The American New Dollar: How America Could Pay Every Dollar of Its Debt — and Still Default

The United States cannot run out of dollars, and that is precisely why the holders of American debt may

one day have reason to worry. Imagine a central bank, sovereign wealth fund or foreign government

that has spent decades accumulating one trillion dollars of United States Treasury securities. The

holdings are the product of trade surpluses, reserve management and confidence in what has long

been regarded as the deepest and safest sovereign debt market in the world. Then imagine that

Washington enters a period of severe fiscal strain. Interest costs are rising, deficits remain entrenched,

political agreement on tax increases or spending restraint is elusive and the volume of debt that must

continually be refinanced becomes progressively harder to ignore. Yet through all of this the United

States never misses a payment. Every coupon arrives, every maturing security is redeemed and no

creditor is asked to accept a restructuring, an extension of maturity or a reduction of principal. The

President can appear on television and state, truthfully, that America has honoured its debts in full. The

Treasury can say the same. The creditor’s account can confirm it, displaying the neat figure of

$1,000,000,000,000.

There is only one difficulty. Those are dollars, and the currency increasingly used by Americans to pay

their taxes, by Washington to issue its new debt, and by international companies to purchase

strategically important American-linked commodities is something else entirely. It is the AND, the

American New Dollar, and one AND now purchases twenty of the dollars in which that trillion-dollar

Treasury portfolio was originally denominated. The creditor has therefore been repaid every dollar it

was promised while simultaneously suffering an enormous loss of purchasing power relative to the

monetary system that has succeeded the old one.

There is no evidence that the United States is planning such a currency, no evidence that the

extraordinary new American-Venezuelan oil arrangements of 2026 are part of a hidden monetary

programme, and no evidence that Kevin Warsh’s monetary philosophy is intended to prepare the

ground for anything resembling a currency reset. The American New Dollar is a thought experiment,

and an intentionally extreme one, but it is useful precisely because it exposes an assumption so deeply

embedded in conventional discussion of American debt that it is rarely examined directly. A country

such as Argentina can run out of dollars. Greece, as a member of the euro, cannot create euros

independently. The United States is different because the overwhelming majority of its sovereign

liabilities are promises to deliver a currency that it itself creates. The conventional image of a debtor

eventually discovering that the cupboard is bare therefore does not fit neatly. Washington need never

announce that it has searched everywhere and simply cannot find the dollars required to pay its

creditors. In a narrow nominal sense, it can always find the dollars.

The more interesting question is what those dollars will mean.

That distinction matters because a United States Treasury security is not a promise to deliver a fixed

quantity of oil, wheat, gold, electricity, land or labour. It is not ordinarily a promise to preserve a fixed

quantity of purchasing power. It is a promise to pay dollars, and the extraordinary privilege of the

United States is that it has long controlled both the debts and the unit in which those debts are

expressed. The usual debate about American fiscal sustainability therefore focuses on whether the

country will tax more, spend less, grow faster, tolerate more inflation, repress savers through low real

interest rates, or allow the Federal Reserve to absorb part of the financing burden. All of these

mechanisms are real and all carry costs, but each assumes that the dollar itself remains the

unquestioned monetary endpoint. The AND hypothesis asks what happens if the dollar survives but its

supremacy does not.

1The fiscal arithmetic provides the background to the thought experiment. America does not face an

immediate inability to finance itself, but it is increasingly operating with levels of borrowing and interest

expenditure that would have looked extraordinary in previous periods of relative economic normality.

The problem is not simply the size of the debt stock but the interaction between persistent deficits,

demographic pressure, entitlement spending, refinancing requirements and the possibility that average

interest costs remain materially higher than they were during the ultra-low-rate era. A government with

monetary sovereignty has many more ways to manage such a burden than a household or company

does, yet those additional options do not make the burden disappear; they merely redistribute it.

Higher taxation moves resources from taxpayers to the state. Spending cuts move the cost onto

beneficiaries of government expenditure. Inflation transfers wealth from holders of nominal assets.

Financial repression lowers the real returns of savers. Monetary financing risks weakening confidence in

the currency. Yield-curve control can protect the Treasury at the cost of distorting financial markets.

Faster growth is the most attractive route, but growth cannot simply be ordered into existence at the

speed required whenever fiscal arithmetic becomes uncomfortable.

This is why the greatest risk to holders of American debt may not be that Washington refuses to repay

them. It may be that Washington discovers a way to repay them in full while changing the monetary

system around the obligation.

The simplest version of such a scheme does not work and should be dismissed immediately. If the

President announced that twenty old dollars would henceforth equal one American New Dollar, while

every salary, house price, bank balance, tax bill, corporate valuation and government debt was

converted at the same rate, nothing of economic substance would have happened. A salary of $100,000

would become AND5,000, a $500,000 house would become AND25,000, a $20 restaurant bill would

become AND1 and twenty trillion dollars of debt would become one trillion AND. The numbers would be

smaller but the underlying claims on real resources would be unchanged. Countries have removed

zeros from currencies repeatedly, sometimes to simplify accounting and sometimes to mark a

psychological break with inflationary failure, but changing the measuring unit cannot by itself improve a

government’s real solvency any more than measuring a table in metres rather than centimetres makes

the table shorter.

