I’m not big on making predictions. At the very least, I’d rather avoid making predictions about what happens in the future in any system that involves humans.

It’s much safer to work with a list of plausible scenarios, and evaluate ideas for possible strategies and concrete actions in relation to all of those scenarios.

When I’m now writing that we’re “on the brink of a financial crisis”, what I mean is that the possibility of a financial crisis now must be included in any realistic list of plausible scenarios.

I’m not putting a date on when that possible financial crisis would happen. It might happen today, or in a week, or in a month, or in a year, or two.

But let me explain why I think that is now quite a plausible scenario:

In a nutshell, I would suggest that much of the world of international investments is addicted to the US being a good location for such investments, but that addiction is now likely to lead (sooner or later) to a crash.

For a long time, the US has been a magnet for international investments. To many investors, investing in the US was attractive because of good investment opportunities, and for many also for reasons of weak trust in the economic future and/or stability of their own countries.

Now however, as Trump is “venezuelifying the US” (for anyone who might not know who Paul Krugman is: He is a Nobel Prize-winning economist and he also has some personal direct central bank experience — he definitely knows what he’s talking about), objectively the US is no longer a good location for international investments.

The one main counterargument is that a lot of investors want to be invested in major AI companies, and there isn’t yet much of an alternative for such investments in the free world outside the US.

But being personally involved with AI, I believe that I know what I’m talking about when I claim that the return on investment for further investments in those companies is likely to be disappointing at best. (AI will continue to be important, as far as it goes the technology is real, and it will continue to be developed, but what those companies can do isn’t that much more powerful that what I can do for clients using open-weight AI. Hence those fantastic company valuations IMO have no basis in reality. And don’t get me started on the pretence that they might be able to create “artificial general intelligence”. That’s IMO pure conmanship.)

Hence I would insist that at the very least, it must be considered a very realistic scenario that eventually the faith in the US as a good location for investments will decline.

In order to understand what will happen when such a realisation becomes widespread among international investors, let’s consider currency markets and how they relate to international investments.

I’m in Switzerland. Suppose that I had a significant amount of Swiss Francs that I wanted to invest in the US. Very likely, the investment opportunities that I would consider in the US would all be in US dollars, so my investment would involve “exchanging my Swiss Francs for US dollars”. That would be possible, because there are for example banks which are willing to sell me US dollars in exchange for Swiss Francs.

Now look at the bigger picture: In total, the amount of US dollars that are sold for non-US currencies is always equal to the amount of US dollars that are bought with non-US currencies.

As long as the US is attractive for international investors, there is a significant overall demand for US dollars. That is balanced by a demand for non-US currencies which results from the US trade deficit: When goods are imported to the US (and on balance, more goods are imported to the US than vice versa) those goods are eventually paid for with US dollars, while most of the workers in foreign countries who produce those goods pay for their living expenses in their local currencies. Hence somewhere along that value chain, those non-US local currencies are bought with US dollars.

But how can it happen that the amounts of US dollars that are sold for non-US currencies is mathematically exactly equal to the amount of US dollars that are sold for non-US currencies? That requires financial intermediaries (like e.g. banks) and currency markets which can adjust exchange rates. So if the US starts being seen as somewhat less attractive for foreign investments, the value of the US dollar will fall in comparison to other major currencies. For example, the USD/EUR rate has fallen by 11.77% over the year 2025; most of that decline has happened from March to June. (cf. e.g. https://www.exchange-rates.org/exchange-rate-history/usd-eur-2025 )

A lower USD/EUR exchange rate means that international investors can get more of whatever they’re buying (for example, shares of US companies) for any given amount in their own currency. But I don’t see that as making shares in US companies significantly more attractive to international investors. On the contrary, if the value of the US dollar is seen to be declining, international investors will consider that to be a trend that might continue, which would be bad for the value of their

investments.

The analysis is different if for example an international company considers building a factory in the US, then the corresponding cost will be lower when expressed in a non-US currency. But actual foreign direct investment in the US isn’t all that significant compared to other kinds of investments and compared to the trade deficit.

