Transcription
Well, I believe in 2026 and going forward to 2027, the odds are the US dollar is going to fall even more, right? I guess in 2025 it dropped by 9 to 10%. But the pain is just not over yet.
Now, the United States is juggling too many balls at the same time. They want to win the AI race. Secondly, they desperately trying to rebuild their supply chains from scratch.
And the only way to do it is to lower rates on the short end of the curve. If you shift all your borrowing to let's say 1 month, 3 months, one year bonds, it is as good as injecting cash into the entire system.
And let's not forget that when Trump enacted his trade war, a 10 to 20% tariff on the world trade with the United States is falling. It's quite ominous for the US dollar going forward, especially for the next 1 to two years. Definitely during Trump's regime, I don't think anything's really going to change with the trajectory of the dollar.
Over the past few weeks, something interesting has been happening. Not on YouTube, not on Twitter, but among policy makers and financial elite. In a recent interview with the South China Morning Post, Singapore's former foreign minister, George U, openly warned that the US dollar could eventually crack under the weight of exploding debt, forcing the United States to monetize its obligations. He pointed out that central banks around the world are already preparing by buying gold, diversifying reserves, and quietly reducing exposure to US financial dominance.
Now, to help us all make sense of this, I've invited one of the best financial insiders in the industry, Mr. Sha Fu, to help us break down everything you need to know about the crashing US dollar and how this will affect the stock markets, bond markets, and international financial system in the future. In today's episode, we will discuss the overheated AI industry, America's decision to sell Nvidia chips to China, the European Union's decision to freeze and use Russian foreign currency reserves, and most importantly, what the crash of the US dollar means for you moving forward. If you want to understand what your money is going to do in the future, this is the episode for you. Let's begin.
Well, everyone, we're very excited to welcome back into the studio, Mr. Sha Fu. He is an expert on all things finance, specializing in gold, very great expert on the bond market, the US dollar. And Sean, I want to welcome you back to the studio.
>> Also to be here, Cyrus, been a long time.
>> It has been a long time. You know, Sean, I I love bringing you on the show because I think you bring so much knowledge to the financial markets. I mean, you really help a lot of our viewers out here that are active investors. And you know, John, one of the big stories for 2025, certainly in the US market, has been the AI industry. We see certain stocks, for example, like Nvidia has been a great performing stock, but there's really a lot of buildup in AI and the stock market, but you've actually been warning about the bond market and some potential problems there. I'd like you to just expand upon that and kind of give us an overview of what your thoughts are.
>> Sure. Now if we look at the AI race, it's basically one of the few pillars of advantage the US still has when it comes to the economic war with China and kind of restoring or maintaining the hijgemony in the entire world. Now the problem with the AI risk is that the US is funneling too much deficits and debt into the entire system. Now if we look at what just happened over the last week, there's a company called Oracle. I think they spent over they committed over $300 billion when it comes to building out all those data centers. Now what happened at the start was investors they were all very hyped up about it and that pushed up the stock price to around additional 350 billion. Now that is quite insane but currently quite a bit of sanity is coming back into the market. Everyone realizes that hey you're committing so much money your cash flow is not really realistic. Where is the revenue going to come from now? As such, the stock price has dropped by 50% from the top even before they made the commitments to open AI to building out all these data centers.
Now, this directly ties into the US bond market which is cracking. When it comes to borrowing of debt to fund all these data centers to push up the eye bubble to prevent it from imploding, we got to understand that at the end of the day, it's all about supply and demand. Now, there's a lot of entities within the United States itself that is constantly borrowing money in order to spend. We don't even need to look at the AI companies just within the US government itself, the US Treasury. I guess in the last quarter up to September, they borrowed over $1 trillion in just 3 months.