For the AND to matter, therefore, it cannot be a simple redenomination. It requires monetary

succession, and more specifically an asymmetric monetary succession in which the economic system

migrates towards a new unit while a large stock of legacy obligations remains denominated in the old

one. Imagine that the United States introduces the AND gradually. Federal salaries begin to be paid in it,

new government procurement is increasingly denominated in it, banks offer AND deposits, tax liabilities

are ultimately payable in it, Social Security and other federal transfers migrate into it, and over time the

Treasury begins issuing new securities denominated in AND. The Federal Reserve, or perhaps a

successor monetary authority operating under a revised statutory framework, manages AND according

to rules designed to make its future supply significantly more constrained than that of the old dollar.

Meanwhile the inherited stock of Treasury liabilities remains payable in legacy USD.

That is the critical distinction, because it allows Washington to argue that no promise has been

repudiated. A trillion-dollar bond remains a trillion-dollar bond and is paid with one trillion dollars when

it matures. The creditor receives exactly what the contract says it should receive. Yet if the domestic

economy, the tax system, newly issued government debt and important international trade increasingly

migrate into AND, the legacy dollar can begin to acquire a very different economic status. It remains a

valid currency, and indeed an enormously important one, but it is no longer necessarily the monetary

unit around which the future American system is organised.

2At first the government might attempt to establish a fixed conversion rate, perhaps twenty old dollars

to one AND, but maintaining full and unlimited convertibility would undermine the entire purpose of

the successor currency. If every holder of legacy dollars had an unconditional right to convert those

dollars into AND at the official rate, and if the authorities stood ready to create however much AND was

required to satisfy conversion demand, the supposed scarcity of AND would disappear. The old

monetary system would simply have been translated into a new unit. For the two currencies to diverge

meaningfully, convertibility would eventually have to be constrained, allowed to float or structured in a

way that treated different categories of claims differently. Once that happened, the market rather than

a presidential proclamation would determine whether AND commanded a premium to the old dollar.

This is also the point at which the legal difficulties would become formidable. The United States has

constitutional protections surrounding public debt, and the Supreme Court’s experience with gold

clauses in the 1930s shows that Congress’s power over money is not entirely separate from questions

about the sanctity of government obligations. If creditors could demonstrate that legacy dollars had

been deliberately maintained as a weaker monetary species for the purpose of reducing the real value

of federal debt, they would inevitably argue that repayment in form had become repudiation in

substance. The government would respond that nominal contracts had been honoured exactly as

written and that the Constitution does not guarantee a creditor an immutable quantity of purchasing

power. Inflation already reduces the real value of nominal bonds without converting every episode of

unexpected inflation into a legal default. Exchange-rate movements alter what foreign creditors can buy

with repaid dollars without changing the contractual status of Treasury obligations. The AND hypothesis

pushes that familiar distinction towards an extreme and uncomfortable edge: if a state has always

possessed the ability to change the real value of the currency in which it borrows, does creating a

successor currency fundamentally alter the principle, or merely make the mechanism impossible to

ignore?

The legal argument would be fierce, but the economic challenge would be even more immediate,

because no government can simply declare a new currency to be superior and expect the world to

comply. Money is not valuable because a legislature says that it is valuable. It becomes valuable

through a combination of scarcity, usefulness, confidence, enforceability and network effects. The

existing dollar possesses all of these on an extraordinary scale. It remains central to global reserves,

trade invoicing, foreign-exchange markets, international lending, derivatives, collateral and the storage

of private wealth. The depth of the Treasury market reinforces the dollar, while the dollar’s international

role reinforces demand for Treasuries. Banks hold dollars because their clients need dollars, exporters

accept dollars because other exporters accept dollars, central banks hold dollars because the markets

in which those dollars can be invested are deep and liquid, and investors value those markets because

the rest of the world already uses them. Dollar dominance is therefore not simply a matter of American

GDP or political prestige. It is an ecosystem.

Any AND serious enough to become a successor rather than a cosmetic redesign would have to create

an ecosystem of its own.

This is where Warsh’s Jackson Hole intervention becomes interesting, not because it provides evidence

for the AND, but because it supplies an intellectual vocabulary for imagining a harder American

monetary regime. His insistence that money matters, his hostility to routine reliance on unconventional

central-bank tools, his desire to restore the informational role of markets and his emphasis on discipline

all point towards a monetary philosophy very different from one in which every fiscal or financial shock

is eventually met with a larger central-bank balance sheet. If a successor currency were launched under

rules explicitly designed to prevent the monetary authority from creating unlimited amounts of AND

simply to service inherited debt, then the distinction between the old and new units would become

intelligible. Legacy dollars could remain plentiful because the United States still needed them to honour

3legacy claims, while AND would be governed by a stricter rule intended to convince savers that the new

unit could not be diluted for the same purpose.

