Thanks to Donald Trump, China wins and Iran becomes a global power.

A blog by Martin Erasmuson.

Having chosen to attack Iran, Trump and the US are now on the horns of an escalation trap with no obvious exit ramp.  Donald’s choices are 1) escalate or 2) declare victory and retreat.

To win his war Trump needs to: 

• overturn the Iranian regime

• destroy or remove their enriched uranium

• remove Iran’s capability/capacity to resuming uranium enrichment

• destroy Iran’s drone and missile stockpile

• remove Iran’s capacity/capability to resume drone and missile production.

In contrast, to win, all the Iran needs to do is survive. 

By that definition, Iran has won the war to date as the US/Israel have not achieved any of those objectives.  Further, Iran is now stronger than it was before the war started, in control of 20% of world oil production via the Strait of Hormuz, and, on the back of the US lifting some sanctions to ease oil prices, is now selling more oil than it did before the war. Iran, with BRICS partners Russia, and particularly China, is on track to become a Middle-East Regional Power, if not a world power. From the Trump/US perspective, it’s an ‘own-goal’.

First the escalation trap, escalate or retreat.

Option 1: Escalate

As of early April 2026, U.S. Politico reported that the US military, after weeks of intensive bombardment, were running out of targets to strike with many remaining assets in hardened bunkers or simply hidden. To continue air strikes, all the US is doing is burning through stockpiles of expensive, hard to replace munitions with minimal impact.

As the US continues its military buildup in The Gulf, there is speculation it will attempt a ground invasion of Iran.  Many expert commentators, including retired US army Colonel Lawrence Wilkerson (former chief of staff to US Secretary of State Colin Powell) suggest a ground war against Iran would fail, though after a many years campaign e.g. as in Viet Nam, Iraq and Afghanistan. While the US’s Iran invasion was going on, the Strait of Hormuz would remain closed, along with 20% of global oil production, gas prices in the US would remain high, driving up inflation that has already increased on the back of Trumps tariff policies, global food production will fall significantly due to reduced fertilisers coming out of the Middle East, and the global economy would tank, likely leading to recession, if not depression.  US Republican's would lose the US mid-term elections (for control of Congress and Senate), and likely be impeached in 2027.

The upshot?  we’re all fucked.

 Option 2: Declaire Victory and Retreat

Trump declares victory and walks away.  Such a move would leave all the US pre-war objectives unfulfilled, but Iran would retain control of the strait of Hormuz, charging tolls and making US$140M per day or US$80B per year. Upshot?  Terrible for Israel, but oil keeps flowing, albeit more expensive, the global economy still takes a hit, but begins to recover relatively quickly, Trump spends a lot of time applying copious quantities of lipstick to the ‘I lost’ pig, repeatedly declaring victory, which most US voters see through, and Republicans still lose the house and Senate.

Apart from Israel and the US, the rest of the world dodges a bullet.

 Option 2B: Retreat, with US blockade on Strait of Hormuz

This will have the same economic effects as options 1, escalation.

Iran through its ally and proxy Ansar Allah (the Houthis in Yemen) close Bab el-Mandeb, the narrow strait between the Indian Ocean and the Red Sea and gateway to the Suez Canal.  Such a move would amplify the economic effects of a closed Strait of Hormuz.

China is the big winner of the Iran war, and even more so the longer it goes on. As of writing, China was ignoring Trumps blockade with several China owned or flagged tankers transiting the Strait of Hormuz.  China also has several navy ships around Iran. Even Trump is probably not dumb enough to go toe-to-toe with China so a further win to them and Iran who is selling them the oil.

China’s strategy? Come the end of WW2 the United States ended up the top dog in the world largely due to every other pre-war power (Japan, China, the USSR, the UK, Germany and the rest of Europe) because everyone else had fought themselves to a standstill.  And when the USSR disintegrated in December 1991, the US found itself the global hegemon.

In this US/Israel/Iran war China effectively employing the same playbook i.e. sitting back and watching the United States bleed-out, Iran charging oil-tolls in Chinese yuan which further weakens the US dollar, all without firing a shot. 

