Pozsar's Bretton Woods III: The Framework

the set of US adversaries is not presently shrinking, to put it mildly

Normally that would be a fair point (and maybe it was valid in 2022).

But given the US approach to foreign policy in 2025, one could argue that the list of countries that “have a contentious relationship with the US” (or, maybe more accurately, the other way around) is a lot longer and less clear-cut today than it was a few years ago.

Brazil and India are actually already being targeted by the current administration

>and have a contentious relationship with the US

I sort of feel many countries that used to not have a contentious relationship with the US have one now and thus the observation of outlier status doesn't really work anymore.

The point is that any nation could face sanctions if their interests do not align with the US. There are many countries that have been sanctioned or threatened with sanctions. I think the risk of confiscation is not the only risk worth mentioning. The Fed has been printing money with abandon, and there is no sign that the national debt will ever be paid.

You're right that Russia was an outlier in 2022; but as others already said, the landscape has shifted considerably since then. The argument isn't that most countries face immediate sanctions risk, but that the uncertainty itself changes the risk calculation. Even traditional US partners are now hedging (or considering their options) gold holdings at central banks recently surpassed US Treasury holdings for the first time in 30 years. It's less about countries thinking 'we'll definitely be sanctioned' and more 'the tail risk is now visible and needs to be managed.' That calculus might drive gradual diversification even among countries with good US relationships.

According to the article, Russia is just a precursor: "What had been viewed as having negligible credit risk suddenly carried confiscation risk. For any country potentially facing future sanctions, the calculus of holding large dollar reserve positions shifted." -- So the question is: what share of the global economy do these countries represent? If China is among them, this share is considerable.

No the fundamental problems was the econmists at the time believe in fixed exchange rates and that's why the got suckered into Bretton woods despite it being a crappy deal, specially for Britain. I didn't help that the American at the meeting was a Soviet spy who wanted to destroy Britain.

And Bretton woods solved nothing at all, it was a system that took a very long to implment, much longer then people think and was unstable almost as soon as it was implemented.

It might involve US sending out trillions worth of stuff. The question is what stuff would that be, could be e.g. bombs.

The flow has definitely started reversing, and yep you're right there will be problems. Worldwide central bank holdings of gold just recently surpassed holdings of US Treasuries for the first time in 30 years. And I believe that's using only reported amounts of gold, when all experts agree that China has acquired far more gold in recent years than what's reported.

Good point about Europe holding most of the frozen assets (~$300B vs ~$5B in the US). But that actually reinforces rather than contradicts Pozsar's framework; it's not specifically about the dollar versus other currencies, but about Western-controlled financial claims generally (whether USD, EUR, or other G7 assets) versus 'outside money' that can't be frozen by institutional decision.

The key insight imp isn't 'dollars are risky,' it's 'any financial claim on a Western institution now carries confiscation risk if your geopolitical interests diverge.' Whether those claims are denominated in dollars or euros doesn't change the fundamental calculus for reserve holders. That's why we're seeing (and might see more) diversification toward gold and commodities—assets with less/different counterparty risk rather than just EUR-for-USD swaps.

Importantly, Russia fully expected to have access to those dollars during a war with the west, as that was the entire reason of stockpiling them in the first place, but Russia's central bank was not informed ahead of time that they were invading Ukraine and was completely unable to move the money before the west reacted.

The risk was known and expected. The risk that (hilariously) wasn't planned for was the risk that Putin is that fucking stupid.

Are you serious? Many examples of countries looking for alternate supply chains. The fact that it takes a while to put those chains in place does not indicate that countries are “playing ball”.

... for now. The future is unknown. So far republicans seem mostly happy with the uncertainty Trump delivers to the world. What will the next administration be like?