Now, all this is placing enormous pressure on the bond market. And we all can remember that the Federal Reserve, they just cut rates, I guess around a week or two ago. They did a 25 point rate cut and everyone expected bond yields to drop across the board. Now obviously short-term yields will drop but everyone kind of expected long-term yields to fall down as well. Now that isn't happening because the United States is just borrowing too much money at this point and we are reaching a point where a lot of traditional industries heavy industries even some in the service sectors they are getting hollowed out in order to support the entire AI race to support the semiconductor war against China to try and advance US AI to the next level. So what I say is that the US is trying their best to place all their chips on black and hoping, you know, the roulette wheel just lands on it because if it doesn't and there's going to be a lot of nasty effects and not only will the bond market break, we could actually see a big deflationary wave hit the United States, especially when everyone figures out that all this spending is not yielding real results.
Yeah, Sean, you know, interesting enough is, you know, we hear this term in the United States is this circular economy, which really refers to, you know, a lot of what you've said, right, is, you know, you have these big companies. They're committing, you know, hundreds of billions of dollars, but it's essentially, you know, Open AI is working with Oracle, who's working with Nvidia, who's working with Microsoft, who's working with Meta, and it's basically we're kind of just passing this all around and there's a lot of bullish sentiment on AI. I mean, I think AI is certainly going to be the future. I mean, it's certainly going to be an important piece, but we've already seen started to see some warning signs. You know, Sam Alman has already said to the US government, you know, if we're not able to, you know, really fund this, we potentially could already need a bailout. You know, he's basically already asking the US government for a bailout. There was a Harvard economist that I think it was last month, he came out and published and said without this data center revenue, you know, basically GDP growth would have been almost 0% for the United States. So, I think there's a lot of underlying issues, right? We have this economy that President Trump certainly wants everyone to believe is thriving and doing great, but a lot of it really is tied up into this AI.
Sean, how does this really work when we're looking at the United States dollar? I think this is something that you've talked a lot about is the future of the US dollar that it's certainly getting weaker. Uh this, you know, 2025 has not been a good year for the dollar in its weakest performance since the early '7s. Tell us a little bit about your thoughts on the US dollar and what that means for the future.
Well, I believe in 2026 and going forward to 2027, the odds are the US dollar is going to fall even more, right? I guess in 2025 it dropped by 9 to 10%, but the pain is just not over yet. Now, the problem with the situation in the United States is all this boring has to continue. Now, the United States is juggling too many balls at the same time. Now, firstly, they want to win the AI race not only against China but the whole world as well. Secondly, they desperately trying to rebuild their supply chains from scratch. Now, Scott Besson, the US Treasury Secretary, he said that he's going to embark on project W speed, which means rebuilding the entire US supply chain, especially when it comes to rare earths in 12 to 24 months. Now, that is seriously not feasible at all. Let's remember that it took China 10 to 20 to even 30 years to build up their own supply chains from scratch. And that was during a period where that even during China itself, environmental rules were much less. It's more stringent today as you know but back then even China kind of had the leeway to develop all these supply chains which are not exactly environmental friendly.
Now the problem with the US is they're trying to speedrun everything in four to 5 years and the only way to do it is to lower rates on the short end of the curve which means lowering interest rates. That's why we are seeing all the Federal Reserve coming out with the rate cards. But the issue with this is that if you shift all your borrowing to let's say one month, 3 months, one year bonds, it is as good as injecting cash into the entire system. So right now you have a surplus of dollars flowing around and not really a lot of demand out there in the world to absorb this dollars, right? And let's not forget that when Trump enacted his trade war, a 10 to 20% tariff on the world at large, trade with the United States is falling. Now Trump likes to say talk a lot about the US deficit is dropping. In some respects it is true but that also means that the US is not really sending out a lot of dollars to the world. So a lot of dollars is just circulating within the United States itself.
Now as time goes on the US is going to realize that they have a few tough choices to make. Do they want to protect the integrity of the bond market? You know so every investor that buys US bonds at least the strength of the dollar will not collapse. Right? because it doesn't make sense if you're earning 3 to 4% yield a year but the underlying currency itself drops by 5 to 10%. However, if they were to embark on that, they would might as well just lose out the entire supply chain war with China because China has a 10 20 to 30 year advantage ahead. Now, I'm not saying that the United States will suddenly win the supply chain war with China by just throwing a bunch of money out there, but that is the only option they have left to go about it. So it's quite ominous for the US dollar going forward, especially for the next one to two years. Definitely during Trump's regime, I don't think anything's really going to change with the trajectory of the dollar.