The precise form of such a rule could vary. It might involve a hard ceiling on the rate of monetary-base

expansion, a commitment linked to inflation or nominal GDP, statutory restrictions on direct or indirect

Treasury monetisation, or a narrow balance-sheet mandate that permitted large-scale intervention only

under defined emergency conditions. None of these would guarantee credibility, because every rule

created by politicians can eventually be altered by politicians, but that is also true of almost every

monetary constitution in history. What matters for the thought experiment is that the AND would need

to be scarce not because the government announced an arbitrary exchange rate but because markets

believed future supply would be credibly constrained.

Even that might not be enough. A monetary rule is still a promise, and the history of money is filled with

promises abandoned when fiscal or political pressure became sufficiently intense. The natural instinct is

therefore to ask whether the AND could be anchored to something outside the discretion of

Washington, which immediately raises the idea of commodity backing. Yet a literal return to a gold

standard would reproduce many of the problems that caused governments to abandon convertibility in

the first place. If holders of AND could redeem their currency at a fixed rate into gold, the United States

would have created an externally constrained monetary system vulnerable to reserve pressure,

speculative attack and deflationary adjustment. The same problem would arise if AND were literally

redeemable into oil. A central bank does not want international creditors arriving at its door demanding

millions of barrels of heavy crude any more than it wants them demanding gold bars.

The more plausible idea is not commodity-backed money in the traditional sense but commodity-

supported money, in which the currency is associated with a broad base of real assets, productive

capacity and recurring resource revenues without providing a direct redemption right. Such a system

could be thought of as Bretton Woods without redemption. The value of the currency would not derive

from a promise that AND1 could be exchanged for a fixed quantity of gold or oil, but from the credibility

of the economic system that generated continuing demand for AND and from the knowledge that the

issuing state possessed immense real productive resources behind its fiscal and monetary capacity.

America is unusually well placed to make such an argument because it is already a resource

superpower. It possesses large hydrocarbon reserves, immense agricultural production, extensive

mineral rights, gold, federal lands, sophisticated technology, enormous capital markets and an

industrial system capable of transforming raw commodities into higher-value products. An AND

resource framework could therefore draw upon the totality of American productive capacity rather than

pretending that the currency needed a single commodity sitting in a vault. In this context the new

Venezuelan oil arrangement becomes especially provocative, not because it proves anything about

monetary planning, but because it demonstrates how a resource that appears geographically external

can become functionally integrated into an American economic sphere.

Venezuela’s proven oil reserves are extraordinary, but the simple number is misleading. The country

possesses some of the largest petroleum reserves in the world, much of them concentrated in extra-

heavy crude in the Orinoco Belt, yet enormous quantities of hydrocarbons underground are not the

same thing as an immediately monetisable asset. Extra-heavy oil is technically difficult and expensive to

extract, transport and refine. Development requires capital, infrastructure, expertise and political

stability. Production takes place over decades, costs are substantial and the value of future output

depends on oil prices that nobody can know in advance. Venezuela retains sovereign rights over its

natural resources, and any agreement involving foreign companies therefore remains vulnerable to

political change, legal challenge and future renegotiation. It would be absurd to multiply tens of billions

4of barrels by a spot oil price and announce that the United States had suddenly acquired several trillion

dollars of backing for a new currency.

The interesting point lies elsewhere. Venezuelan heavy crude is unusually well matched to sophisticated

refining capacity on the United States Gulf Coast, where large complex refineries were historically

configured to process precisely the sort of heavy, high-sulphur crude produced by Venezuela and

Mexico. For decades the relationship was economically complementary. Venezuela possessed difficult

crude in enormous quantities, while the United States possessed nearby refineries capable of

transforming that crude into high-value fuels and petroleum products. The deterioration of Venezuelan

production, sanctions and political estrangement fractured that relationship, but the physical logic

never disappeared.

This matters because it reveals why the refinery may be as important as the oilfield. Raw resources are

not equivalent to economic power. Venezuela has demonstrated that possessing spectacular geological

wealth does not guarantee the ability to turn that wealth into durable prosperity. The value chain

matters: capital must finance extraction, technology must make production viable, infrastructure must

move the crude, refineries must process it, insurers must cover it, banks must finance cargoes, markets

must price the products and buyers must exist at the other end. The economic value of the resource

therefore emerges from a system rather than from geology alone.

A reconstructed American-Venezuelan energy relationship could form one element of a much larger

productive sphere in which Venezuelan reserves connect to American capital, American technical

expertise, Caribbean shipping routes, Gulf Coast refineries, American finance and global markets. The

American New Dollar would then be supported not by a promise to exchange banknotes for oil but by

the resource base of a reconstructed American economic sphere. That sphere might include domestic

energy, gold, agricultural production, critical minerals, federal resource revenues, advanced technology,

North American industrial capacity and long-term claims on strategically integrated foreign production.