In my view, the main adjustment mechanism is the trade balance: When the value of the US dollar decreases, imports become more expensive for buyers in the US. Also, then US exports become more attractive for buyers outside the US. Now decreasing consumption of imported goods (because they’re becoming too expensive) can happen faster than increasing exports (which for all kinds of goods requires marketing, and time for buyers to respond to the changed prices, while for physical goods it may also require increasing production capacities).

Therefore, if/when the US becomes less attractive for international investments, IMO the main balancing mechanism which can act fast is for prices in the US to rise for goods which the US imports. Then imports will decline, reducing the US trade deficit, or potentially even leading to a US trade surplus (if imports decline strongly and fast, while exports decline much less or much more slowly).

There is however a hard limit to how much imports can decrease: they absolutely cannot fall below zero. They cannot balance a dramatic loss of confidence in US investments by international investors who might on balance, in total, behave worse than only reducing the investment of additional capital in the US; they might eventually rather want to take capital back out.

I won’t try to predict what exactly would happen in the US then. But I think that it’d certainly be a major financial crisis that would also severely affect all other countries, with central banks worldwide (with the exceptions of Russia and North Korea) scrambling to save their national banking systems from collapsing due to contagion from whatever happens to the US financial system.

It is in many respects quite terrible. For example, it is rather pro-Russian and quite hostile to important core principles and institutions of democratic European self-government.

However, here is a sentence from this document which is in my eyes quite reasonable: “As Alexander Hamilton argued in our republic’s earliest days, the United States must never be dependent on any outside power for core components—from raw materials to parts to finished products—necessary to the nation’s defense or economy.”

Of course, this is not only a reasonable principle in the context of the US. As a European I find it likewise quite natural to think we must get rid of all outside dependencies for anything that is essential for Europe’s economy or military defence capabilities. Global trade can do a lot of good, but it must certainly not be allowed to make us dependent on foreign powers that are actually openly hostile to principles and institutions of democratic European self-government.

The US is now such a hostile foreign power. In writing this, I’m of course not thinking of the people in the US in general, but of the US as a country with a powerful federal government and many powerful businesses, most of which will generally act in accordance with what the US government tells them to do or not to do.

Now, some economic dependencies are worse than others.

I would suggest that the worst kind of dependency is when critical business processes depend directly on any kind of Software-as-a-Service (SaaS), so that if for any reason that online service is no longer available, with immediate effect —and potentially no warning at all— those business processes cannot continue.

This includes of course Software-as-a-Service services in the field of AI. Alternatives exist (even if they are less well-known), such as open-weight AI systems that you can run on your own hardware, so that there is no risk of business disruption due to an AI SaaS service suddenly no longer being available due to any kind of political conflict.

Millions of people have participated in “no kings day” protests, but for example the major social media companies appear eager to appease the Trumpist government, and many others are fearfully silent. That invites uncomfortable historic comparisons, for example:

I now want to look at how the political leaders of important European democratic countries are responding.

This week’s NATO summit

The North Atlantic Treaty Organization, NATO, is the major military alliance of democratic countries on both sides of the Northern Atlantic Ocean. In the preamble of the North Atlantic Treaty, they affirm that they “are determined to safeguard the freedom, common heritage and civilisation of their peoples, founded on the principles of democracy, individual liberty and the rule of law.” These principles are not somehow merely incidental to NATO — defending these principles of freedom is NATO’s core purpose.

Traditionally NATO has been led by the US. Now however the US has a government that is working directly, and quite intensely, against the very principles that NATO is intended to safeguard. On top of that, the current president of the US wants to annex Canada (while calling it “highly unlikely” that the US would use military force to make that happen) and Greenland (explicitly not ruling out the use of military force in that case).

Therefore I consider the NATO summit group photo remarkable in that it essentially pretends that the NATO leaders can still stand together in unity:

The actual content of the summit’s proceedings was reportedly worse still, effectively an orchestrated grovel at the feet of Donald Trump.

The foolishness of hypocrisy

By means of all that hypocrisy, the risks that are inherent in open political conflict with the US have been avoided for now.

