It is a phrase synonymous with American dominance, especially when it came to matters financial.
asserted
it → come → matters
In God We Trust.
asserted
We → trust → God
While it first appeared on a 2-cent coin in 1864, it wasn't officially adopted until 1956, when Dwight D Eisenhower declared it the national motto.
asserted
it → appear → 1956
Now, the phrase appears on every US coin and printed currency note.
asserted
phrase → appear → coin
A hint of moral superiority, combined with equal parts economic and military power, the greenback and its position as the world's reserve currency have symbolised America's global hegemony since the end of World War II.
asserted
greenback → combine → II
But the crown is beginning to slip.
asserted
crown → begin → ?
Investors have begun to lose faith in the once almighty US dollar, and in the past few weeks, a coup has been launched against Washington.
asserted
coup → begin → Washington
They first forced the newly re-elected president's hand in April last year after he launched his "Liberation Day" tariffs, and he duly walked back some of the trade penalties.
asserted
he → force → penalties
But now they are taking no prisoners.
asserted
they → take → prisoners
Investors are dumping US dollar debt in a vicious market rout, forcing American and global interest rates to their highest levels in decades.
asserted
Investors → dump → decades
Alarmed by a national debt that has doubled since Trump first took office in 2016 and which has now expanded beyond $US40 trillion ($57 trillion) — along with soaring inflation driven by a Middle East war that is becoming increasingly intractable — investors seeking safety are beginning to look elsewhere.
asserted
investors → double → safety
Trust in America, the foundation of US economic power, is fraying.
asserted
Trust → fray → power
And that is likely to have a profound impact on the Reserve Bank of Australia as it meets today in what most economists believe is a foregone conclusion: that we will see a fourth rate hike for 2026.
asserted
we → have → 2026
Central banks lose control
asserted
banks → lose → control
They either follow interest rate decisions to align their trades with the monetary mandarins or desperately try to figure out what the next central bank move may be.
Right now, the tables haven't just turned; they've been overturned.
uncertain
they → follow → mandarins
Money markets are calling the tune, and investors are dictating interest rate policy to those pulling the levers.
asserted
investors → call → levers
The US Federal Reserve, led by the newly appointed Kevin Warsh, who Trump installed to specifically cut interest rates, has just delivered its first rate hike in more than three years.
asserted
Trump → lead → years
It had no choice.
asserted
It → have → choice
Investors are dumping US government debt.
asserted
Investors → dump → debt
In order for America to continue funding its ever-increasing deficits, it must now offer much higher interest rates to attract global cash.
asserted
it → continue → cash
They're demanding higher returns to compensate for the increased risk.
asserted
They → demand → risk
That's increasing America's annual interest bill, which already outstrips the mammoth annual defence spend, thereby creating a snowballing federal budget problem.
asserted
which → increase → problem
It is the international investment capital, and the US dollar remains the global reserve currency.
asserted
dollar → remain → ?
America, despite its diminished role, still calls the shots on the cost of cash.
asserted
America → diminish → cash
And despite their ambitions, neither China nor the European Union are capable of replacing America, at least in the medium term.
asserted
China → replace → term
When it comes to the economy, the US will continue to underpin and influence what happens across the planet.
asserted
what → come → planet
A month ago, US 10-year government bonds — the global benchmark for risk-free investments — carried a yield, or interest rate, of about 4.65 per cent.
asserted
bonds → carry → cent
That's had a corresponding impact on Australia's money markets.
asserted
That → have → markets
From less than 5.1 per cent a month ago, our similar rate has now jumped to more than 5.4 per cent.
asserted
rate → jump → cent
With a cash rate of 4.35 per cent, the RBA has no choice but to hike.
asserted
RBA → have → choice
Even allies look elsewhere for financial safety
In Ernest Hemingway's The Sun Also Rises, there's a conversation that neatly sums up America's current situation.
asserted
that → look → situation
"How did you go bankrupt?" the protagonist asks.
asserted
protagonist → go → ?
But the trend appears to be accelerating.
asserted
trend → appear → ?
A decade ago, US dollar-denominated debt accounted for 65 per cent of global central bank holdings.
asserted
debt → denominate → holdings
That's now dropped to 56 per cent.
asserted
That → drop → cent
Once the biggest investor in US government debt, China has been actively selling down its holdings as relations have deteriorated, an unsurprising trend.
But now European investors are following suit.
asserted
investors → sell → suit
Norway's Sovereign Wealth Fund this month said it would reduce its holdings of US Treasuries by almost a third as it looked for stronger returns elsewhere.
asserted
it → say → returns
Other nations have been switching to gold.
asserted
nations → switch → gold
Last year, gold reserves for the first time surpassed official holdings of US government securities.
asserted
reserves → surpass → securities
Some have been rattled by America's willingness to use its control of the financial system to sanction adversaries like Russia and Iran.
asserted
Some → rattle → Russia
…and 18 more, not listed.
The Aporia