Change to the world order is where a country considered to be the superpower in the world loses its power and influence over the rest of the world. Change to the world order has been recorded to have happened thrice in the last 500 years. Although the change is not common, there is the risk that it could happen again in the near future, according to financial experts. The previous three changes in the world order recorded happened to the Dutch, the British, and the US Empires. This article explains the current state of events, challenges, or problems leading to the changes in the world order and how cryptocurrency has the ability to influence the changes.
Currently, the superpower in the world is the United States of America. The USA became a superpower after the 1944 Bretton Woods agreement in 1944 after the Second World War. When this agreement was made, it meant that the United States currency, the United States Dollar became the world’s reserve currency. This meant that other countries in the world would store their wealth in dollars. All international business would also be conducted in American Dollars. Although this is the case, the current chairperson of the American reserve and many other financial experts have stated that the world can have more than one world reserve in case one fails. This is the main problem the American dollar is facing, leading to changes in the world order.
Understanding some of the problems that are leading to the changes is important to the Big Circle. The Big Circle is the process by which a currency develops, becomes powerful, and later fails, leading to change in the world order.
The process has three main steps. The first is called the rise. This is where a group of people makes an agreement to form a country. Every country in the world has done this, but for a country to have an impact on the world order, there are a few more things that need to be done. When the country is formed, the people decide how to make the people living in the country more productive and resourceful. This includes developing education systems that will ensure the population is educated and becomes resourceful for the entire country’s growth. They use their knowledge and skills to ensure their country is the best in the field. This ensures that the economy develops as the skilled people use their skills to grow themselves and the entire economy. The country also invests in the military to protect itself and its economy, thus becoming the best and developing a world reserve.
The second step is called the top. This is where a country gets to the top, and they are appointed as the country controlling the world reserve. At this stage, the country has to spend more money to ensure they remain at the top. The money spent improves the skills and ways the people of the country become productive. This expenditure and confidence in the economy lead to the country borrowing money to fund projects such as the military. The country also increases its rate of printing money, thus causing an increase in inflation. High inflation causes a financial bubble, as seen in 2008 with the mortgage bubble. When the bubble pops, more money is printed to stabilize the economy, reducing the economy’s value. While all this is happening, the country’s competitors are getting stronger and improving their economies. This is what leads to the next stage in the Big Circle.
The third stage in the big circle is called the decline. At this stage, the inflation rate in the country is at an all-time high. Suppose the currency is backed with any commodity. In that case, the country breaks the link between the currency and the commodity, as seen when the United States currency was converted from Bretton Woods 1.0, where the money was backed by gold, to Bretton Woods 2.0, where the currency was not backed by anything. The country continues to struggle with excessive expenditure, borrowing, and printing money. When a country starts to print money, the wise thing to do is invest your money in assets that gain value.
The current issues that are causing the change in world order started years ago with the United States of America spending billions of money on their military and other things. As a result, the country had to borrow funds to pay for its expenses. The situation got worse when the pandemic hit, and the country had to spend more money to safeguard American companies and the population. This led to more borrowing and printing. The last nail in the coffin was the war between Russia and Ukraine. America and other countries sanctioned Russia, which is currently leading to a commodity crisis and inflation as products get expensive all over the world. High inflation and an increase in interest rates have the ability to lead to a recession, which will weaken the American dollar. As the American dollar loses its value, the Chinese Yang becomes a stringer and becomes a better solution to serve as the next world reserve currency.
Nobody knows for sure what will happen, but one thing is for sure, the United States will try to resolve its issues as fast as possible, and other countries will not sit back and watch as their reserves lose value as the American dollar loses value. People, and most probably, countries, will shift their wealth to cryptocurrencies to ensure they do not lose their wealth. This is what is being referred to as Bretton Woods 3.0, where a product, this time, will back the currency; it will be cryptocurrency. This is a possible future solution because the supply of cryptocurrency will remain the same for years. The number will not increase; only the value will change over time. Suppose 1% of the world’s economy goes to cryptocurrency. In that case, this will have a huge impact and make cryptocurrency either the second world reserve currency or it will fully replace the American dollar as the world reserve currency.
