The Price of Peace
So. Let’s talk about how the global reserve currency system got another hit this weekend because the American president didn’t get a prize.
I’m not making this up. According to reports this morning, Trump is pursuing Greenland – the world’s largest island, population 57,000, zero interest in becoming American – because he was snubbed for the Nobel Peace Prize.
The logic is flawless. They didn’t give me the prize, so I’ll take the world’s largest island instead. It’s like not getting invited to someone’s birthday party and responding by purchasing their house. Very measured. Very proportional.
Next, Trump announced 10% tariffs on eight NATO allies – Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland – starting February 1st, escalating to 25% by June. The condition for lifting them? Denmark must sell Greenland to the United States.
Not lease it. Not negotiate strategic access. Sell. The entire territory. To make up for not getting a Norwegian medal.
I want you to pause here and appreciate the beauty of this arrangement. A US president is threatening close military allies – actual treaty allies, the “attack one, attack all” kind – with economic sanctions to force a territorial purchase. Meanwhile, those same allies are literally buying American weapons systems to defend themselves.
From America.
They’re buying weapons from America to defend against America.
The Godfather at least had the decency to keep the protection racket quiet. Maybe send someone to whisper about “nice island you got here, shame if something happened to it”. This is the mob boss calling a press conference. “You come to me on the day of my daughter’s wedding – no wait, forget that bit – you come to me, you buy the weapons. Beautiful weapons. The best weapons. Then you’re protected. Protected from what, you ask? Protected from me, naturally. That’s how protection works. I protect you from me. Now about that island you have…”
But here’s the thing – and I need you to pay attention to this bit because it’s important – underneath all the circus music and flashing lights, something genuinely dangerous is happening. And it has absolutely nothing to do with Greenland’s rare earth deposits or Arctic shipping lanes or any of the ‘strategic’ justifications people are pretending to believe.
The U.S. doesn’t subsidize the world; the world subsidizes the U.S.
— Peter Schiff
Foreign countries hold ~$10 trillion in US Treasuries as of November 2025. That’s a record, by the way. An all-time high. Japan holds $1.1 trillion. China, despite years of very loud “de-dollarization” talk, still holds $683 billion. The UK, Luxembourg, Canada, Belgium – all of them financing America’s $40 trillion debt.
Why? Not because they love America. Not because Treasuries are such a great investment. But because they’re trapped. They need dollars to conduct international trade. Or so they think. They need Treasury securities as collateral. Or so they say. They need access to dollar clearing mechanisms. Or … yeah you get it.
They spent 80 years building their entire economic system around the dollar and now they can’t leave without bringing the whole thing down.
It’s like being in a terrible marriage but you co-signed the mortgage, the car loans, the credit cards, and also you work at your spouse’s company and all your friends are their friends and leaving would mean starting over completely so you just… stay. And hope it gets better. Which it won’t.
This is how the reserve currency status works. You print paper and the world gives you real goods in exchange. Legal counterfeiting at planetary scale. You get extremely wealthy as a nation by extracting real resources and manufactured products by creating money that costs you essentially nothing to produce.
But the printed money flows to countries where production is cheaper. Why make things when you can just print money and buy things? Your trade deficit grows. Your industrial base hollows out. You become a paper tiger. Literally. All paper. No production.
Then your currency begins to weaken because that money isn’t backed anymore by the ability to actually produce things. So… just paper with promises attached. Other countries start realizing they’re accumulating claims on an economy that produces less and less of what they actually need. They start wanting something else. Something real. Something that can’t be printed.
Your reserve currency status dies. At which point you have nothing left. No industry to compete with. No currency that foreigners trust. Just debt. Enormous quantities of debt that you can’t inflate away anymore because you’ve lost the magic ability to export inflation through your currency’s special status.
And Trump just reminded EVERY SINGLE ONE of them – Japan, China, the EU, everyone – that this system they’re trapped in can be weaponized whenever it’s convenient. On a Saturday morning. Via tweet. Because he wants an island he can’t have.
