Balshazzar’s Feast, the US dollar and the 'Invisible Hand'

What is foretold of today’s greatest empire?

My dear friend Frances Coppola and I were walking home last week and discussing empires - as girls do - when she reminded me of the tale of Balshazzar’s Feast. I had to confess to not having read Chapter 5 of Daniel (he of the Lion’s Den) in the Torah, or what Christians call the Old Testament. So let me recap…

Daniel, a captive of the Nebuchadnezzar’s Babylonian empire, had witnessed both the power and the decline of Nebuchadnezzar’s rule. Before the collapse, the king was so powerful that

all people, nations, and languages, trembled and feared before him: whom he would, he slew; and whom he would, he kept alive; and whom he would, he set up; and whom he would, he put down.

That terrifying power did not save him. He was soon deposed from his kingly throne and, in the rich language of the King James’s version of the bible.

driven from men, and did eat grass as oxen, and his body was wet with the dew of heaven, till his hairs were grown like eagles' feathers, and his nails like birds’ claws.

Balzhazzar, the deposed King’s son and successor, learnt little from his father’s fate, his humiliating defeat and the collapse of Nebuchadnezzar’s kingdom. Instead, in a moment of hubris he assembled 1000 of his noblemen to a great feast to celebrate his own power and empire. There he blasphemously served wine in the sacred vessels his father had looted from the Temple in Jerusalem.

Rembrandt’s painting above (in Britain’s National Gallery) depicts the scene, highlighting the gold and silver thread of Balshazzar’s sumptuous gown, the chains, the turban with its little crown perched at the back, and the sacred vessels - all symbols of conquest, wealth and power.

Suddenly like a clap of thunder came a warning. A disembodied hand appears and traces out in strange letters an indecipherable message on the wall behind Balshazzar. The wise Daniel is summoned to ‘make interpretations and dissolve doubts’. Daniel is brief and to the point. Balshazzar had praised “the gods of silver, and gold, of brass, iron, wood, and stone, which see not, nor hear, nor know: and had not glorified God”. The consequence?

God hath numbered thy kingdom, and finished it. Thou art weighed in the balances, and art found wanting. Thy kingdom is divided, and given to the Medes and Persians.

Still Balshazzar fails to grasp the real meaning of ‘the writing on the wall’. Foolishly he lavishes rewards on Daniel including a chain of gold, clothes him in scarlet and declares him a ’third ruler’. And then

In that night was Balshazzar the king of the Chaldeans slain.

And Darius the Median took the kingdom.

The message delivered by the invisible hand was clear. Empires can fall. Suddenly.

Frances and I went on to discuss something I had personally witnessed: the sudden (in historic terms) collapse of the Afrikaner nationalist government of South Africa. The white supremacist, apartheid regime had governed the country from 1948 until 1994, and seemed, at the time, indomitable.

Until it wasn’t.

Then there was the equally sudden collapse, in historic terms, of the Soviet Union - which before 1989 had seemed militarily and economically invincible.

Few predicted those collapses, but for both empires, the writing was on the wall.

What would the ‘invisible hand’ divine for the future of today’s greatest empire?

The world’s hegemon and the US dollar

The power of the world's hegemon - the United States - is declining even while the empire remains one of the richest economies in the world. At the same time the version of globalization built on US financial dominance, free capital flows and market liberalization is beginning to crack under the weight of its own contradictions, as Lara Merling argues.

Why is this happening? The answer goes beyond Trump and China.

As Professor Ken Rogoff noted last week in the Wall Street Journal, don’t forget Biden and Russia.

At the heart of the globalised financial system is the United States’s currency, the US dollar, which has since 1971 acted as the world’s reserve currency - a globally-recognized currency used in international trade and global finance.

Most of the world’s central banks hold the wealth and international investments of their country – their foreign exchange reserves - in US dollars, and are part of the Federal Reserve system of the United States.

About 80% of all cross-border trade (outside Europe) is invoiced in US dollars. At least 40% of the paper US dollars in circulation by value, worth more than $1 trillion, are held outside the United States.

Before the Trump Shock, China and members of the G20 group of countries were already discussing a turn away from dependence on the United States dollar as the world’s reserve currency.

Earlier, in February 2022 the United States had retaliated to the invasion of Ukraine by freezing Russia’s central bank reserves held in the ‘vaults’ of the US Federal Reserve.

Russia’s foreign reserves, like all national reserves, are a public good – the wealth generated by the economic activities and savings of the Russian people as a whole.