However, the political leaders of the other NATO countries have also weakened themselves. Both in regard to the relationship with the US, and in relation to their own populations. Nobody has much respect for sycophants. Such weakness is not a good starting point when the time comes for addressing matters of importance, like the climate crisis, defending the country’s economic interests when Trump starts the next round of bullying around the topic of tarriffs, or informing the country’s citizens about why Russia’s aggression against Ukraine is in fact a serious problem for the whole of the free world.

That of course does not make the climate crisis less severe, and the threats to democracy must not be allowed to make us even more distracted than we already are from addressing the problems of greenhouse gases and their effects on earth’s climate system. Quite on the contrary, I believe that neither of these two problem areas can really be addressed successfully without also addressing the other. Seriously committed and strategic actions are needed in both areas, while appropriately understanding and addressing the interconnectedness of the political and diplomatic obstacles to solving the problems.

The political opposition to what must be done in the area of reducing greenhouse gas emissions and working towards creating a sustainable economy includes not only those who deny the problem outright. There are also many who simply have other, more short-term prioritites. That may to a significant extent be related to the moral failure of not seeking to understand the matter with sufficient clarity. There are no valid excuses anymore for not knowing enough to understand the need for drastic action to urgently reduce greenhouse gas emissions. Priorizing short-term objectives over that is now really inexcusable, it’s a kind of serious climate crime to excessively enjoy life today at the expense of future generations.

I believe that what I have just described in regard to the problem of greenhouse gases has significant parallels in the threats to democracy and the free world as a whole, which result from Trumpism in the US and Putin’s war in Europe. The difference being that in regard to the threats to democracy, much less has been written yet with a goal of creating clarity in regard to what precisely the dangers are.

The process for solving any complex problem must start with understanding the problem.

This is doubly true in the context of democratic political processes for problems that require political action and where there are well-paid political agents who seek to push things in the direction of ensuring that any political action that might be taken will be ineffective. In the context of the climate crisis, the influence of the lobbyists of fossil fuel interests is by now well-understood. Similar phenomena exist is the context of the threats to democracy, for example in the form of obvious and not-so-obvious forms of Russian propaganda and in the form of the various hate narratives of far-right populists.

If we don’t really understand the problems and if we don’t learn to focus on what is really relevant to solving them, most of our capacity to pay attention will be absorbed by noise. And if the general public is distracted and confused in regard to what may need to be done, the necessary political will for taking decisive action cannot arise.

For example, US president Trump is an extreme egotist for whom one of his primary priorities seems to be that he himself is seen as important. On the basis of this, I would predict that as long as Putin’s war against Ukraine continues to be be seen as important and continues to be in the news, Trump will continue to do just enough so that he will be seen as a seemingly-important part of those news cycles. This generates lots of media noise that has nothing to do with any path to actually solving the problems.

Therefore, let’s seek to understand the problems well enough so that we will know what is just noise, and so that we can focus on what truly matters.

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While these events are reported in the mainstream media, many of those reports contain much of what is like noise in my ears. At the same time, it seems to me that those events that actually have significance are not analysed carefully and deeply enough.

It is in response to these frustrations that I’m starting this publication, in which I’m planning to report significant news about what is going on in regard to the free world, and comment on it.

I’m calling it a “thoughtsletter” rather than a “newsletter” because I expect it to be primarily about how I think about what is going on, and about how I believe that it should be thought about. When something happens, I will not rush to directly publish an article about the news item as quickly as I can. That said, this publication will be about news in regard to the free world, and in particular about what turns out to be significant news.

I do not plan to comment immediately about news items that might possibly turn out to be significant. Rather I will take the time to think about what they mean, and often also wait to see whether subsequent events confirm that the events were in fact significant.

For example, many politicians will often make statements that sound significant, but if they then don’t follow up with corresponding actions, I won’t consider what was said worthy of an article in this thoughtsletter.

In deciding what is significant enough to be addressed in this thoughtsletter, I plan to think about what is important from the perspective of Christian small business owners anywhere in Europe, people who want to have a reasonably good general understanding of what is going on, but who do not want to spend so much time on general international news (i.e. news about countries which are not for some reason particularly important to them) so that that would significantly distract them from the people they care about or from their businesses.

That said, I certainly intend to write so that what I write will be of interest and value to a broader audience.

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