The Endgame of Fiat Money

The AI Narrative as a Last-Chance Saloon for Ultra-Financialised Capitalism

In September 1985, representatives from the G-5 nations of the US, Germany, Japan, the UK, and France convened to address the appreciation of the dollar resulting in the signing of the Plaza Accord named after the site of this agreement—the Plaza Hotel in New York City. This agreement forced the United States to devalue its currency due to a current account deficit, approaching an estimated 3% of GDP according to Paragraph Six of the accords. From left to right: Gerhard Stoltenberg, Pierre Bérégovoy, James Baker, Nigel Lawson, and Noboru Takeshita Photo credit: Mario Cabrera

Can we still see the wood for the trees? What we are living through is not a sequence of disconnected crises, but the weird consolidation of a debt‑saturated economic system. This system can now function only through managed instability, where crisis is no longer a failure of policy but its primary operating mode. This is not a metaphor: only the constant production of instability can generate the distorted semblance of socioeconomic order.

Let’s consider monetary policy, commonly understood as the set of actions taken by a central bank to manage the economy by controlling the money supply and influencing interest rates. In the current regime of implosive capitalism, monetary policy is no longer a “boring” technical instrument confined to inflation control or financial stability. It has become the central organizing principle of power, shaping geopolitics, domestic politics, social relations, and even the narratives of everyday reality. This point bears stating as plainly as possible: markets, states, and societies are no longer governed toward an ideal of equilibrium; they are governed by being kept permanently and pervasively off kilter. Why? Because balance would expose insolvency.

This is not unprecedented. The Weimar Republic used monetary debasement to dissolve unpayable obligations after World War I. Bretton Woods emerged from the recognition that unmanaged currency competition would destroy political order. The Plaza Accord of 1985 formalized coordinated dollar devaluation to rebalance an overextended US economy. Each episode marked a moment when monetary arrangements were forced to absorb political and fiscal contradictions. What distinguishes the present, however, is that there is no new settlement on the horizon—only chaos and improvisation as techniques for managing the ongoing deterioration of socioeconomic conditions.

The glorious West, self‑styled land of free‑market capitalism, can be reduced to two simple categories: debt overhang and asset‑price dependence. In plainer terms: unredeemable indebtedness and hyperinflated financialization, which can only be held together by more or less overt manipulation. This constellation has reached a magnitude of potential insolvency that can no longer be sustained under any conditions of stability. Growth and productivity gains belong largely to the past, while political systems are now deliberately fragmented, because any serious attempt at stabilisation would require violent defaults, restructuring, and, above all, authentic political imagination. Perennial crisis, by contrast, allows the can to be kicked endlessly down the road, in perfect technocratic style.

Political leadership has long been hollowed out into administration. What remains are not decision‑makers in the classical sense, but puppet‑like extensions of a financialised machinery that thinks for them. Today’s politicians rarely display genuine political or moral judgment; in the best of circumstances, they operate through protocols. They are agents without agency, executing orders issued by markets and balance sheets rather than making choices in any substantive sense. This is the banality of evil as a contemporary form of political automation, upgraded for the age of finance: a hyperreal world run by people who no longer think, because the system has already decided what thinking is allowed to mean.

In this framework, the most flamboyant, authoritarian, and idiosyncratic figures — Trump being the archetype — are not aberrations but functional accelerants of disorder. They operate less as autonomous strongmen than as useful agents of chaos, whose volatility legitimises emergency measures and extraordinary financial intervention. Whether knowingly or not is beside the point: their role is systemic, aligned with a financial order that now desperately depends on disruption to sustain itself.

By now we should know that “crises” enable liquidity injections, regulatory suspensions, emergency facilities, and narrative resets aimed at an ever‑receding “new normal”. Crises keep the system alive precisely by postponing resolution and deflecting serious questioning. A concrete example lies in the treatment of recent wobbles in AI megacaps, such as Microsoft and Nvidia, whose valuations now anchor not just tech indices but broader financial and economic sentiment. These moments of serious market stress were quickly overshadowed by spectacle—the appointment of a new Fed chair, the latest Epstein-related scandal—that reframes attention without touching the underlying systemic decomposition. This is how volatility becomes structural: it hides in plain sight behind compelling narratives of instability. And while we are busy being distracted, central banks quietly expand their balance sheet sand absorb public debt, reinforcing a regime in which fiat currencies, having long since lost their role as stores of value, drift toward economic nothingness without ever formally collapsing.

The United States sits at the centre of this architecture of deliberate obfuscation. The dollar remains the world’s reserve currency, but its role is rapidly mutating. A sustained depreciation of the USD is underway—unannounced, unacknowledged, yet tolerated and even brandished as success. When Trump says that the dollar is ‘doing great’, he has a point: a weaker dollar reduces (“inflates away”) the real burden of US debt, exports inflation abroad, and preserves geopolitical leverage without the political cost of admitting explicit devaluation. Commodity inflation is reframed as “transitory” or blamed on supply chains, climate events, or foreign actors. This is why an 11% annual decline in the dollar can be dismissed as normal market movement. And this is why violent swings in gold and silver prices—involving trillions in notional value—are treated as technical anomalies rather than stress signals from a system being gradually repriced in real terms.

