The Day the Dollar Died

What if...?

If the U.S. Treasury stopped issuing money, and the Federal Reserve stopped providing liquidity to the banks, and the flow of money was stopped, and the markets ceased trading, and no backup or alternate monetary system was deployed, businesses and consumers would no longer be able to transact value exchange, or pay bills, or pay for utilities, or food...but that day-to-day exchange could be replaced in-part by barter or local agreements to carry-on vital business peer-to-peer...but there would be no money, nor way to pay debts back to the bankers - unsecured debt would evaporate, but what would happen to asset-backed debt? Would the assets - land, homes, vehicles, inventories, etc. suddenly become the property of the bank? Would massive foreclosures on a nationwide scale force people into the streets? How would the banks liquidate assets into a money-less economy? Who would own the assets after foreclosure? The bank? The bank's shareholders? The local government? Federal agency? What comes next? How would the populace recover from this crisis? Would communism (perfect communism, not the evil communism associated with modern culture) be implemented as a means to ensure survival for all while the machines of progress are rebuilt and re-deployed? How likely is this to happen given the state of the union and the economic fragilities of late?

Transcript

Okay, so imagine a Tuesday, just a regular, you know, boring overcast Tuesday morning.

You wake up, pour your coffee, you reach for your phone, and maybe out of habit, you check your bank balance or or look at the pre-market numbers, the usual route.

But instead of numbers, there's nothing. And I don't mean the server is down or your Wi-Fi is acting up. I mean the US Treasury has simply stopped issuing money.

Wow.

The Federal Reserve has no liquidity flowing to the banks. The markets, they haven't just crashed. They've ceased trading entirely. The big board is dark.

It sounds like the opening scene of a a post-apocalyptic thriller, doesn't it?

It does, but without the zombies, just a a silent, massive financial heart attack.

Exactly. And here's the kicker that makes this scenario genuinely terrifying to me. There is no plan B.

No backup.

No backup tape, no emergency switch, no secret vault of gold being wheeled out. The machine just stops. Today, we are unpacking a scenario that is uh mechanically fascinating but also pure nightmare fuel. We're looking at excerpts from the fragility of exchange, a post-monetary blueprint by the futurist Sheridan Forge.

And I want to be clear right off the bat, our mission today isn't to fear-monger or, you know, tell you to go bury gold bars in the backyard. That's not what we do here...

Right?

Our goal is to follow Sheridan Forge's thought experiment to its logical and perhaps illogical conclusion. He isn't just asking, "What if we go broke?"

We've seen that. We've seen recessions. We know what broke looks like. He's asking something much more fundamental. What happens when the actual mechanism of value exchange, the physics of the economy breaks down completely?

I have to admit, reading through the source material, I felt this mix of like intense curiosity and just pure anxiety. It's like watching a car crash in super slow motion.

Yeah.

But the car is the global economy and I'm sitting in the passenger seat without a seat belt.

That anxiety is actually the point.

Forge is essentially stress testing our reality. By removing the one thing we all take for granted, the invisible constant flow of money, he exposes how fragile the underlying structures actually are.

Huh. 

We assume the floor we stand on is solid concrete. But Forge argues it's actually just a suspended ceiling held up by cash flow. So, let's take a deep breath and walk through the day the dollar died.

Okay, let's get into the gears of this. Forge sets the stage with a very specific, very extreme set of conditions. 

Cascade failure,

Right. It's not just one thing going wrong. The Treasury stops issuing. The Fed stops providing liquidity. The markets stop. And most importantly, he specifies that no backup or alternate monetary system was deployed.

And that last part is the critical variable. Usually, when we talk about financial crises like '08 or the Great Depression, we assume intervention...

Of course,

We assume a bailout or new currency or a digital pivot or the IMF stepping in. Forge removes that safety net entirely. He forces us to look at a scenario where the flow simply stops. It's a closed system failure.

So, practically speaking, what does that look like on day one? Forge writes that businesses and consumers would no longer be able to transact value exchange, 

Which is a very clinical way of saying...

...can't buy a sandwich,

Right. But drill down into what transacting value actually covers. It's not just the sandwich or new TV. Forge specifically lists the essentials. Paying bills, utilities, buying groceries, all of it.