>> Yeah, I think that's a good point. Uh Sean, you brought up a good point. You know, talking specifically with China. I mean, we certainly see that, you know, when we talk about AI and microchips. Obviously, the two biggest players are the United States and China. You know, earlier this week, we've saw big news that Nvidia was going to allow H200 chip sales to China. You know, this was a decision by Donald Trump. I'm sure Jensen Hang, Nvidia CEO, was very happy about that. He's been campaigning a lot trying to get these chips. But interesting enough, we saw China almost simultaneously say, you know, we don't need these chips and we're going to actually ban these chips because we really want to focus on domestic production and really ramp up our own supply chains. Tell us a little bit about, you know, this USChina battle where it relates to the microchips and, you know, the future of AI and things like that.
I believe China is viewing the entire H200 chips. You know, the sudden approval from the Trump administration to sell to Beijing. I think they are viewing it as a Trojan horse and honestly it is. Now, the United States has a lead against China when it comes to advanced chips. You know, there's no two ways around it. Some people say it's 2 to 5 years ahead. However, China is aggressively catching up for a variety of reasons. China has the resource, they have the brain power, they have the money, and their cost of borrowing is so low that eventually, given enough time, China will catch up with the US with their own chips. And it really doesn't matter if it comes from Capricorn, whether it comes from Huawei, whether it comes from the new startup that just IPOed Mo threats. It really doesn't matter. What China wants is for their own companies to use their own domestic chips.
Now what Nvidia is trying to do and what Jensen Huang is trying to do is get the entire Chinese companies the tech giants to be hooked on the Nvidia chips because once you start using the chips you'll be sucked into their ecosystem you know you'll be able to use the entire architecture the entire library and once you create solutions for customers on that you are very vulnerable for whole variety of reasons now what if one day Trump decides to jack up the prices of Nvidia chip to China now you're caught or let's say he just decides to cut off the entire supply to China, you are doubly caught. And China cannot afford for the US to really gain a big foothold when it comes to their domestic chip ecosystem. That's why we saw Chinese regulators say all new statebacked data centers are to use locally made Chinese chips. And honestly, all these new data centers, chances are they have a bit of a government print on it as well, government print. So what China is trying to do is forcibly or encourage their companies to just use domestic chips. And if we look at the recent announcements by China, they're about to inject $70 billion worth of chip subsidies into the entire economy. Now, of course, some of it will be used to give preferial treatment to their own chip companies. But it doesn't surprise me down the road, China might actually help this big tech giant subsidize the buying of their own local chips.
I believe that we are moving towards a world where critical trade will be separated will be bifocated between the US energy 7 and China and the rest of the world. Now I've said quite a few times that there will be some trade around the fringes. You know plastics, chemicals, t-shirts, maybe even iPhones, laptop, all this seriously they're not really critical trade. But when it comes to the big stuff that moves the lever when it comes to semiconductors, when it comes to AI solutions, when it comes to AI chips, I believe the US will be operating in their own ecosystem going forward and China will be operating in their own ecosystem going forward as well.
>> Yeah, I think that's well said. I mean, for many of our viewers out there, I'm sure you're aware that, you know, for many years, China was a great consumer of American chips and and actually was a great customer, but we go back to the Biden administration. We go back to Trump 1.0. You know, we see the trade war, the tariff war. I think that really says a lot about this USChina relationship and how this has developed over the past, you know, let's say five to six years specifically where exactly what you said. I think both countries are the most critical resources and certainly technologies. We want to make sure that we're developing those internally and making sure that we depend on ourselves for that in the future. We're going to look for areas to collaborate. But you're definitely right. I think there's a big split. And you know, we kind of going back to the US dollar here. I think there's an interesting story here as well, Sean, is with gold. And I know that you're a great investor in gold. You've made some amazing videos on this. And myself, I'm very bullish on gold. I've been an active investor as well for many years. You know, we also are seeing that, you know, I think it was reported last month that China has a new gold discovery. They've obviously along with Russia and many other central banks around the world have been a very active buyer of gold. You know, how are you looking at the gold market that has again you know significant 2025 appreciated a lot. How are you looking at this in this geopolitical struggle or battle I should say? How is the gold market performing right now?