Think about what this tariff threat actually represents. The US president is openly extorting NATO allies – not adversaries, not competitors, not rivals, but treaty allies who are theoretically on the same team – over territory. If you don’t sell us Greenland, we’ll damage your economy until you comply.
Every treasury buyer from Beijing to Brussels just got a masterclass in how safe their dollar holdings really are when Washington wants something.
Through a spectacular act of imperial overreach, Trump showed the world who’s the REAL bozz!
The EU response was immediate and entirely predictable. “Unacceptable”. “We will not be blackmailed”. “Europe will remain united”.
Emmanuel Macron declared no intimidation or threat will influence them. Swedish PM Ulf Kristersson insisted they will not allow themselves to be blackmailed. Emergency meetings were scheduled. Threats to suspend trade deals were issued.
Strong words. Very firm. Strongly worded statements. The kind of statements you make when you’re about to comply but need to look tough for the cameras first.
And then – this is my favorite bit – the Danish foreign minister said he was “surprised” by the tariff threat. This came after what he called a “constructive meeting” with VP Vance and Secretary of State Rubio earlier in the week.
Surprised.
He was surprised.
Let me make sure I understand this correctly. The Americans have been telegraphing that they want Greenland since 2019. Trump brought it up again in December. Then again in January. There were meetings. Official statements. Actual troop deployments. European military exercises in response. More meetings. More statements.
And the Danish foreign minister was surprised by the next logical step.
Surprised… (Translation: “We hoped if we ignored it long enough it would go away”)
They’ll rage for 72 hours. Draft more statements. Hold emergency sessions in Brussels. Someone will call it “deeply concerning”. Someone else will demand “further dialogue”. Then they’ll quietly check with Washington about what compliance looks like and how quickly they need to move.
But it doesn’t have to be so!
Here’s what they could do.
Right now.
This afternoon.
Without violating even a single treaty or any international agreement.
Stop buying US Treasuries.
Not sell their existing holdings. That would be aggressive. A financial nuke. But just stop buying new ones.
Take the euros they would normally convert to dollars to purchase Treasuries, and buy literally anything else. Gold. Silver. Oil. Stocks. Real estate. Beanie Babies. Anything that isn’t a dollar-denominated asset controlled by a government that just threatened them with economic sanctions for refusing to sell sovereign territory over a Nobel Prize snub.
China has already reduced its Treasury holdings by over $100 billion from peak levels. Japan keeps buying but they’re diversifying. The trend has been clear for years – slowly, carefully, trying not to spook the markets, moving away from dollar dependence.
But Europe? Europe could accelerate this overnight.
And here’s where it gets interesting – and by interesting I mean “potentially catastrophic for the American economy”.
Both sides will get hurt, sure, but Trump will TACO first.
The US cannot function at current spending levels without continuous foreign Treasury purchases. Not with annual deficits in the trillions. Not with debt service costs already exceeding defense spending. America needs foreign buyers to show up to every Treasury auction and keep buying or the entire fiscal house of cards implodes.
But Europe can’t easily decouple from dollar dependence either. They’re intertwined. Locked in. Co-dependent. It’s a very unhealthy relationship that both parties know is dysfunctional but neither knows how to leave.
And what should terrify Trump but apparently doesn’t: Europe would win this game if they had the courage to play it.
Just stop buying for a few months. That’s it. Don’t make it dramatic. Don’t hold a press conference. Just quietly stop showing up to Treasury auctions. Watch what happens.
Yields will spike. Auctions would fail. Borrowing costs would surge across the American economy. The dollar weakens. Trump’s ability to finance his government evaporates. Now watch how fast he backs down when Fox News is running segments about spiking mortgage rates threatening homeowners and small businesses that can’t get loans anymore.
It would be uncomfortable for Europe. A few weeks or months of market volatility. Some economic pain. But they’d win.
Because the dirty secret everyone knows but nobody says out loud is that America needs Europe more than Europe needs America. At least financially. Right now. In this specific arrangement.
But that would require courage. It would require European leaders willing to endure a few uncomfortable weeks while markets adjust. It would require belief in their own leverage.
I can tell you already now: they won’t do it.