The crucial monetary question would then become not who owns the barrels underground but in which

currency the economic activity surrounding those barrels is conducted. If selected petroleum contracts

associated with this American-centred system were denominated in AND, then foreign purchasers

would need AND not because Washington had instructed them to hold it but because there were

economically desirable things they could obtain with it. At that point the analogy with the petrodollar

becomes far more useful than the analogy with the gold standard. The dollar was never redeemable for

Saudi oil, but oil’s centrality to the global economy helped generate recurring demand for dollar

liquidity because major energy transactions were priced and settled in dollars. Those dollar balances

then flowed through banks and financial markets, often ending up in dollar-denominated assets,

including Treasuries.

An AND-centred energy system could theoretically recreate that mechanism on a smaller scale.

Venezuelan-linked crude might be one starting point. American LNG, selected petroleum products or

strategically important minerals might follow. The United States would not need to denominate every

barrel of global oil in AND. It would need enough economically significant trade to create persistent

transactional demand for the currency. Foreign companies would then maintain AND balances, banks

would develop AND clearing, derivative markets would emerge to hedge AND exposures, commodity

exporters would look for AND-denominated assets in which to invest their receipts, and the Treasury

could begin issuing AND securities to satisfy that demand. The critical transition would occur when a

private investor somewhere in Asia or Europe voluntarily chose an AND-denominated American bond

over a legacy-dollar Treasury because the new unit had become a more credible store of value. At that

point the currency would no longer be merely an administrative project. It would have acquired

monetary life of its own.

5The Venezuelan element immediately raises an obvious objection, because the entire architecture

appears to depend upon political commitments made by a country with a long history of resource

nationalism. Venezuela nationalised its petroleum industry in the twentieth century and under Hugo

Chávez again forced major restructurings that led to bitter disputes with foreign oil companies. Why

should an American investor in 2026 assume that a government elected in Caracas in 2038 or 2045 will

honour contracts signed by its predecessors? No answer can eliminate that risk, and any serious

valuation of Venezuelan production would have to discount it heavily.

What changes, however, is the potential cost of expropriation once integration has deepened. Imagine

that by 2040 tens of billions of dollars of American private capital have been invested, Venezuelan

output has risen substantially, specialised American technology and expertise are embedded in the

production chain, Gulf Coast refiners again depend upon Venezuelan feedstock, Caracas receives large

streams of tax and royalty revenue from the arrangement, and part of the trade is financed, insured and

settled through an AND-based system. A future government can still announce nationalisation, but it

would no longer be confiscating a set of isolated oilfields. It would be attempting to detach those fields

from much of the capital, technology, refining capacity, insurance, finance and market access that

allowed them to generate their full value.

The United States would also possess a wide range of economic coercive instruments short of military

force, including sanctions, restrictions on technology, asset freezes where legally available, exclusion

from capital markets, pressure on financial intermediaries and potentially measures aimed at shipping

and insurance. None of this means that Washington would possess an automatic legal right to

intervene militarily because Venezuela changed its petroleum policy, and any serious discussion should

avoid slipping from economic deterrence into casual assumptions about war. Geography nevertheless

matters. Venezuela sits on the Caribbean rim, close to the Gulf of Mexico and close to the industrial

system with which its crude is most naturally integrated. It is therefore operating within a region where

American economic and military reach is unusually strong.

This is the uncomfortable dimension that simplistic theories of commodity backing usually ignore. A

barrel underground is not monetary backing merely because geological surveys say it exists. It becomes

economically relevant when there is a credible claim upon its future production, and that claim becomes

valuable only when investors believe it can still be enforced decades later. Property rights are not

metaphysical objects floating above politics. They are sustained by institutions, contracts, courts,

economic dependency and, ultimately, the balance of power surrounding them. Fort Knox required

guards; a resource-supported AND would require something broader, not necessarily soldiers standing

beside oilfields, but a political and strategic system capable of making long-term economic claims

credible.

The old Bretton Woods order itself depended on far more than gold bars. The United States in the

aftermath of the Second World War possessed immense industrial capacity, the world’s most important

financial system, political institutions that other states broadly trusted, and military power capable of

underwriting a wider order. The dollar’s position today remains similarly inseparable from the system

behind it. Courts, capital markets, banking infrastructure, military power, technological leadership,

taxation capacity and political credibility all help make a dollar claim valuable. The AND thought

experiment simply makes explicit something conventional monetary discussion often treats as

background: money derives power from the ecosystem that stands behind it.

That raises the central geopolitical challenge. If America attempted to reinforce its monetary system by

integrating resources, finance and settlement around a successor currency, it would not be acting in a

vacuum. BRICS countries are already debating and developing parts of an alternative architecture,

although the reality is subtler than the repeated headlines claiming that a gold-backed BRICS currency

6is about to overthrow the dollar. There is no functioning BRICS central bank, no common BRICS

banknote and no agreed monetary union. The members themselves have different strategic objectives

and would be deeply reluctant to surrender monetary sovereignty to one another. India is unlikely to

accept Chinese monetary dominance merely because it dislikes aspects of dollar dominance, and

countries with very different inflation histories, capital controls, financial systems and political

structures would face enormous difficulty sharing a conventional currency.