China and the BRICS group of nations – Brazil, India, South Africa – quickly recognised that the United States could just as easily confiscate their central bank reserves, and so at G20 annual meetings began discussing alternatives to the US dollar as the world’s reserve currency.

Then in 2025 and as a result of the Trump Shock, and in particular his ‘Liberation Day’ announcement of high tariffs on US imports, the US dollar began to weaken.

By May 2025 it was ten percent below what its value should have been relative to other currencies, given interest rate differentials between the US and other countries.

That had never happened before.

Whenever US interest rates rose, the US dollar strengthened, and capital flushed out of the capital markets of countries like Brazil, Russia, India, China and South Africa – and were funneled into US financial markets. The effect was always to strengthen the US dollar and crush the value of currencies around the world – especially those of low-income countries.

The weakening of the US dollar in 2025 was an unprecedented reversal of this process.

The broad dollar decline is counter-intuitive but suggests financial markets are losing confidence in US policies..

writes Elias Haddad, a currency strategist at Brown Brothers Harriman & Co. In a note to clients, he said that rising stagflation risks and Trump administration’s implicit support for a weaker currency are also weighing on the greenback.

Is the US dollar problem down to ‘too much government’?

Prof. Joseph Stiglitz was in London recently to launch his new book – The Road to Freedom – a riposte to Hayek’s Road to Serfdom.

At SOAS’s annual Development Leadership lecture, he made an interesting observation.The rise of authoritarianism, of nationalism and specifically of Donald Trump was not, he argued, a result of ‘too much government”.

On the contrary it was a consequence of ‘too little government’. It is striking, Stiglitz noted, that Scandinavian countries, in which arguably there is too much government, have not produced authoritarian nationalist governments, even while shifting sharply to the Right.

He pointed out that in the US, the ‘Red States’ that Trump won so decisively were all states in which public intervention in private markets were constrained.

Stiglitz went further in his attack on Trump:

No one can, or should trust an agreement they make with the United States. Not just under Trump… for the United States has a long supply of demagogues –

Trump is far from unique.

Prof. Stiglitz is right about Trump not being unique. There are other dictators: Presidents Dutuerte of the Phillipines (currently behind bars in The Hague charged with crimes against humanity), Putin, Netanyahu, Narendra Modi, Bolsonaro, Argentina's Javier Milei. But also ex-President Zuma of South Africa who, by selling off South African public assets to private interests, created the blueprint for Trump’s ‘state capture’ - systemic political corruption in which private interests significantly influence a state's decision-making process to the private advantage of the president.

The rise of authoritarianism

There is reasoning behind this phenomenon that is the rise in dictatorships and authoritarianism worldwide. It is this: The world economy is governed by deregulated markets in goods and services, but also in money. As Karl Polanyi argued, such a world economy cannot exist for any length of time without annihilating the human and natural substance of society; it would, argued Polanyi, destroy humanity and transform our surroundings into a wilderness.

Inevitably society takes measures to protect itself. In the United States the seventy seven million people that voted for Trump sought protection from markets that

a) fixed the price and rent of homes - often beyond their reach;

b) inflated their cost-of-living;

c) denied millions affordable access to healthcare;

and

c) decided whether young people could or could not access further education.

Markets that dictated the cost of essential human needs for shelter, food, health and well-being.

Trump used that discontent with ruthless markets to channel blame for homelessness, poor health and lost opportunities at migrants and foreigners: Mexican, Chinese and even Canadian foreigners…

He then embarked on a series of Executive Orders that will impair the operation of global markets in goods, services and money - including US dollars.

Polanyi again: whatever measures society takes to govern markets, those measures just disorganize industrial life, and thus endanger society in yet other ways.

Whatever measures Trump takes to deal with global trade imbalances further impairs markets in US exports and imports; and in the process disorganizes American industries, and ultimately, American society.

Markets in Money

From my perspective, these developments – of too little regulation, of too little government, of deregulation and lawlessness… destabilise above all, markets in money and currencies - including the market in US dollars.

And all because economists believe that a) money is a commodity or like a commodity and

b) that like a commodity money can be traded in, and managed by markets

and c) that as Hayek insisted, money can be de-nationalised – detached from public, democratic authority and regulation; in other words from a nation’s law, its legal and judicial system - to be traded in global markets.

Here I must remind readers, if you do not know already, that money is not a commodity, but a social construct; a social technology; a promise to pay.