Why? Because their economies are deeply dollarized. The political courage required to make that move doesn’t exist among leaders polling at 10% approval. And after decades of strategic dependence, European elites have genuinely forgotten how to be independent geopolitical actors. The muscle memory of sovereignty has atrophied. They’ve been Washington’s well-compensated junior partners for so long that they can’t imagine being anything else.
And -seeing as I’m a silver bug (for now)… stay with me here because this matters – Trump’s tariff announcement has the potential to make the global bullion markets just stop functioning.
The LBMA (London Bullion Market Association) has been running on fumes for months now already. Like “we have a serious problem here” level.
The bullion banks have been playing a very sophisticated game of whack-a-mole, shuttling metal between London, New York, and Shanghai to ease pressure wherever it builds. Previously, they imported millions of ounces of silver from the LBMA into the US because they were worried about Trump’s tariff threats on critical minerals.
That metal was supposed to flow back to London once the Section 232 review confirmed that critical minerals wouldn’t face tariffs.
Perfect. The review finished. Critical minerals are exempt. Metal started flowing back across the Atlantic to ease the LBMA shortage.
But then Trump happened. 10% tariffs on select EU countries.
So now that silver is just… stuck. Again. Trapped in COMEX warehouses.
The bullion banks won’t risk pulling metal out of US jurisdiction if they can’t get it back in without paying 10% (soon to be 25%) import duties. So the LBMA’s inventory crisis just got worse (worserer?). And the COMEX isn’t in great shape either – traders are rolling March contracts backward to January, standing for immediate delivery in what’s normally an inactive month.
That’s people who want physical metal now. Right now. Not March. January. Because they don’t trust the paper system anymore.
China’s already paying 12-13% premiums over LBMA spot for physical silver. Japan’s secondary markets have seen premiums surge past 60%. The physical market is decoupling from the paper price, which is a polite way of saying the paper price is fictional.
And Trump just made it worse by trapping a chunk of global silver supply behind tariff walls that weren’t supposed to exist.
This isn’t simply about trade policy. This is about a financial system so fragile that a Saturday morning tweet can break the global bullion market’s plumbing because someone got upset about a Norwegian committee’s prize decision.
Ok, great. Trump wants Greenland. Europe! Let’s FIGHT.
One small problem.
Europe depleted its weapons stockpiles supporting Ukraine’s defense against Russia. Noble cause, perhaps. Laudable goals. Possibly. Fighting for ‘democracy’ and ‘territorial integrity’ and all that. Also – and this is just a minor detail, barely worth mentioning – helping America’s proxy war. Fighting Russia on Washington’s behalf while Washington cheers from the sidelines and sells them the weapons they’re using.
Now they need to rearm. Where do you buy advanced military hardware at scale when you’ve given all your existing hardware to Ukraine?
Well. You could ask Russia. Or China. They manufacture weapons. Quite good ones, actually. Proven in actual combat, not just PowerPoint presentations. Cheaper than American equivalents, too. The Russians would probably give them a nice discount just for the sheer comedic value.
Except… who would trust the EU not to immediately hand those weapons over to Washington for “inspection”?
Can you imagine this conversation?
“Yes, thank you for the S-400 systems, very nice, very advanced. We’ll just send the technical specifications to Langley for, uh, compatibility testing. Standard NATO procedure. Nothing to worry about. Also we need the plutonium cores for ‘analysis.’ Totally routine. We’ll give them right back. Pinky promise”.
Besides, Europe and Russia are enemies now. Apparently. Even though Europe desperately needs Russian energy and Russia would very much like to sell it to them. Even though the only thing preventing cheap Russian gas from flowing to German industry is like a big huge pipe.
Well. This is awkward. Someone blew it up.
In 2022.
Funny story, that.
Seymour Hersh says America did it. The US government says Russia sabotaged its own extremely expensive pipeline that it spent years building to sell gas to Europe. You know. For strategic reasons. That definitely make sense if you don’t think about them.
Europe was like “we won’t investigate too closely because we might not like the answer and that would be infelicitous”.
