offers a path to a reformation and renewal that serves the shared interests of us all, not just the few. Introduction (free) Ultra-Processed Life print $16, (Kindle $7.95, audiobook, Hardcover $20 (129 pages, 2025) 
Ultra-Processed Life: the substitution of a synthetic, commoditized, very profitable facsimile for what was once authentic.
Ultra-Processed Life is my term for everything that is analogous to ultra-processed snacks: attractively marketed, instantly alluring, easy to consume, addictive by design, tasty in the moment but harmful over time, its origins a black box of unknown processes, the brightly colored product bearing no resemblance to the real-world ingredients, an idealized form of what is inherently imperfect, untethered from the natural world. As with many others, the catalyst for my exploration was a life-threatening medical crisis that did not have a specific cause. This led me to wonder if our entire way of life is like an ultra-processed snack: tasty but not healthy, edible but stripped of the nutrients we need to be healthy, addictive by design. Introduction (free) The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $20, (Kindle $9.95, Hardcover $24 (215 pages, 2024) audiobook, Read the Introduction and first chapter for free (PDF) 
What if the policies to accelerate growth are no longer working because our fix for every problem--growth at any cost--is failing? We're told Progress is inevitable as a result of technology, but everyday life is getting harder, not easier--the opposite of Progress, what I call Anti-Progress.
What if the real source of the unraveling is far deeper than economics or politics? What if the problem is what we see as the inevitable destiny of humanity--Progress--is actually a modern mythology, disconnected from the real-world consequences of growth for growth's sake? We indignantly reject that Progress is a mythology, but our need for mythology hasn't gone away because we've mastered technology; we've created a modern mythology of technology that is heedless of its own consequences. To truly progress, we need a new mythology aligned to 21st century realities. Read the Introduction and first chapter for free
Recent entries: Could a Rip-Your-Face-Off Rally in the Dollar Trigger a Global Financial Crisis? October 22, 2025 The Crisis and Revolution Hidden in Plain Sight October 20, 2025 If We Measured the Economy by Quality-of-Life Instead of GDP, We'd Be In a Depression October 16, 2025 The Year When Everything Happens in No Particular Order October 14, 2025 The True Meaning of Stoicism October 9, 2025 Look Out Below October 7, 2025 The Golden Age of Spectacle October 3, 2025
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Smith's Neofeudalism Principle #1: If the citizenry cannot replace a kleptocratic authoritarian government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only. The Smith Corollary to Metcalfe's Law (The Network Effect): the value of the network is created not just by the number of connected devices/users but by the value of the information and knowledge shared by users in sub-networks and in the entire network. (CHS, 4/6/16) My Credo of Liberation: I no longer care if the power centers of our society--the distant, fortified castles of our financial feudal system--are changed by my actions, for I am liberated by the act of resistance. I am no longer complicit in perpetuating fraudulent feudalism and the pathology of concentrated power. I no longer covet signifiers of membership in the Upper Caste that serves the plutocracy. I am liberated from self-destructive consumerist-State financialization and the delusion that debt servitude and obedience to sociopathological Elites serve my self-interests. (Thank you, Klaus-Peter L., for reminding me) "We've become a culture of excuses rather than solutions: solutions always require sustained effort and discipline." (CHS 4/9/16) "Fraud as a way of life caters an extravagant banquet of consequences." (CHS 4/14/16) "Creativity = problem solving = value creation." (CHS 6/4/16) "Truth is powerful because it is the core dynamic of solving problems." (CHS 7/21/17) "We live in a system of human emotions that masquerades as a science (economics)." (CHS 1/1/18) "Always remember, your focus determines your reality." (George Lucas) "Diversity is for poor people. Sameness is for the successful." (GFB) "When power dissipates suddenly, it dissipates completely." (CHS 7/14/19) "Disobedience is the true foundation of liberty. The obedient must be slaves." (Henry David Thoreau) "Markets cannot price in the value of non-monetized natural assets such as diverse ecosystems." (CHS 7/14/19) "Magical thinking isn't optimism, it is folly." CHS 1/3/22) "Tune in (to self-reliance), drop out (of hyper-consumerism and debt-serfdom) and turn on (to relocalizing capital and agency)." (CHS 1/5/22) "The path to everything you desire starts here: like yourself as you are right now." (CHS 11/20/22) "There are only two signals: how many essentials you produce and share and if you're consuming less with better results. Everything else is noise." (CHS 12/17/22) "Liberation is no longer needing any confirmation or feedback from others or the world for one's sense of self. Wealth, fame, recognition, admiration, praise, prestige, approval, sainthood, martyrdom, success: none are needed, none are desired." (CHS 12/26/22) "When fame, wealth, prestige, status and glory are out of reach, you're free to pursue other more valuable things." (CHS 2/6/22) "It is the sacred duty of every activist who seeks to better their community to grow and share as much life-giving food as is humanly possible." (CHS 6/15/23) "Being anonymous, gray and unknown is the ideal state of freedom." (CHS 3/15/24) "We seem to have entered a world of anti-leisure and anti-productivity in which the unpaid shadow work demanded to keep all the complicated digital bits in motion obliterate our leisure and productivity." CHS (5/22/24) "It is axiomatic that failing systems work the best just before they fail catastrophically." Ray W. "Looking younger is mere technique; thinking younger demands creativity." CHS (10/16/24) "Tell me what's taboo and I'll tell you the truths that threaten the status quo." CHS (12/15/24) "This is the core of the Attention Economy: the ultimate addiction is the addiction to ourselves." CHS (1/28/25) "If You Seek the Truth, Look for What's Taboo." CHS (7/18/25) "My definition of self-reliance: the less you need, the easier it is to get what you need." CHS (7/26/25) "Mastery requires reading and doing." CHS (7/28/25) "The replacement of authentic value, quality, agency, choice, trust, legitimacy and experience with self-serving facsimiles is the key dynamic of Ultra-Processed Life, my term for the present-day human condition." CHS (8/12/25) "Ultra-Processed Life replaces an authentic experience with a synthetic, simulated, commoditized, highly profitable version that's superficially attractive but destructive over the long term." CHS (8/12/25) "What we see everywhere is the replacement of authentic things--including democracy--with synthetic facsimiles designed to maintain the illusion of choice and value." CHS (8/12/25) "Sometimes certainty is the enemy we don't even see and uncertainty is our most faithful ally." CHS (9/20/25) |
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