If the electronic and physical flow of money ceases, the grocery store cannot sell to you because they have no way to process the value you're offering.

Wait, let's pause right there. So, even if I have a wallet full of cash, say I just went to the ATM yesterday.

In this specific scenario, if the Treasury and Fed have stopped the system, confidence just collapses instantly.

So, the paper is worthless.

That paper in your pocket is just paper. It's a promisary note from an entity that has stopped promising anything. But more importantly, the digital infrastructure, the credit card terminals, the bank transfers is dead. You have no way to pay the electric company and they have no way to pay for the natural gas to run the turbines.

That is the immediate panic moment. You're standing at the checkout counter holding a loaf of bread. The card reader is dead. Cash is worthless.

And the concept of buying has ceased to exist.

So what do we do? Do we just stand there staring at each other?

Well, humans are resilient and biology doesn't stop just because economics does. You still get hungry,

Right.

Forge. suggests that the immediate pivot is towards survival. He writes that day-to-day exchange would be, uh, replaced in part by barter or local agreements to carry on vital business peer-to-peer...

Barter. So, we really are going back to I don't know the stone age trading chickens for shoes...

In a sense. Yes. But it's messier than that. In economics, there's this concept called the double coincidence of wants.

Oh yeah, I remember this.

It's the classic problem with barter. For it to work, I have to have exactly what you want and you have to have exactly what I want at the exact same time.

Right. If I have a script for a deep dive and you have a sandwich but you aren't in the mood for reading, I starve.

Exactly. That's why money was invented in the first place to solve that friction. Forge is saying we return to that high friction environment.

But he also says local agreements.

Yes. Look at that phrase. It implies that trust shifts from a global centralized system like the Fed or Visa to a local interpersonal system.

Ah,if I know you and I know you're good for it, or I know you have skills I might need next week. We make a deal. We just bypass currency entirely.

So the global economy collapses. Amazon is dead. Walmart is paralyzed. But the local economy, the literal neighborhood might weirdly become more active.

Precisely. The vital business continues because people still need to eat and stay warm, but the scale just shrinks dramatically. You can barter with your neighbor. You cannot barter with a multinational utility conglomerate.

They don't want my chickens.

They don't want your chicken. and they can't process your goodwill.

And that's where things get really complicated because while I might be able to trade some canned goods for firewood with the guy next door, I have these things called debts and they are usually owed to massive institutions, not my neighbor. I've got student loans, credit cards, a mortgage.

This is where Forge's blueprint gets incredibly detailed and frankly fascinating. He makes a distinction between two types of debt that determines your fate.

Okay.

First there's unsecured debt.

Okay, so that's credit card cards, personal loans, medical bills, stuff not tied to a physical object like a house or a car.

Right. And Forge predicts that without money, without a way to pay bankers back, this unsecured debt would effectively evaporate.

Evaporate. That sounds surprisingly optimistic. I feel like I should be happy about that word.

In a vacuum, sure.

Yeah.

If the mechanism to transfer value doesn't exist, the debt is functionally meaningless.

You can't pay it.

You can't write a check. They can't process digital payment. The ledger freezes. is the debt exists. In theory, it's on a hard drive somewhere, but in practice, it's gone.

They can't come take your kidney for a credit card bill.

There's no recourse.

Okay, I can hear a lot of listeners thinking, "Sign me up. No more student loans. Let's crash the treasury." But there's always a but, isn't there?

The but is massive. And it's the assetbacked debt.

The mortgage, the car note, the business inventory loan.

Exactly. This is where the thought experiment turns dark.

Forge asks a terrifying question: Would the assets, land, homes, vehicles, inventories suddenly become the property of the bank?

This is the stuff that keeps you up at night because legally the contract is clear. If I don't pay my mortgage, the bank takes the house. That's the deal.

That is the deal.

The contract doesn't say, "Unless the economy explodes, then it's cool. Keep it."

No, it does not. And Forge paints a picture of massive foreclosures on a nationwide scale. He uses the phrase force people into the streets. It's a mechanical enforcement of contract law. In a world where compliance is impossible.