It’s like a murder mystery where everyone knows who did it but investigating would be rude so we all just pretend it’s unsolved and move on.
Friends, you see. Close friends. With friends like this, who needs enemies? Actually, Europe has enemies too. Russia. Or so they keep repeating. Repeatedly. Ad infinitum.
So that leaves one supplier for European rearmament: the United States. Buying expensive American LNG and F-35s and Patriot systems to replace the energy and weapons they lost fighting America’s enemies at America’s request while defending against America’s territorial demands.
Germany could theoretically rearm domestically. France has some indigenous defense capability. But at scale? At speed? With the technological edge required for modern warfare? They’re locked into American supply chains. American intellectual property. American manufacturing. They’ve been free-riding on American military protection for so long that their domestic defense industries exist primarily as subsidiaries or junior partners to American firms.
So they’ll pay. They’ll buy the weapons. They’ll buy the expensive LNG. They’ll keep supporting Ukraine. Trump will pocket the revenue while simultaneously threatening them with economic sanctions over an island they can’t sell him because it’s not actually theirs to sell and the people who live there have made it very clear they’re not interested.
And European leaders will pretend this is normal alliance behavior.
Because they’re friends.
Very special friends.
Europe has GDP. They have population. They have history and culture and universities and museums and all the trappings of power.
What they don’t have is the will to use any of it independently.
They can’t defend themselves without American weapons systems. They can’t conduct international trade without dollar clearing mechanisms. They can’t secure energy without accommodating someone – Russia, the US, Middle Eastern suppliers, somebody.
Seventy years as a geopolitical accessory doesn’t reverse in 72 hours of emergency meetings.
Trump has given them until February 1st before the 10% tariffs kick in. June 1st before they escalate to 25%. That’s not much time to restructure 80 years of geopolitical alignment.
So what will they do?
They’ll coordinate. They’ll threaten counter-tariffs. They might even suspend some trade agreements as leverage. They’ll definitely complain loudly. Very loudly. With strong words and firm statements.
But actually stop buying US Treasuries? Actually tell Washington “no” and mean it?
Unlikely.
What’s far more likely is that Trump extracts some concession – increased defense spending commitments, mining rights in Greenland, expanded basing agreements, something – and declares victory. Europe will spin it as principled resistance that protected their core interests. Everyone will pretend the system still works.
That the dollar survived another crisis.
But each crisis leaves a scar. Each weaponization of the dollar system makes the next Treasury auction a little harder. Each threat makes alternatives a little more attractive. The accumulation matters even when individual events seem manageable.
Reserve currency transitions take decades, sometimes generations. But they’re not linear. They’re not smooth. They’re punctuated by specific events that make the previous system untenable. Threshold crossings from which there’s no returning.
Confiscating Russian foreign reserves in 2022 was one such event. It communicated to every non-Western country that their dollar holdings aren’t safe if they cross Washington on issues that matter. China got that message. India got that message. Saudi Arabia, the UAE, everyone got that message.
This Greenland extortion is another threshold event. It’s telling Western allies that their dollar holdings aren’t safe either. That alliance commitments don’t protect you from economic coercion when Washington wants something.
Eventually enough countries internalize these lessons. Eventually the costs of dollar dependence outweigh the benefits. Eventually someone says “no” and means it and has the courage to follow through.
Silver already understands this at a molecular level. Physical premiums in Shanghai and Tokyo are screaming that the paper price has detached from reality. That the system is breaking.
Gold understands it too. Central banks purchased 297 tonnes through November 2025. China’s extended its buying streak to 14 consecutive months. That’s not portfolio diversification. That’s not risk management. That’s preparation for a fundamentally different monetary system.
They see what’s coming and they’re preparing.
My guess? Europe figures this out sometime around 2030, long after Trump has extracted whatever he wanted and moved on to threatening Canada over water rights or Panama over the canal or whoever’s next on the list.
By then the dollar’s privilege will be diminished enough that America can’t simply print its way out of structural problems anymore. The math stops working when your printing press loses its global subsidy.
Trump just accelerated that timeline because he didn’t get a participation medal.