Expanding money supply and declining dollar confidence may increase demand for assets without government counterparty risk.

On December 10 2025, the Federal Open Market Committee announced it would begin 'reserve management purchases' to maintain what it calls 'ample reserves.' Starting at $40 billion per month in Treasury bills, the Fed balance sheet has since risen from $6.6 trillion to $6.7 trillion. The Fed says this is not quantitative easing. It is buying government debt with newly created money. The name is new. The mechanism is identical.

Every time the Fed expands its balance sheet, more dollars chase the same goods. Core PCE inflation has remained above the 2 percent target since March 2021. UK inflation rose to 2.9 percent in July 2026. The Bank of England's own policymakers warned that a looser Fed stance pushes up UK inflation directly. If you are remortgaging in the UK, average two-year fixed rates remain elevated. In the US, the 30-year fixed mortgage sat at around 6.30 percent as of April 2026.

The Law of the Narcissist: the system rebrands what it does to avoid accountability. 'Reserve management purchases' sounds technical, responsible, surgical. It is designed to make you feel this is nothing to do with you. An 18-year-old hearing 'reserve management purchases' does not connect it to the price of their weekly shop or their first rent payment. That disconnection is not accidental. When the language is obscure, the cost stays hidden. You absorb the inflation. They keep the name.

A 2023 clip of then-Senator JD Vance resurfaced this week in which he called dollar reserve currency status a 'resource curse' comparable to coal in Appalachia: cheap consumption financed by hollowed industrial capacity. Vance is now Vice President and frontrunner for the 2028 Republican primary. The view was later embraced by Trump's Council of Economic Advisers Chair Stephen Miran. This is not a fringe position. It is becoming official doctrine. The implication: a future administration may deliberately engineer dollar weakness.

Dollar reserve status is what allows the US to borrow cheaply in its own currency. If that status is deliberately unwound, US Treasury yields rise as demand for dollars falls. A weaker dollar means imports cost more in the US: food, electronics, petrol. For UK households, a sustained dollar decline raises the cost of dollar-denominated commodities including oil, priced globally in dollars. Petrol and energy bills in the UK are already rising in 2026. This is the 30 to 90-day chain nobody is pricing.

The Law of Projection: the system blames you for the consequences of its own design. Vance's argument is that reserve currency status hollows out American workers while subsidising consumers. That is partly true. But the projection is this: the cost of unwinding reserve status lands on ordinary people through import inflation, higher mortgage rates and more expensive debt, while the political win of 'restoring manufacturing' gets claimed at the top. An 18-year-old hears 'fixing the economy.' They will pay for it through their weekly shop.

China is executing a two-part strategy: sell the asset that depends on a rival's creditworthiness, buy the asset that does not. After Western sanctions froze Russia's central bank reserves in 2022, China drew the same conclusion every non-Western reserve manager drew: gold held in your own vault has no counterparty. Chinese regulators have also advised domestic financial institutions to scale back US Treasury exposure. This is not a single dramatic dump. It is a deliberate, multi-year structural reallocation. Beijing is not panicking. It is positioning.

The People's Bank of China added 640,000 ounces of gold in July 2026 alone, the single largest monthly purchase of the year, pushing official holdings to a record 76.08 million ounces. China has simultaneously reduced its US Treasury holdings to approximately $693 billion, down roughly 50 percent from a 2013 peak of $1.3 trillion. Gold now officially makes up around 4 percent of China's $3.2 trillion in foreign exchange reserves, well below the global central bank average of 15 to 20 percent: the accumulation has significant runway remaining.

The Law of the Landlord: the entity that owns the underlying asset collects rent from everyone priced in it. Gold is the oldest landlord. Every ounce China adds in its vault is one less ounce the dollar-denominated financial system controls the narrative around. An 18-year-old needs to understand this: China is not buying gold because it thinks gold is trendy. It is buying gold because it wants a reserve asset that Washington cannot freeze, sanction, or debase by printing $40 billion a month and calling it management.