>> I believe the demand for gold will be quite strong in 2026 2027 going forward and a lot of this have to do with what China is planning ahead. Now over the past 12 to 15 months we have seen non-stop buying of gold from the Chinese central bank. Now there's a lot of speculations of how much they have been buying. Now officially the Chinese government says that they've been buying anywhere from 1 to five tons a month which is modest. But then we have seen a lot of reports from the big banks so genocide general we have reports on Goldman Sachs that China is actually buying five to 10 times more. So we are seeing aggressive stockpile of gold from the rest of the world to China and China has been aggressively going around their own country trying to find more gold discoveries out there.
Now why is China doing it? Now firstly we all know the story that they're getting out of US treasuries is going on. They're dumping US bonds taking a lot of money and putting it into gold and obviously that is a very good outlet for them. But if we look at the evolution of what's going on, China themselves, they are so-called weaponizing gold what they have in order to break the chains from the western financial system. I guess recently, a few months ago, we heard China is helping Cambodia custody their own central bank. Now this is a very big development tells the world that hey because of recent events over the last 3 years especially when it comes to the seizure of Russian assets your money might not be 100% safe in the western financial system for what for whatsoever reasons you might want to get out and throughout the last few decades we have seen many instances of this happening as well if I'm not wrong Venezuelan gold is still held up in London it is still not back to the country because of how they believe that Maduro is not the legitimately leader in Venezuela for example.
>> right?
>> So all these kind of alliances, all these kind of agreements can always always shift and change. So what China is telling the world is that hey there's a additional outlet for you to store your gold rivers and that's the first reason. Now the second reason what China is trying to do is to build up the entire financial economy in Shanghai. Now over the last 20 to 30 years it is undisputed that global capital of the world is the United States. You have Wall Street, you have a lot of commodity tradings there. you have a lot of ETFs that people can just invest in like the GLD, I use all these ETFs where people can buy gold in paper form. Now, what China is trying to do is to replicate that in Shanghai itself, but they're going to do it in such a way that all the gold is backed physically. So, if you want to uh cash out your gold at any time, there isn't any problem. However, there are so many paper contracts in the west versus one physical ounce that a lot of people are saying that it is suspect whether you can get your own bullion out if everyone does a gold run so as to speak. So by doing this by buying all the gold and holding it within China itself what China is trying to do is to build up their own financial sector and slowly slowly leech away financial capital from Wall Street. And that isn't very good as well because every dollar that flows to China is capital being denied to the US financial system and that can come from stocks that can be leached from bonds and that can come from gold ETFs in New York as well.
>> Sean, you brought up a good point about the seizure of Russian assets and this is again something that many European countries have been speculating for a long time. You know, the idea is not a new idea. I mean, over the past couple of years, you know, certainly with the war between Russia and Ukraine continuing to escalate. I mean, we're now entering 2026, and you know, that conflict, unfortunately, is still persisting with no real end in sight. But one of the things that has really been brought back on the table in the last few weeks is that European leaders are wanting to seize Russian assets and then take that money and transfer it to Ukraine to fund their continuing war efforts against Russia. Tell me a little bit about your thoughts about the seizure of Russian assets and, you know, what this means for the future of, you know, financial markets.
First, we need to look at this from a geopolitical lens. Right now, when Trump came into office, he basically more or less abandoned the entire Ukraine project. He has left Europe alone. He wants to pull out. And if we look at the latest peace plan that Trump is trying to impose on Europe, Ukraine, he's trying to work out a deal with Russia and that essentially gives a lot of concessions to the Russians as well. A lot of land will be seeded and that basically means Europe will be on the losing end. Now if we look at certain clauses of the 28 point peace plan a lot of it is how the US will be tapping onto the Russian assets themselves in order to you know rebuild Ukraine or whether it is to form a joint venture to mine rare earths under the ground. Now the problem with that is Europe finally understands they are being left out in the cold. So somehow they need to keep the fight going. They want to continue challenging the Russian war machine for as long as possible until let's say Trump leaves office maybe in 2029 2030. That's why over the last 24 hours there was a emergency meeting in Brussels on how to tap the Russian assets, right? They still haven't come to a conclusion because by doing so it's basically going to wreck the entire EU financial system.