Money is credit; and credit is money.

For our money or monetary system to function well, requires trust, honesty and responsibility in credit; in our promises to pay. The monetary system to function well and with stability requires the values of honesty, accountability, Iintegrity and responsibility to be applied. Those in turn require the institutions that uphold the values of honesty, accountability and responsibility. The publicly backed legal institutions that uphold contracts and regulate promises to pay. The accounting institutions and standards that define assets and liabilities. The taxpayer-backed central banks that uphold the value of the currency, and manage the distribution of money via the commercial banking system.

Those are values upheld by public institutions and regulation - and that don’t apply to private, deregulated markets in money.

Economists and money

The conviction that money is a commodity or like a commodity; that it is finite in quantity, and that to be distributed efficiently it must be subject to “the market process” is a conviction deeply embedded in mainstream economic thought - even amongst economists that would deny money is commodity-like.

But denials cannot erase evidence embedded in ‘classical’ or orthodox economic language. Phrases like the price of money (the rate of interest) is subject to the ‘supply and demand’ of and for, the ‘thing’ that is money, imply that money is a commodity.

Economists discussing quantities of money treat it as a ‘thing’ that can add up to ‘stock’ of capital. Or that ‘flows’ of money ‘circulate’ with varying degrees of ‘velocity’.

The power and purpose behind the conception of money-as-commodity is this: if money is comparable to commodities like lumber or platinum, then it is but one short logical step to the belief that trading money in markets is acceptable.

Not just local or national markets, but global markets

Money – our promises to pay – can be traded, it is argued, just like commodities, in markets. Global deregulated markets.

They are ideas – nothing more than ideas - that drive government treasuries around the world to act as if money, like gold or cinnamon or lumber, can be scarce, despite evidence to the contrary.

It leads central bankers, politicians and technocrats to proclaim: ‘there is no money”.

In other words, the apparent misapprehension that money is a commodity allows its advocates to do something impossible for those who understand money as a social and societal relationship, a promise to pay: it allows money to be bought and sold in markets.

The reasoning goes further: like lumber, or coffee beans or platinum, there can be shortages or gluts of money. If a shortage in the ‘supply’ of money occurs, and impoverishes millions of people, then blame can be laid on an inhuman, invisible, de-politicised institution: ‘the market’. But that should not happen, because according to the ideology of markets, if left to their own devices, markets allocate scarce resources in the most efficient way possible.

That belief leads governments and financiers to act as if markets – globalised markets in mobile money – can be trusted to uphold the values that underpin our money – trust, honesty, accountability, integrity and responsibility – the values that make our promises to pay meaningful.

Today we live in a world in which thanks to the marketisation of all aspects of life there is distrust, dishonesty, corruption, outright theft, insecurity, instability and irresponsibility.

It is this level of distrust that continues to undermine the value of the US dollar.

The clearest evidence of the distrust is the explosive market growth of Crypto - a currency designed by criminals, for criminals, and whose purpose is to evade all regulation and law.

Crypto’s global market value stood at $3.28 trillion in January 2025, up 98.8% from January 2024’s $1.65 trillion cumulative market value - thanks to the corrupt actions of an American president and his friends in the Tech sector. It should come as no surprise that those levels of distrust extend to politics and to politicians that go along with the corruption of Crypto, and the marketisation of the precious social construct we call money.

Today’s news, as reported by the investigative news outlet The Lever (please subscribe) calls on Americans to ‘Get Ready to Pay In ZuckBucks’:

Amid a flood of industry lobbying in Washington, D.C., and Democrats’ capitulation, the Senate is set to pass the GENIUS Act, a sweeping cryptocurrency law that could spread fraud-ridden, destabilizing digital currencies across the banking system. But lawmakers and consumer protection experts warn that the bill has an even more serious problem: It would allow Elon Musk and other Big Tech tycoons to issue their own private currencies.

These and other warnings – the equivalent of the ‘clap of thunder’ in Daniel, Chapter 5 – is that trust in markets, in money, and therefore trust in currencies like the US dollar, trust in the financial system, trust in public authority – states and governments like that of the United States - trust in all these institutions are being deliberately undermined by deregulation, by too little government and by the lawlessness of, for example, crypto.

From my perspective, these developments – of too little regulation, of too little government, of deregulation and lawlessness, amount to “the writing on the wall” for the empire that is the United States of America - an empire that allows the ‘invisible hand’ to govern markets in money.

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