Given this context, the dollar’s decline is no accident but—from the US perspective—a necessary “policy error”. Yet openly admitting as much would trigger a confidence shock with devastating consequences. Hence the parade of scapegoats: inflation not only manipulated but blamed on wars, viruses, supply chains, climate events, corporate greed, migrants, or foreign enemies. A depreciating dollar also carries immediate financial consequence: it redirects capital flows toward rival currencies and assets, amplifies inflationary pressures in dollar‑denominated markets, and risks coordinated policy responses from other major players. This is geopolitically explosive, because the dollar’s credibility underpins global trade, debt contracts, and central‑bank reserves worldwide.

This logic therefore extends beyond finance. Geopolitical conflict, trade fragmentation, sanctions regimes, and even domestic political violence increasingly function as monetary alibis—events that justify extraordinary measures while distracting from structural exhaustion. Emergency has become permanent background noise because admitting permanence would demand accountability. Central banks now wait for disorder sufficient to legitimise the next expansionary leap: a market freeze, political breakdown, or geopolitical escalation will serve as pretext to unleash emergency facilities, balance-sheet expansion, and currency coordination. This is the world we live in.

In the United States, fiscal dysfunction has long been structural. The recurring threat of federal government shutdowns is no longer an aberration but part of the operating system—a symptom of a political economy that governs through stopgap measures rather than stable budgeting. Since the mid-1990s, Congress has shifted from year-long appropriations to near-permanent reliance on continuing resolutions and last-minute deals. Of the shutdowns since 1976, the majority have clustered in the last three decades, including the 35-day impasse of 2018–19 and the record 43-day shutdown from 1 October to 12 November, 2025—furloughing or forcing nearly a million federal employees to work without pay before a funding bill was cobbled together.

This cycle shows no signs of abating. As 2026 began, lawmakers faced another funding deadline amid unresolved appropriations bills and partisan standoffs over Homeland Security and immigration funding—exacerbated by public backlash to recent enforcement actions, notably the killing of Minneapolis ICU nurse Alex Pretti by ICE agents. The resulting 4-day shutdown exemplifies the system’s new normal: unstable and perpetually hostage to short-term conflicts that serve as de facto justifications for emergency powers.

Rising domestic tension further darkens an already fragile economic picture. ICE‑related shootings and killings—and the political backlash they provoke—are not mere law‑and‑order stories; they signal a state losing social consent, increasingly reliant on force and spectacle (a truculent update to ancient Rome’s panem et circenses, or divide et impera) to maintain authority. Markets, meanwhile, ignore or opportunistically trade these signals until they no longer can. Political legitimacy and financial credibility thus decay in tandem, however unevenly paced.

The endgame here is not hyperinflation in the classic sense, but something more insidious: slow fiat devaluation, unevenly distributed and concealed through statistical adjustments and asset-price absorption. Purchasing power thus erodes while nominal stability is preserved. Society adapts downward; expectations reset lower. This is our direction of travel. Emergency capitalism does not collapse spectacularly—it exhausts legitimacy gradually, replacing active governance with passive crisis management, accountability with blame, and money with narrative. By the time devaluation is broadly recognised, it will no longer be vaguely reversible, let alone redistributable.

Hovering over all this is the AI narrative: the final great growth story propping up equity valuations, a last-chance saloon for ultra-financialised capitalism. Even insiders now acknowledge mega-bubble dynamics built on mountains of leverage. This is no glorious technological revolution; it is the latest financial costume party where cheap money is dressed up as innovation and everyone pretends it is sustainable. And when senior figures warn of an inevitable painful correction and markets shrug, that is more than denial—it is functional delusion; madness camouflaged as rationality. The truth is that AI has become a formidable liquidity sponge, absorbing huge amounts of excess capital amid absent economic dynamism. But when funding tightens or trillions in debt come due, that sponge might wring itself violently—unleashing a massive devaluation avalanche.

Seen together, these developments form a single architecture of immense fragility: central banks substituting liquidity for solvency; governments trading narratives for legitimacy; markets swapping leverage for growth. Currencies, bond yields, and social unrest sound the same warning note across the orchestra of approaching collapse. The pound, euro, yen, yuan, and dollar are all engaged in a slow, uneven repricing of trust. The real event is not any single crisis—not a shutdown, AI crash, or currency break—but the implosion of the insane coherence holding this hollowed out system together. When confidence finally snaps, expect no polite or gradual exit: it will cascade across markets, politics, and societies that have mistaken managed appearances for resilience. At that point the familiar actors will abandon the sinking ship. That is the crossroads we now face—if only we could see the wood for the trees.