Now the problem with trying to seize the Russian assets is the entire financial world is built on something called trust, right? is not a very new concept. You know, it takes a 100 years to build it. All it takes is one small event or one big event to entirely wreck it. Now, unlike China, unlike the US, Europe really doesn't have a strong financial base. Now, the good thing about China is that they can run almost 1.2 trillion worth of trade surplus. So, they have a lot of capital buffer naturally because everyone wants Chinese imports, right? It's cheap. It's deflationary for them. Now, for the US, whether you like it or not, they still have the reserve currency. So in the intermediate to the medium-term they can still borrow endless amounts of money from the world but Europe currently has nothing. Their industries are in shambles. We have heard calls of Volkswagen themselves closing down their factory in Dresden just a few weeks ago. So all this shows that the EU economy itself is very unstable and the only way they can prolong the war, the only way they can hang on is to tap into the Russian assets. Now the bad thing about using this 280 billion or 300 billion dollar worth of it is essentially they'll be undermine undermining the entire integrity of the EU. That means in the future a lot of countries especially in the bricks especially in the global south they will not want to buy EU bonds. The risk is simply just too high at that point.
Yeah, absolutely, Sean. I think this is something that we've seen play out for a long time right now in the last few years is for example the United States sanctions. You know, I mean, we passed tens of thousands of sanctions against Russia. Although that really hasn't really deterred anything. I mean, we've seen Russia continue to battle on. We've certainly seen this is a very big problem. I think that you've really hit the nail on the head as far as the integrity and just the trust. And I think that's why a lot of countries around the world certainly wanting to shift away from the US dollar because they've seen gosh, you know, if our assets can be seized overnight or if we're not in favor with the US government, you know, this is a substantial risk. Hence why our central banks are buying more gold. Hence why, you know, organizations like bricks is really, you know, coming, you know, continuing to develop. Let me know a little bit your thoughts on bricks organization and how this plays into this whole global financial system and what you're really seeing for the future there.
I think there will be a big decoupling between the bricks and the G7 financial systems and we are beginning to see it already. Now the big problem bricks has is the material nature of Donald Trump and the entire trade war in general. Now a lot of people felt that the seizure of the Russian assets for example will only be done to countries where the G7 is directly hostile with or they helping fight a proxy war. But that doesn't seem to be the case anymore. That's why I made the argument back then, I guess start of the year, that the trade war was actually more damaging to western reputation versus the sue of the Russian assets cuz everyone right now is fair game. And this feeds into the idea of how can we as bricks be more independent outside of western trade, outside of the western financial system. And all roads still points to China because they're the biggest industrial base and of all the bricks countries, they have the biggest financial base as well. That's why over the last year, I guess 6 months to 12 months, we are seeing a lot of companies and countries themselves borrow in the Chinese currency, the R&B, because it makes a lot of sense versus the United States dollar as well.
Now, firstly, the dollar has been dropping in value and this really puts a lot of pressure on people, right? So, let's say you borrow a million dollars from the market, you borrow it in US dollars, suddenly a month or two months later, it drops by 5%. So you have like 950K worth of purchasing power. You won't be very happy about it, right? You will suddenly be forced to deploy the money, make crazy decisions faster than usual, and that could really run you to a ditch. On the other hand, the Chinese currency is actually appreciating, right? Versus the dollar, many people don't really notice it, but against the US dollar, the Chinese R&B or the yuan is up by 3 to 6%. Right? So if you borrow in a Chinese currency, you actually have more purchasing power over time and a lot of goods today is still being bought from China. So you might as well borrow in the Chinese currency, right? So as time goes on, we can see this dependency on US financial markets on the dollar actually drop. So the events that has happened over the last three to four years is actually helping to shape bricks to be a more independent uh trading block. Not only are they trading more amongst themselves, there's less reliance whether it's trading with Europe, whether it's trading with the US and I think a lot of the sanctions, a lot of the tariffs have backfired in real time here.