The more important developments are taking place underneath that headline. BRICS members have

been exploring greater use of national currencies in trade, payment-system interoperability, alternative

clearing arrangements, possible connections between central-bank digital currencies, commodity

exchanges and mechanisms that could reduce dependence upon dollar settlement. Russia has

promoted the idea of a BRICS grain exchange and broader commodity-pricing infrastructure, while

proposals in and around BRICS circles have examined wholesale settlement units linked partly to gold

and partly to participating currencies. These ideas remain embryonic and should not be confused with

an operational replacement for the dollar, yet they point towards a strategy that may be far more

plausible than trying to invent a BRICS equivalent of the euro.

BRICS does not need a common currency to weaken the dollar’s network effects. It needs to create

fewer situations in which its members require dollars.

That distinction is profound. Suppose India buys Russian oil in rupees. The transaction has avoided the

dollar, but Russia then accumulates rupees and must decide what to do with them. If Russia cannot

easily buy enough Indian goods, invest the balances freely or convert them into assets of similar

liquidity and reliability to dollar securities, the apparent solution simply shifts the problem one stage

down the chain. The genius of the existing dollar system is not merely that oil can be priced in dollars. It

is that the recipient of those dollars can recycle them through an enormous financial ecosystem. The

Saudi exporter receiving dollars can buy Treasuries, equities, real estate, corporate bonds or goods,

lend the dollars onward, hedge them cheaply or leave them in highly liquid bank accounts. The currency

works because the financial plumbing surrounding it works.

A serious BRICS challenge would therefore need to build plumbing rather than merely announce a rival

unit. One can imagine a gradual progression in which Russian energy trades through non-dollar

channels, Iranian oil follows, Brazilian agricultural products acquire alternative settlement routes, grain

is priced through new benchmark exchanges, metals migrate into the same system, Gulf producers

conduct a portion of their trade outside the dollar and interoperable payment infrastructure lowers the

friction involved in settlement. A common accounting mechanism might eventually emerge at the

wholesale level, not as a currency used by ordinary consumers but as a device through which

participating countries balance transactions without continuously passing through New York, London or

the dollar banking system.

No individual development would overthrow the dollar, and that is precisely why the process could

matter. Network effects rarely collapse because a competitor announces itself one morning. They erode

at the edges. A transaction that previously required dollars no longer does. Then another. Then another.

The dollar remains dominant, but the marginal need for it declines.

For the United States, the significance of this process extends beyond prestige because the dollar’s role

in commodity trade, reserves and international finance feeds directly into demand for dollar assets.

Foreign institutions that receive and hold dollars need places to invest them, and Treasury securities

have long provided the most obvious combination of safety, liquidity and scale. This creates a

reinforcing circle: the world uses dollars, therefore the world accumulates dollar balances; those

balances seek dollar assets, therefore Treasuries enjoy deep foreign demand; the depth of the Treasury

7market reinforces the dollar’s attractiveness as a reserve currency; and that reserve status encourages

further dollar use. The relationship is not mechanical, but it is powerful.

If BRICS and other states gradually develop commodity and payments architecture that reduces the

amount of dollar liquidity generated by international trade, foreign Treasury demand need not

disappear for the effect to matter. It may simply become slightly less automatic. With a modest

American debt burden, such a change might be absorbed almost invisibly. With enormous refinancing

needs and net interest expenditure already placing increasing pressure on the federal budget, even

relatively small increases in the yield required to attract the marginal buyer could compound over time.

This creates a much more interesting causal relationship between BRICS and the AND than the

conventional story in which America launches a new currency and BRICS responds. It is equally possible

to imagine the pressure running in the opposite direction. A gradual reduction in structural dollar

demand could make financing the American state more expensive at precisely the moment when fiscal

pressures are intensifying, which in turn could encourage Washington to think more aggressively about

how to preserve the privileges of monetary centrality while separating those privileges from some

portion of the liabilities accumulated under the existing system.

The AND could therefore be understood not merely as an American answer to debt, but as an American

answer to a world in which commodity trade itself is becoming contested monetary terrain.

Venezuela then becomes especially significant because the same physical resource can reinforce

completely different financial systems depending on how the surrounding trade is organised. Imagine a

barrel of Venezuelan heavy crude extracted with American capital and technology, moved north

through the Caribbean, processed in a Gulf Coast refinery, financed through American banks, insured

within American-linked markets and sold through contracts settled in AND. That barrel contributes to

the liquidity and usefulness of the AND ecosystem. Now imagine the identical barrel moving eastward,

priced against a BRICS-oriented energy benchmark, financed outside the US system, settled through

alternative payment rails and generating proceeds that are recycled into gold, BRICS securities or a

future wholesale settlement unit. The geology has not changed. What has changed is the monetary

geography surrounding the barrel.

