The World of Gold, Dollars, and Debt: Reassessing the Balance Sheet

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Author: Brother Tie Zhu on CRYPTO

The most fundamental and covert organizational coordination mechanism in modern society is not currency itself, but the continuous extension of debt—credit relationships.

Whether it’s a country, community, organization, or individual, the essence is performing a repeated action: trading the future for the present.

Our familiar economic growth and consumer prosperity do not originate from wealth appearing out of nowhere, but from a highly institutionalized consensus that the future can be pre-allocated. Debt is the technical implementation of this consensus.

From this perspective, understanding the world reveals a core principle: who has the greater ability to discount the future to the present, and who has the power to define the future.

In this sense, the creation and contraction of money are merely expressions of the debt world. The magic of finance is essentially one thing: intertemporal resource exchange.

I. Understanding Gold and the US Dollar from a Debt Perspective

If you place debt at the center of the world’s operation, the roles of gold and the dollar become immediately clear. The dollar is not currency; it is a tool for debt coordination and valuation.

U.S. Treasuries are not simply the U.S.’s own liabilities. On the global balance sheet, the dollar system is: America’s promise to deliver the future, and the world’s capacity to absorb current debt. Both parties use dollars as a contract, creating the largest intertemporal transaction in human history.

Gold’s uniqueness lies in the fact that it is the only financial asset not backed by any liabilities. It requires no endorsement, no promises—its value is in its final settlement capability. On the balance sheet, gold is the only asset without a counterparty.

Because of this, when the debt system functions well, gold often appears inefficient, unprofitable, and lacking in imagination; but when doubts about the future’s smooth fulfillment arise, the value of gold is reinterpreted.

Some say gold hedges geopolitical risks. But if you continue to analyze with the balance sheet, this statement is incomplete. Geopolitical risks do not directly destroy wealth; what they truly undermine is the stability of debt relationships.

II. Hedging Risks Means Finding Healthy Balance Sheets

Once you understand the above logic, it’s clear that if you see the world as an ever-expanding balance sheet, then the so-called hedging is not about finding an asset that is forever safe, but about finding a healthy and sustainable debt structure at different stages. The fundamental risk is not volatility, but imbalance in the debt structure.

Therefore, if you observe recent market trends, what does the depreciation of the dollar and the huge fluctuations in the yen accompany? It’s the rapid appreciation of fiat currencies in relatively healthy countries like Switzerland.

Extending this further, why is silver rising, and why are many commodities increasing? From a broader macro perspective, the only fundamental variable affecting debt and credit relationships today is AI.

AI is not just an industry; its fundamental impact lies in reshaping balance sheets. On one end, it exponentially reduces human efficiency costs—software becomes cheaper, labor is replaced, information processing approaches zero cost; on the other end, it creates unprecedented rigid capital demands in the real world—computing power, electricity, land, energy, and minerals become the strongest tangible constraints.

These two forces are simultaneously acting on global balance sheets: efficiency is decreasing costs, while capital is becoming heavier. This is the core of the current restructuring of the debt system.

In other words: any work that can be digitized, logicalized, or automated is approaching zero cost. Software, copywriting, design, basic coding—these once-expensive intellectual assets are becoming as cheap as tap water. Everything has a cost, which is reflected in the generation of each Token—burning computing chips, consuming electricity, and transmitting via copper cables. The smarter AI becomes, the more it demands from the physical world.

Over the past decades, global growth has relied more on financial engineering—credit expansion, leverage rollovers, expectation management. Future growth can be continuously discounted, making debt appear lightweight and controllable. But when growth is increasingly tied to tangible variables like computing power, electricity, resources, and capacity, debt is no longer just a numbers game. From this perspective, looking at silver and commodities, what the market is pricing is the pre-emptive valuation of future production capacity constraints.

Thus, when growth is physically constrained, the magic of debt fails. No matter how much currency you inject, without enough copper to build power grids, enough silver for panels, AI computing power cannot be realized.

III. Is the Era of the US Dollar’s Decline Coming?

Nothing is eternal, including gold. Once you understand the operational logic of the debt world, you must accept an unappealing conclusion: gold is not an eternal answer either. Its current rise is merely due to its scarcity as an asset with no counterparty. However, gold cannot generate cash flow, improve productivity, or replace real capital formation. From a balance sheet perspective, it temporarily freezes risk.

Returning to the dollar, why do we still use it for valuation despite ongoing market pessimism? Because you need the world’s deepest asset pool for collateral, settlement, and hedging; holding U.S. debt is not just about trusting America, but about needing an asset recognized by the global financial system that can be pledged for financing at any time.

The strength of the dollar lies not in its financial correctness but in its irreplaceable network effect. It is currently the only container in human civilization capable of supporting tens of trillions of dollars of debt extension.

Over the past decades, the core capability of the dollar system has been: discounting the future to the present—America issues debt, the world pays; America consumes, the world supplies—essentially a global redistribution of time value.

But as America’s fiscal path increasingly relies on expanding the balance sheet and rolling over debt, the dollar’s credit will undergo a subtle change: it remains the best choice, but no longer a free one—opportunity costs rise significantly.

What is even more critical is that as growth becomes more dependent on electricity, computing power, resources, and capacity, the financial system’s most adept tools—expectations, leverage, discount rates—are based on bringing the future into today’s reality, which will face hard physical constraints.

The so-called Greenland, tariffs, manufacturing return—all are games around these physical constraints. In other words, the U.S. must lead in reshaping AI infrastructure, turning the dollar into the sole voucher for purchasing the world’s most powerful computing and most efficient production capabilities. This is the necessary condition for the dollar’s resurgence.

Otherwise, under the backdrop of physical constraints and AI redefining global division of labor, the dollar system will gradually lose its ability to discount the future, heading toward an era of decline—a slow but irreversible relative decline, until a currency that better represents real productivity and technological dominance replaces it.