>> Absolutely. Sean, I want to get to some predictions for the future. You know, what what are you really seeing as kind of the biggest stories going into 2026? And I think you do a great job, you know, with your YouTube channel, you know, really talking about, you know, the gold markets and, you know, these financial markets. And I think it really serves a lot of our viewers who are active investors. So, you know, as you're looking forward to 2026, what is the biggest things that you're looking for? And let's give some kind of tangible benefits to our viewers here and kind of like maybe some steps that they can do. I know we get a lot of questions here on the YouTube channel. You know, Cyrus, we see these decoupling. We see these, you know, China and Russia and many countries stockpiling gold. We see the rise of bricks. We see the purchasing power of the US dollar decline. You know, what can we do? And so I'd like to get your opinions on that as we're looking forward to this new year and how people can actually prepare themselves for the future.
>> I think the biggest story going forward into 2026 is this global debasement trade or global debasement trend is going to continue especially when it comes to the US versus China. Now we have to appreciate the fact that the US will not want China to win in the AI race. China also doesn't want to lose in the AI race because so much is on at stake right now. Now I believe the greatest export in the future maybe 5 10 20 years down the road is going to be AI chips to the whole world and because of that we are seeing a lot of central bank action on both the Chinese and the US side to basically flood the entire economies with money as well.
Now the US as we all know they are lowering rates on the short end via the central bank via the Federal Reserve I'm sorry and Scott Besson is borrowing money endlessly is trying to lessen the financial regulations of the banks so that he can directly tap into Wall Street's money in order to fund the US government. So that's on the US side and that's not very good for the currency. Now on the Chinese side they are looking to lower their own bond yields as well. Now Chinese bond yields are already very low as you know right the 10 years around 1.8 8% but a lot of people believe that it's going to drop down to 1.5%. So China is fighting fire with fire as well. The only difference is that China has a longer runway and they can stretch their dollar further compared to the United States. But regardless of this, the whole world has no choice but to inflate their entire balance sheet. They have to print a lot of money. They have to borrow a lot as well. It's even happening in Japan. Japan just announced a stimulus of $120 billion. So if we look at this trend, I would say one of the riskiest investments to hold long-term is actually bonds, more specifically US dollar bonds, right? So going forward, I think everyone needs to appreciate that we are moving towards a highly inflationary world. The inflation scare that we saw over the last 3 to four years is going to be a cakewalk compared to what's coming ahead. I mean, if we look at a lot of the assets right now, doesn't matter what, it's up by 10, 20, 30%. Even if you look at gold is up by 50 to 60%. So that's why at least personally I mix my investments around but a huge chunk of it is in gold right because honestly we do not know how the situation is going to evolve whether China might win short term maybe they lose medium-term but they win long term. We have no idea and there's so much gerrations in the economy that I believe precious metals in my opinion is going to be the better and the safest bet going forward.
Well, Sean, thank you uh so much for your time today. It's been always such a pleasure to chat with you. I love our conversations because I think it brings a lot of value to our viewers, but also to myself. I love listening and learning from you and you know, it's so fascinating to get your takes from the other side of the world and I think it's something that we're going to continue to look at because obviously this USChina relationship, it is the most important geopolitical relationship in the world. You know, we certainly see the major storylines like the future of AI. Like you said, I like what you said. The United States doesn't want to lose, but neither does China. you know, they're certainly going to be competing in that sector and I think it's going to be a very dominant story for the future. So, I want to thank you, Sean, for being here today and sharing your knowledge with everyone.
>> Thanks, Harris. Great to be here.
>> Absolutely. Awesome. Everyone, thank you for making it to this point in the video. And please make sure you check out my other deep dive interviews, including my conversations with Colonel Douglas McGregor on both the Ukraine and Venezuela conflicts. You can watch both of those by simply clicking here. Also, if you enjoyed this channel, make sure you subscribe to my geopolitics newsletter. The link is in the pin comment down below.