China & America’s Economic War with Matthew Pines - WBD602

Matthew Pines is a Managing Consultant at the Krebs Stamos
Group and a Fellow at the Bitcoin Policy Institute
specializing in national security. In this interview, we
discuss the rapidly changing geopolitical order as China
competes with the US for dominance, and how Bitcoin may
become one of a number of alternative global reserve assets
to US debt.


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There are moments when the world pivots when events change
the course of world affairs. The Russian invasion of Ukraine
was one such event. More to the point, it was the western
sanctions imposed on Russia that will come to be seen as a
paradigm shift. It was when the world went from working in an
open Eurodollar system to a closed system involving
alternative forms of money.


In the face of increasingly fraught geopolitics and a loss of
faith in the US dollar, certain countries are seeking to
diversify the reserve assets they hold. This will create
problems for the USD-UST system, at the same time the US is
facing significant headwinds: dealing with huge structural
debt, ‘reshoring, restocking and rewiring’, and countering
China’s rise.


What was once a theory is now turning into reality: China is
on the cusp of being able to compete with the US, principally
within the Asian geopolitical sphere. To this end, China has
a strategic imperative to secure reliable commodity and
energy sources, and will likely move towards a
proto-petroyuan system, and coerce other countries and
entities to follow.


In this context, Bitcoin is emerging as a viable alternative
to fiat currencies and gold as a global reserve asset. It is
a unique form of money: a digital commodity with global
fungibility, limited counterparty risk, and large liquidity.
But critically it is a politically neutral asset, an
increasingly attractive attribute for countries seeking to
hedge their exposure to increasing geopolitical risk.


In the US, the rise of Bitcoin companies, along with the
Biden administration's Executive Order on Digital Assets and
positive statements by officials, suggests the US could
accept Bitcoin's gradual adoption and monetization. From a
national security perspective, key decision-makers may
realize that allowing Bitcoin to serve as a new global
reserve would disproportionately benefit the US.