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

Author: Brother Tie Zhu on CRYPTO

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

Whether it’s a country, community, organization, or individual, the core action is the same: using the future to exchange for the present.

Our familiar economic growth and consumer prosperity are not derived 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 question: who has a 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.

1. 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: the U.S. outputs promises of the future, while the world provides the 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 ultimate settlement capability. From a balance sheet perspective, gold is the only asset without a counterparty.

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

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

2. Hedging Means Finding Healthy Balance Sheets

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

So, if you observe recent market trends, what does the depreciation of the dollar and the huge fluctuations in the yen indicate? It’s the rapid appreciation of currencies like the Swiss franc, which have relatively healthy balance sheets.

Extending this further, why is silver rising, and why are more 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; in my view, its fundamental significance lies in its ability to reshape 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 becoming lighter, capital is becoming heavier. This is the core of the current debt system restructuring.

In other words: any work that can be digitized, logicalized, or automated is becoming costless. 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 re-bound to tangible variables like computing power, electricity, resources, and capacity, debt is no longer just a numerical game. From this perspective, looking at silver and commodities, the market is pricing in the future production capacity constraints in advance.

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

3. Has the Era of the US Dollar’s Decline Arrived?

Nothing is eternal, including gold. Once you understand the 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 a non-counterparty asset. But 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, despite ongoing market pessimism about it, do we still use the dollar for valuation? Because you need the world’s deepest asset pool for collateral, settlement, and hedging; holding U.S. debt is not just because you believe in America, but because you need 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. The U.S. issues debt, the world pays; the U.S. consumes, the world supplies—essentially a global redistribution of time value.

But as the U.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 more deadly is that as growth increasingly depends on electricity, computing power, resources, and capacity, the financial system’s best tools—expectation, leverage, discount rates—will face hard physical constraints when trying to bring the future into today out of thin air.

The so-called Greenland, tariffs, manufacturing return—all are games around these physical constraints. In other words, the U.S. must lead in rebuilding 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.