Once the shooting stops

Key members of the Gulf Cooperation Council (GCC – comprising: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates) welcomed US military basses on their territory principally for security reasons.  Of the many salient lessons of this war, a key one for GCC states is that, not only were the various US bases not a deterrent for attack from Iran, those same countries became a target, not only US bases but their own oil infrastructure. 

As the US bombed, Iran sustained missile attacks attacks against U.S. and Israeli interests which Col. Wilkerson (et al) suggests demonstrated high accuracy and effectiveness (contrary to some Western media portrayals). Meanwhile, as of early April 2026, the US sustained significant losses including over 15 personnel killed and hundreds injured, billions of dollars in equipment damage (including F-15s, E-3 AWACS, A10 warthog, 2 X Black Hawks, 2 X Hercules C130, dozens of drones and cruise missiles, a severely depleted air-defense missile inventory, and all but total retreat from 13 Middle East bases which multiple media outlets describe as now ‘uninhabitable’.  The biggest causality in the conflict is likely the myth of US and Israeli invincibility. That will leave the GCC states pondering their defense options, likely without the US, and that may lead to a regional nuclear arms race, because if Iran wasn’t considering a nuclear weapon prior to this latest Israel/US attack, they must surely be considering one now.  For their own security, how many GCC countries will also consider a nuclear weapon?

China, the big winner.

As of early 2026, roughly 13% to 15% of China's total crude oil imports come directly or indirectly from Iran. 

Chinese firms own, operate, or have stakes in over 100 ports worldwide, some bought, but many built by China.  When the US/Israel/Iran conflict comes to its inevitable conclusion, whatever option above Trump chooses, almost certainly China will step in and build/rebuild Iranian ports, and other critical infrastructure. Add to that the Chinese Belt & Road initiative, which has already built rail links from China through to Iran.

Iran’s oil exports to China, via sea and rail will almost certainly increase, all paid in yuan into Chinese bank (i.e. immune to Western sanctions/confiscation) which, along with other infrastructure investments, will put rocket-boosters on Iran’s economy.  In a few years, Iran will become the powerhouse in the Middle East, if not the World, adding to the existing, collective $27T GDP of its BRICS belt and road neighbors (Russia $2.66T; India $4.15T; China $20.86T, further eroding US hegemony and global influence.

China’s President Xi Jinping must be saying ‘thanks Donald, I couldn’t have done it better myself’.

RIP Uncle Sam - How to survive the Post-America World Pt 2

By martin Erasmuson

Back in November 2016 I wrote the first blog of the same title: ‘How to survive the Post-America World’.  Before we turn our attention to that question, let’s address the implied question: ‘why would the United States collapse’?

In answering that question, it is useful to follow the money.  Much of that dollar-train ends with China which is poised to push the United States off the global financial pedestal which they’ve dominated for nearly a century.  How might that happen?  In exploring that question, a good question might be: ‘How is it that the U.S. Dollar seems to be impervious to events like the 2008 global financial crisis (GFC)?  The US substantially survived the GFC by just printing more money.  And by more, I mean a lot more.  As CNBC journalist Jeff Cox puts it; “The numbers are daunting if not shocking: [since 2008] US$12.3 trillion of money printing [quantitative easing], nearly $10 trillion in negative-yielding global bonds since [the GFC] in 2008”.  Basically, the US has been running the printing-presses night and day for almost a decade, yet still the U.S. dollar remains high.  How do they do that?

Mostly because the U.S. Dollar is the international default unit of currency.  i.e. if you want to do business around the world, particularly buying or selling oil, you need U.S. Dollars.  While the US looks to control as much of the world’s oil reserves as it can, and it does a pretty good job of that, what it can’t control physically with US troops (in Russia, Iran or China), it can do so financially by controlling the currency (U.S. Dollars) that oil is traded in.  That’s why the U.S. dollar is frequently described as the ‘Petrodollar’.  Such is the global demand for U.S. dollars for trade, it can literally keep printing a $12.3 trillion mountain and no one bats an eyelid. 