This is why debates about who “owns” Venezuelan oil can miss the more important issue. The monetary

significance of a resource does not depend solely on legal title to the molecules underground. It

depends on who finances extraction, who provides the technology, who controls the processing

capacity, whose institutions insure and settle the trade, whose exchanges establish the benchmark

price and where the resulting financial surplus is recycled. The struggle is not simply over resources. It

is over which ecosystem captures the economic activity created by those resources.

Seen in this way, a future contest between AND and BRICS would not really be AND versus yuan, still

less AND versus some imagined BRICS banknote. It would be ecosystem versus ecosystem. On one side

would stand the deepest capital markets in the world, sophisticated legal and financial institutions,

immense technological capacity, North American energy and agricultural resources, potentially

reintegrated Venezuelan hydrocarbons, world-class refining and the strategic reach of the United

States. On the other would stand an extraordinary concentration of raw materials and demand: Russian

oil and gas, Iranian hydrocarbons, Gulf energy, Brazilian agriculture and iron ore, African minerals,

Chinese industrial processing and the immense consumption requirements of China and India.

America’s greatest advantage would be finance and institutional depth. BRICS’ great potential

advantage would be control over a very large share of the physical resources and demand that global

commerce requires.

8The deeper question is therefore who succeeds in turning physical resources into monetary power.

This is where the AND debt mechanism returns to the centre of the argument. Suppose the new

currency gradually succeeds and the old dollar depreciates relative to it until one AND purchases twenty

legacy dollars. Our foreign creditor’s one trillion-dollar Treasury portfolio eventually matures. The

Treasury pays every dollar due. The creditor receives one trillion dollars, but in the new American

monetary system those dollars purchase only AND50 billion.

Economically, the creditor has suffered something that looks very much like a gigantic haircut. Legally,

Washington may still insist that no default has occurred because the contractual obligation was

denominated in dollars and dollars were delivered. The creditor would reply that the entire dual-

currency structure had been engineered to deprive those dollars of the economic status they possessed

when the debt was issued. The distinction between a lawful change in monetary value and a disguised

repudiation of public debt would become one of the largest constitutional and contractual disputes in

American history.

Yet even before a court heard the case, financial markets would react, and this may represent the

greatest practical weakness of the entire hypothesis. Creditors are not passive. The moment investors

became convinced that Washington intended to subordinate legacy dollars, they would demand higher

yields on legacy debt or refuse to hold it altogether. Treasury prices could fall sharply. Foreign reserve

managers would diversify. American banks, insurers, pension funds and money-market funds would

suffer losses alongside foreign governments, because Treasury securities are not merely debts owed to

China, Japan or Saudi Arabia. They form the collateral foundation of modern finance.

This is where simplistic fantasies of inflating away foreign creditors collapse. America would be inflicting

much of the loss upon itself. Treasuries sit on domestic balance sheets, support repo markets, function

as liquidity buffers, anchor the pricing of countless financial instruments and underpin the perception

of what constitutes a risk-free asset. Damaging that market in order to reduce the real burden of

federal debt could destabilise the very banking and financial system through which the federal

government finances itself.

The problem would spread far beyond Treasuries. The existing dollar is embedded in mortgages,

corporate bonds, insurance contracts, derivatives, leases, bank deposits, international loans,

stablecoins and offshore dollar markets. A household with a thirty-year fixed-rate mortgage

denominated in legacy dollars would naturally want to keep paying the depreciating currency while

earning wages in AND. A bank would naturally object if its assets remained in weakening dollars while

its liabilities migrated into the new currency. Converting private debts into AND while leaving Treasury

obligations in USD would expose the political purpose of the exercise immediately. Leaving everything

untouched would transfer enormous wealth between debtors and creditors. Every choice would create

winners, losers and litigation.

Eurodollars would create another problem because vast quantities of dollar claims exist outside the

direct jurisdiction of the United States. Stablecoins would raise questions about which monetary species

their reserves represented. Derivative contracts would require decisions about reference rates and

settlement currencies. Companies with revenues in AND and debts in USD could experience windfall

gains, while companies on the opposite side would suffer catastrophic mismatches. The transition

would amount to one of the largest exercises in contract reinterpretation ever attempted.

Capital controls might become tempting because holders of legacy dollars would rush to acquire AND

before further depreciation, but controls would attack one of the defining attributes that helped make

9the dollar dominant in the first place: the ability to move capital through open and liquid markets. The

Federal Reserve might then be forced to intervene heavily in legacy Treasury markets to prevent a

disorderly collapse in yields and collateral values, yet such intervention would reproduce exactly the

sort of fiscal dominance that a hard-money AND was supposedly designed to escape. To establish the

new currency’s credibility, Washington would need to convince the world that AND would never be

printed simply to rescue the Treasury. To survive the transition, Washington might discover that it

needed the central bank to rescue the Treasury on an unprecedented scale.

This is the central paradox of the AND. Its success depends upon proving that America has learned

monetary discipline at the very moment when its creation would appear to demonstrate the opposite.