Just imagine that for a second. The economy has stopped. No one has money. Everyone is trying to barter skills for food. And simultaneously, the automated legal machinery of the banks initiates a mass repossession of millions of homes and cars.

It creates a scene of absolute chaos. You have the evaporation of financial obligation on one hand.

Her credit card is gone. Hooray.

And the brutal enforcement of property rights on the other. Get out of your house. It's a collision of two different realities.

But hold on, I feel like there's a logic gap here. Or maybe it's a trap. If the bank takes my house, then what?

You've spotted the paradox. Forge calls this the liquidation trap. This is central to his argument about fragility.

Lay it out for me. Because if the bank takes the house, they win, right?

Do they? Think about it. Why does a bank foreclose on a house?

To sell it?

Do they want to live in it? Do the board of directors want to move into your spare bedroom?

No, of course not. They want the money.

Exactly. They want the liquidity that house represents. They want to sell it at auction to recoup the loan. But go back to the conditions of the scenario. The markets have ceased trading.

There is no money.

There is no money.

So the bank takes my house, but they can't sell it because no one can buy it because there is no currency to buy it with.

Correct. They're collecting assets that have zero liquidity. They are repossessing millions of vehicles that they cannot auction. They are seizing warehouse inventories they cannot liquidate.

They have become the owners of a kingdom of nothing.

It's absurd. The bank becomes the landlord of everything.

Yeah.

But everything is worthless if you can't exchange it for value.

And this leads us down a rabbit hole of ownership that Forge highlights, which I think is the most intellectual part of the text.

It really is.

If the bank forecloses, who actually owns the asset? Is it the bank itself?

Well, you'd think so, right? The bank entity, the corporation.

Yeah,

But who is the bank?

A bank is owned by shareholders. In a world without stock markets, do shareholders exist. If the stock value is zero, does the ownership structure just dissolve?

That's a really good point. The bank is just a proxy for investors.

Exactly. So, if the investors are wiped out, does the ownership fall to the local government? Does the mayor own your house?

Yeah.

...or a federal agency? Forge is pointing out that our entire concept of ownership is tied to the ability to enforce and exchange that ownership. If you break the exchange, the definition of ownership starts to blur.

It's like a glitch in the matrix. The bank has the deed to the house, but The deed is just a piece of paper if there's no market to validate it.

And yet the physical reality is that people might be forced into the streets based on that piece of paper.

It highlights the absurdity and the fragility of the system.

How so?

The system is designed to handle individual failures. If you go broke, the system works. It processes you. But if everyone goes broke, if the system itself breaks, the rules of foreclosure become nonsensical. Yet, they might still be enforced by automated systems or, you know, local sheriffs following old laws.

So, we have a world where trade is local and barter-based, but property rights are in this weird suspended animation of mass foreclosure with nowhere to go.

Right?

Which brings us to the big question Forge asks. What comes next?

This is the transition from economics to sociology. How does a population recover from this?

And Forge throws out a term here that carries a lot of baggage. I want to be careful with it, but we have to address it because it's in the text.

He brings up Communism.

He does. And we need to be very precise here. because he is very precise in the text. He asks, "Would Communism be implemented as a means to ensure survival for all, while the machines of progress are rebuilt and redeployed?"

But he qualifies it.

Yeah.

Immediately. He doesn't just leave it hanging there.

Yes. He explicitly puts in parenthesis "perfect Communism," not the evil communism associated with modern culture.

Okay, let's explain that distinction because it's important. We are not taking a political stance here. We are analyzing his blueprint. What does he mean by "perfect Communism" in this specific context?

He's talking about mechanism, not ideology. He's not talking about political parties or secret police. He's talking about resource allocation.

In a situation where the free market, the mechanism of exchange is physically broken, how do you keep people alive? You cannot rely on I buy, you sell.

Because there's nothing to buy with. The pricing signal is gone. I can't offer you $5 for bread if dollars don't exist.

Right? So, if you can't use pricing to distribute food, What's the alternative?

Central distribution.

Central distribution. From each according to his ability, to each according to his need, purely as a survival tactic. If the grocery store can't sell food, and the truck stop running because no one can pay for gas, does the community just let the food rot while people starve?

No. In a crisis, you break the glass. You seize the food and distribute it?