Until someone challenges that status quo.  When that happens, the US ‘banks the farm’ on maintaining global dominance of the U.S. Dollar.  Then they have no problems going ‘all in’ to protect the status quo.  Examples?  In the last 15 years two major oil-producing counties attempted to challenged that, with both revealing plans to drop the U.S. Dollar in trading their oil: Libya and Iraq. It didn't go so well for them.  Conspiracy theory I hear you say!

Let’s start with Libya.  In January 2016 the US State Department released over 3,000 Hillary Clinton emails.  According to journalist Brad Hoff, those emails show that Libya’s plan to drop the U.S. dollar and create its own gold-backed currency was the real motive for the US and NATO’s intervention.

Much has been written on the Iraq wars.  History has already proven that the whole ‘weapons of mass destruction, (WMD) pretext was a sham.  So what was the reason, the excuse for the US to go to war?   Journalist Ron Paul, way back in 2006 reported “Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; [while pitched as a threat to regional security, Iraq’s] lack of any military might was never a [real] threat…  There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for [the US] obsession with Iraq [and] played a significant role in [the US’s] motivation to wage war.”  Back in 2006, Ron Paul also suggests, both Iran and Venezuela had similar ideas for ditching the U.S. Dollar, swiftly dropped on seeing the demise of Saddam Hussein.

Roll forward a decade and the list of countries looking to drop the U.S. Dollar as an oil trading currency now looks like this: Russia, China, Iran and Venezuela.  Is it just coincidence that those are the same four countries the US will have us believe are a threat to Western Civilization as we know it and are subject to US sanctions?

As Ron Paul suggests, while Libya and Iraq were never any military threat to the US or their proxy NATO, the same cannot be said of Russia and China.  While both rank behind the US in military and economic capability, that is changing fast.  Wikipedia (November 2017) has China's economy as the world's second largest, the world's largest economy by purchasing power and the world's fastest-growing economy.  China dominates global manufacturing and, according to Gartner, is poised to displace California’s Silicon Valley of their half-century technology dominance.  That will see toe-to-toe battles between China and US Tec Giants: Amazon vs Alibaba Group; Apple vs Huawei; Apple Pay vs Ai Pay.  And the numbers suggest some of those battles have already been won by China.  Fortune predicts China will overtake the U.S. as the world's largest economy before 2030 (And possibly much sooner if the thesis in this blog prove correct).

So what?  The U.S. Dollar is still the default international currency isn’t it?  China might eventually dominate global manufacturing and by extension trade, but they, like other countries, will have to underwrite that trade in the worlds default currency, U.S. dollars.  So, the US still has control right?

Well that might be about to change.  China is poised to invite countries to trade oil in their Chinese, yuan.  And to do that countries will need/want to buy yuan.  Lots of yuan.  Yeah right!  ‘Why would anyone invest in yuan’ I hear you say?  Because China will back yuan with gold.  Basically, China will return to the ‘Gold Standard’ in which the standard economic unit of account (yuan) is based and backed by gold.  Up until the early 1900’s many countries underwrote their currency with gold.   Under the Gold Standard a country’s currency was effectively a promissory note for gold.  In practice that would mean if you have a Billion in yuan, China will exchange your yuan for physical gold on demand (Do a Google search with “yuan china gold”, you’ll be presented with a bunch of articles).

‘Supplementary question’?  “Wouldn’t China need a lot of gold to pull that off”?  Yes, they’ll need a lot of gold; like literally truck loads.  (And the questions keep coming……..) ‘So how much gold does China need/have’?  Back in Feb 2016 CNN reported that “Gold imports to China have surged over 700% since 2010” and goes on to say: “China now [Feb 2016] consumes about 40% of the gold that comes out of the ground [anywhere on the planet] every year”.  In October 2017 a Reuters article suggested “China’s proven gold reserves reached 12,100 tonnes at the end of 2016”.  At the time of writing this blog, November 2017, gold was trading for US$1,278.40 an ounce, or US$45,094.27 a kilogram.  (I’ll let you do the rest of the math to work out the value of 12K tonnes). 