There is a second paradox that may be even harder to overcome. If Washington deliberately weakens

the currency in which old Treasury obligations are denominated, why should investors believe that it will

never do the same thing to AND? The American government would effectively be saying that one set of

sovereign promises may be subordinated for reasons of fiscal necessity, while asking investors to trust

that the next set of sovereign promises is sacred. A resource anchor could help. A restrictive monetary

rule could help. Commodity settlement could create genuine demand. None of them can fully substitute

for institutional trust.

This is why the most aggressive version of the AND hypothesis probably fails unless the alternative is

already sufficiently bad. A government enjoying stable markets and easy financing would have little

reason to risk destroying the credibility of the Treasury system in order to execute a spectacular

monetary trick. The scenario becomes more plausible only in a world where every conventional option

has become politically or economically painful: debt servicing is consuming an ever larger portion of

federal revenue, investors are demanding higher yields, entitlement reform is politically blocked, taxes

cannot be raised sufficiently, inflation prevents unlimited monetisation and foreign demand for

Treasuries is no longer as automatic as it once appeared. At that point the choice would not be between

the existing dollar system and a costless AND. It would be between several unpleasant forms of

adjustment.

Governments behave differently when every available option is bad.

This also suggests that the most plausible version of monetary succession would be far more gradual

than a dramatic weekend conversion at twenty to one. AND might begin as a wholesale or strategic

settlement currency, perhaps used initially for selected commodity contracts, new categories of federal

borrowing and transactions where Washington wanted to create a hard-money reputation. Legacy USD

would continue to circulate domestically and internationally. Over time, AND-denominated securities

could develop their own market, American banks could begin offering AND accounts, companies might

invoice selected exports in AND and foreign central banks might add modest quantities to their reserve

portfolios. The two currencies could coexist for years, even decades.

The distinction would initially appear technical, but the incentives could gradually diverge. Legacy USD

would remain extraordinarily liquid and useful for everyday transactions, yet it would carry the

accumulated liabilities of the old fiscal system. AND would be marketed as the currency in which the

United States intended to save, invest and issue long-duration future obligations. The old dollar might

become the transactional currency of the inherited world while AND became the savings currency of the

successor system.

Such a transition would reduce the spectacular 95 per cent haircut implied by a sudden twenty-to-one

devaluation, but it would make the underlying idea much more plausible. The important point is not the

10exact ratio. The ratio is merely a device for illustrating what happens when two monetary species that

begin as accounting equivalents acquire different credibility over time. If markets increasingly prefer

AND for long-term saving, strategic trade and new American debt, while legacy dollars remain

abundant because Washington continues using them to honour old obligations, the real value of those

obligations can decline without the dramatic theatre of formal default.

The historical irony would be remarkable. America might respond to concerns about excessive fiat-

money creation not by abandoning fiat money but by creating a second fiat currency whose central

selling point was that it would not be treated like the first.

This is why Venezuela, Warsh and BRICS belong in the same argument even though none of them

provides evidence that the AND is actually being planned. Warsh supplies the language of monetary

discipline. Venezuela supplies an example of how strategically important real resources can be

integrated into a broader American productive sphere. Gulf Coast refining demonstrates that the

economic value lies in the system that transforms those resources rather than in barrels underground.

The BRICS debate demonstrates that competitors are already thinking about how commodity trade,

payment infrastructure and monetary dependence interact. The American debt problem provides the

incentive that could one day make a successor monetary architecture politically imaginable.

Taken together, they force us to reconsider what “backing” means in the twenty-first century. The AND

would not be backed by oil in the nineteenth-century sense that a note could be presented and

redeemed for a specified physical quantity. It would instead be supported by an economic system in

which strategically important goods were produced, transformed, financed and traded through

institutions that generated demand for the currency. Oil would matter because oil contracts created

AND transactions. Refineries would matter because they transformed difficult crude into valuable

outputs. American capital markets would matter because exporters receiving AND needed somewhere

to invest it. New Treasury securities would matter because they supplied the safe assets required to

recycle those balances. Military and geopolitical power would matter because long-term claims on

strategic resources are credible only if participants believe the system protecting those claims will

survive political shocks.

In this sense the old petrodollar provides a more useful model than gold. The brilliance of the dollar’s

international role was never that oil physically sat behind every banknote. It was that globally

indispensable transactions created dollar demand, those transactions generated dollar balances, those

balances required financial assets and the American system supplied them at unparalleled scale. The

AND would attempt to reproduce this circular reinforcement around a new monetary unit.

BRICS, meanwhile, would attempt to interrupt the circle. It would not need to convince the world to

abandon the dollar in one dramatic act. It would need to persuade an Indian refiner that Russian oil can

be purchased without it, a Brazilian exporter that agricultural products can be financed without it, a Gulf

producer that a portion of energy trade can be settled through alternative rails, and central banks that

some resulting balances can be recycled outside the Treasury market. Each decision would be modest,

but together they could slowly weaken the automatic relationship between commodity trade and dollar

demand.