That's effectively what he's describing.

A system where resources are pooled and handed. out because the trade system is dead. Think of it like a lifeboat.

Oh, that's a good analogy.

On a lifeboat, you don't buy and sell water rations. You distribute them equally to keep everyone alive. That is the perfect Communism he's referring to. It's a logistical solution to a mechanical failure.

It's interesting that he frames it as a temporary bridge. He says it's implemented while the machines of progress are rebuilt.

Exactly.

It implies that this isn't the end goal, but the emergency life raft.

He's looking at the physics of resource distribution. If method A, Capitalism or exchange, breaks, method B, Communism or distribution, might be the only way to prevent total biological collapse until method A can be fixed.

It's a sobering thought that the only thing standing between us and a total restructuring of society is the liquidity provided by the Federal Reserve.

It can expect that idea of fragility. We assume our social structure is solid based on laws and culture. Forge is arguing that our social structure is actually based on the flow of money. Stop the money and you might inevitably slide into a completely different social model just to survive the winter.

So, we've gone from the Treasury stopping the printers, to bartering for eggs, to banks owning unsellable houses, to a potential communal distribution system. It's a wild ride.

It is.

But I have to ask the question Forge asks at the very end of the source material...

The probability check.

Right? He asks, "How likely is this to happen?"

And he doesn't give a percentage. He doesn't say there's a 10% chance, but he gives a reason for asking. He says, "We have to consider this given the state of the union and the economic fragility of late."

Economic fragility of late. That feels like a polite way of saying things are shaky.

It's an acknowledgement that the system isn't as robust as we pretend it is. We've seen supply chain breaks recently. We've seen high inflation. We've seen banking jitters where regional banks collapse over a weekend.

Yeah.

Forge is suggesting that these aren't just glitches. They are cracks in the foundation.

And this blueprint, this fragility of exchange is his way of showing us what happens if those cracks turn into a canyon?

Precisely. It's a warning. It tells us that our normal is dependent on a very complex, very specific set of variables staying constant. If you pull one block out of the Jenga Tower - the confidence in currency, the whole tower changes shape.

So, what does this all mean for us, the listeners? Why should we care about a hypothetical doomsday scenario? I mean, hopefully this never happens. I like using my debit card.

Hopefully not, but thinking about it changes how you look at the money in your pocket, or the lack thereof.

Yeah.

It forces you to realize that money isn't value itself. It's just the transportation system for value.

And if the transportation system breaks down...

Then you better have something of actual value to trade, or a community you trust. It shifts your priority from accumulating numbers to building resilience,

Right.

It makes you ask, "If I couldn't buy anything tomorrow, what could I actually do?"

It definitely makes you want to get to know your neighbors. a little better, doesn't it? Maybe learn how to grow tomatoes just in case.

Absolutely. Skills and relationships become the new currency in that world. You can't foreclose on a friendship.

We've covered a lot of ground today from the liquidity freeze, to the rise of barter. We looked at the paradox of the banks owning the world but having nothing,

Right.

And we touched on the possibility of social restructuring, not as politics, but as a survival mechanism.

It's a dense text, but a necessary one. It clears the fog on how the machine actually works by showing you what it looks like when it's broken.

Before we wrap up this deep dive, is there one final thought you want to leave our listeners with - something to keep them staring at the ceiling tonight?

I think the most provocative part of this entire blueprint is the question of ownership we touched on earlier. I want you to really sit with this.

Okay.

If the banks end up owning everything, every house, every car, every acre of land, in a world where money no longer exists, does the concept of ownership actually still exist.

That's the big one.

Is ownership just a collective hallucination that we all agreed to maintain as long as the dollars kept flowing? If the bank has the deed but no power to sell and no currency to value it in, is it really their house or is it just a building standing on the earth?

Who owns the earth when the ledger is deleted?

Exactly.

That is definitely going to keep me up. The idea that ownership might just be a story we tell ourselves,

The story that requires a very specific audience to work.

Well, on that existential bomb We are going to wrap up. Thank you for listening and thank you for taking this journey into the fragility of exchange with us.

It was a pleasure. Keep questioning the systems around you.

We'll see you next time. Stay curious.