Back to those four ‘threat-to-civilization-as-we-know-it’ countries: Russia, China, Iran and Venezuela.  What happens if they all ditch the U.S. dollar and switch to the yuan as their oil trading currency?  Of the planets 80 million barrel per day total oil production, those four countries produce around 25%.  What if we add to that reports from Saudi Arabi where the Kingdom’s Crown Prince Mohammad bin Salman bin Abdulaziz Al Saud is looking at options to end its 40 plus year reliance on the U.S. dollar.  Then you could have nearly 40% of the worlds total oil trade moving away from U.S. Dollar.  (On the day I was completing this blog, China’s President Xi Jinping announced that China supports Saudi Arabia’s efforts to safeguard national sovereignty and achieve greater development.  This all poses further risk of the U.S Dollar collapsing)

Unlike Libya and Iraq, the US has less options at their disposal in combating China and Russia, least of all their preferred ‘Gunboat Diplomacy’.  It doesn’t stop there for the US.  The launch of the Asian Infrastructure Investment Bank (AIIB) in 2015, mostly backed by China, Russia and India directly challenges the US-dominated World Bank.  Add to that predictions from commentators like Tony Seba that the Internal Combustion Engine (ICE) will be obsolete (and with it the oil industry) by 2030, the whole oil/U.S Dollar/Petrodollar may be consigned to history along with the ICE itself making the debate in this blog moot anyway.  Either way, it’s 'Brown Trousers' time for the United States and by extension, the rest of the planet.

I keep threatening to explore the opening question in the title of this blog; what will happen if the United States collapses, and I will soon.  That said, while the evidense presented in this blog suggests that inevitable demise (as inconvenient and alarming as that is), I’m far less certain about what the effect that will have on the rest of the world.  In that regard, I’m curious of readers thoughts, suffice to say, it is unlikely the US will go quietly.

On the road to another global conflict?

This week Trump follower and Senate Finance Committee Chair Orrin Hatch (R-Utah) pushed forward two of President Donald Trump’s Cabinet picks despite a Democratic boycott.  The rules require at least one member of the minority party to be present for the committee to vote on a nominee. But Hatch suspended the rules, allowing him to go around that requirement.

In Berlin, Germany on 21 March 1933, the new Reichstag was constituted.  To achieve full political control despite not having an absolute majority in parliament, Hitler's government brought the Ermächtigungsgesetz (Enabling Act) to a vote in the newly elected Reichstag (German Parliament). The Act gave Hitler's cabinet the power to enact laws without the consent of the Reichstag for four years. 

Between 1933 and September 1 1939 when WW2 ‘officially’ kicked-off; Western Nations, particularly Great Britain had ample opportunities to push back on Hitler but, like UK Prime Minister Theresa May is doing now, chose the consolatory route rather than stand up to the fascist.  Happily paving the road to 25 million WW2 deaths with the ‘good intentions’.

The time to act is now, not when you hear the jack-boots on the stairs.

How to survive the Post-America World

Part 1 of a blog-series by Martin Erasmuson.

Back in July I blogged ‘Start getting ready for President Trump’ and ‘The beginning of the end of NATO’; to some derision I might add.  The arguments for and against my first blog are now moot and with EU leaders now openly discussing the need for an EU army.  The EU it seems are already considering the questions proposed by this blog; a world without a United States of America.

Tuesday’s US Presidential election result was not the end; but the beginning.  The key question for everyone now is : “What will a post-US-empire look like?” 

Peter Turchin, a Russian-American scientist in the statistical analysis and dynamics of historical societies, predicted way back in 2007 a major wave of social upheaval and revolutionary violence is set to take place in the US in 2020. All Turchin’s pre-cursers are in place in the US: an increase in the elite population; a decrease in the overall living standards; and enormous government debt.  Tuesday night’s result just confirmed the individual who will set those events in motion.

So back to the main topic; what will a post-US world look like or more importantly, how will it affect countries and individuals?  How should countries like New Zealand and individual citizens start to prepare for the eventuality?

More to come...........................