That is why the battle over the monetary future may ultimately be less about currency symbols than

about infrastructure. The winner will not necessarily be the country that prints the most attractive

banknote or even the country with the largest GDP. It will be the system that succeeds in connecting

real trade, deep financial markets, credible institutions, reliable settlement, strategic resources and

attractive stores of value into the most useful network.

11The United States already possesses the most powerful such network ever created. This is precisely why

the AND thought experiment should not be mistaken for a prediction of imminent dollar collapse. The

dollar remains extraordinarily dominant. The argument is almost the reverse. America’s monetary

privilege has been so successful that it has allowed the United States to finance an immense stock of

obligations in its own currency on terms that would be unavailable to almost any other sovereign. If

those liabilities eventually become politically difficult to sustain, Washington may be tempted not to

surrender its monetary privilege but to find a way of preserving the privilege while separating it from

some portion of the liabilities accumulated under the old regime.

That is the real purpose of AND.

Keep the network, but change the unit. Preserve American monetary centrality while rebuilding scarcity.

Allow the old dollar to continue fulfilling inherited obligations while directing the future economy

towards the new one. Attach the new currency to strategically important transactions so that foreigners

have reasons to demand it. Use America’s productive and resource sphere to create those transactions.

Issue new safe assets denominated in the new unit so that international surpluses can be recycled.

Above all, continue paying every legacy dollar promised so that Washington can insist that no

conventional default has occurred.

Would the scheme work in its most radical form? Probably not without enormous legal, financial and

geopolitical disruption. Markets would anticipate it, domestic creditors would suffer alongside foreign

ones, Treasury collateral would be damaged, capital flight could become destabilising and the credibility

cost might destroy the new currency before it had established itself. If the purpose were transparently

to cheat existing creditors while avoiding the word default, the result could be self-defeating.

In a slower and less confiscatory form, however, the underlying principle becomes harder to dismiss.

Parallel currencies can coexist. Governments can determine the units in which taxes are paid.

Commodity settlement can generate structural currency demand. Monetary regimes do change. Old

sovereign liabilities can survive into new monetary systems. New government securities can coexist

with inherited ones. Digital payment technology makes administering multiple monetary instruments

considerably easier than it would have been in earlier eras. None of this makes the AND likely, but it

makes monetary succession less fantastical than it first appears.

The real obstacle is not technology. It is trust.

The question is whether any American government would knowingly risk the institutional credibility

that makes Treasury securities so valuable in order to reduce the burden of those very securities. In

normal circumstances the answer should be no. The reputation of the United States as a debtor is itself

an enormously valuable national asset, and destroying it casually would be economically irrational. Yet

sovereign decisions are rarely made against a menu containing one painful option and six painless

alternatives. If America ever confronted a combination of severe fiscal stress, politically blocked

adjustment, elevated inflation and a slowly fragmenting global commodity system, the relevant

comparison might no longer be between AND and the comfortable continuation of the present order. It

might be between AND and some mixture of inflation, repression, explicit restructuring, fiscal crisis and

central-bank subordination.

At that point the thought experiment becomes less about predicting a particular policy than about

identifying the extraordinary flexibility created by monetary sovereignty.

A conventional debtor fears running out of the thing it has promised.

12America controls the thing.

That is its greatest financial strength.

It is also what makes the concept of repayment more ambiguous than it first appears.

Imagine, then, that several decades from now the American economy has not collapsed but adapted.

Artificial intelligence has lifted productivity, energy production has expanded, Venezuelan heavy crude

again moves through an integrated Caribbean-Gulf system, sophisticated refineries turn it into high-

value products, American LNG travels across the oceans, strategic minerals are developed throughout a

wider American-aligned resource network and some of these commodities are priced in AND. The

Treasury has developed a deep AND yield curve. Global banks clear the currency. Companies borrow

and hedge in it. Central banks hold it. The Federal Reserve guards its supply with the discipline that the

old system was accused of losing.

The legacy dollar has not vanished. Quite the contrary. There are trillions of them in circulation and

trillions more represented by financial claims. It remains useful, liquid and familiar, but it increasingly

belongs to the inherited monetary order rather than the one around which new American wealth is

organised.

Our foreign creditor still owns the Treasury portfolio accumulated decades earlier. The final securities

mature and there is no dramatic announcement from Washington. There is no emergency summit, no

IMF rescue, no repudiation, no television images of pensioners outside closed banks. The Treasury

simply sends the money it promised.

The account receives one trillion dollars.

Every coupon has been paid, every bond has been redeemed and every contractual dollar has been

delivered. The United States can point to the record and say that throughout the greatest sovereign-

debt adjustment in modern history it never once defaulted.

Yet the oil is now priced in AND, the new Treasuries are denominated in AND, American taxes are paid in

AND and the assets the world increasingly wants are valued in AND. The creditor possesses precisely

what Washington promised to give him, but the monetary system that once gave those promises their

meaning has moved elsewhere.

The United States has paid its debts.

Every last dollar.

Nobody had remembered to ask which dollar.