THE TRANSITION FROM GLOBAL NEO-LIBERAL ECONOMIES TO MERCANTILISM

We are living in an era where, since the 1980s, liberal global corporations have directed states, and accelerating into the 2000s, they have handed state administrations their written scripts and roles.

In this situation, is the greatest resource of the global economy, namely the neo-liberal economy, technology? Is it innovation? Reason and science? Diligence? Good education? Modern thinking? These are not the resources. The actual resource is the reserve currency. I define it as an "exorbitant privilege." A power made of paper, nylon, and cotton, which you print limitlessly, and with which you purchase all the real and financial assets of countries. Since 1980, two reserve currencies have dominated the global economy. While the US Dollar's share in global trade was 67% in 1980, it is around 57% today; the Euro, which started with the German Mark, has a dominance of around 15%-22%. Together, the two account for about 80% of the money circulating in global trade. The extreme concentration of the global economy's power in a single area is the greatest obstacle to the growth of other economies. It is hardly possible for countries not using these two currencies to balance their imports and exports. This unnatural imbalance has gradually enriched some while forcing others into harder work, cheap production, cheap labor, poor working conditions, and a struggle for daily survival. It created the income distribution chasm.

So, how did the countries outside this 80% slice, whose currencies are not reserve currencies, spend the last 45 years? They survived by helping the reserve currency advance even further. They delivered the goods they produced to US and European ports and left with dollars and euros. As if that wasn't enough, they invested the euros and dollars they earned back into the bonds of these countries, ensuring the continuity of dollarization.

Were there those who tried to prevent this? Yes, but it didn't work much:

1. The Euro created a shield to break the dollar's dominance in the world. EU member states demanded their rights from the world. They got them, and with the idea of printing unbacked money, they too began to enjoy this exorbitant privilege.

2. Local currency swap networks were established. Countries stopped using the dollar as an intermediary in trade and began directly swapping their own local currencies (Especially the network China established with over 40 countries). Countries filled their Central Bank reserves through mutual swaps and substituted the foreign exchange portion with non-dollar and non-euro currencies. This looked good to their citizens. But the exorbitant privilege system was not fully destroyed.

3. Another power of the dollar was that all the world's oil and gold were priced in its own denomination. By opening the Shanghai Gold Exchange to international trade in 2014, China began pricing gold in "Yuan." Then, in 2018, it launched oil futures contracts (Petro-Yuan) priced in Yuan and convertible into physical gold at the Shanghai International Energy Exchange. With this move, the heaviest physical blow was dealt to the West's (Comex and London) price-setting monopoly.

4. Following the collapse of the USSR, BRICS and the Shanghai Cooperation Organisation went down in history as the largest international organizations established to break this exorbitant privilege. The decisions taken and the use of their own national currencies in trade did not completely weaken the dollar and the Euro, but they halted their expansion.

5. Cryptocurrency was one of the most important weapons to break the exorbitant privilege in the world; therefore, it had to be rendered dysfunctional. The blockchain network, a new world technology, was going to break this exorbitant privilege. However, it was not difficult to dilute it and make it useless; the establishment of crypto exchanges was left to individuals, and cryptocurrency production to scammers. With the absence of any official guarantor activity, crypto was silenced with a slap on the back of its neck. It was essentially told, "Now is not the time."

The developments I counted above against the exorbitant privilege of the US Dollar and the European Euro only slowed their growth. However, a model that had come to life somewhere in the past for both the financial and real economy slowly reminded us of itself: "I am here, my name is mercantilism."

It is as if we can hear all the countries that cannot print dollars and euros saying, "We cannot cope with this exorbitant privilege; we are now shifting to protecting our assets." This situation may bring along a new move where they turn global trade in their favor by protecting valuable assets.

The transition to that rigid, protectionist, and precious-metal-oriented historical system—where there are no free market fairy tales, where the state acts like a merchant, where borders are walled off economically, and where the sole goal is "filling the vault with real assets"—can be seen as a last resort. Its name is mercantilism. It may not seem highly probable to happen, but it is a somewhat bitter yet definitive formula to stop the exorbitant privilege.

So, exactly how will this new generation of mercantilism arrive, and how is it showing itself today? Actually, this transformation has already begun, not by being suddenly declared, but through silent yet massive security decisions taken by states. The biggest indicator is that the central banks of countries unable to print reserve currencies are selling Western paper bonds and executing the highest physical gold stockpiling in history; because nobody trusts each other's "word" or digital paper anymore. In addition; the chip wars between tech giants, export bans imposed on strategic minerals like lithium and silver, and the redrawing of supply chains based entirely on "national security" rather than profitability are the most concrete footsteps of this transition. States are no longer investing in the transparency of the free market, but in the physical power and mineral depots within their own borders.

In conclusion; the moment the supposedly unshakable 'exorbitant privilege' of the Dollar and Euro crashes into the harsh realities of the physical world and geopolitics, this mercantilist transition will fully take the stage. The treasure and mineral-oriented protectionist doctrine of the 16th century is returning in the guise of the digital and energy wars of the 21st century. In the new multipolar order, the power at the table will not be determined by limitlessly printed unbacked currencies, but by who practically owns the gold reserves, critical supply chains, and production corridors. As the reign of paper and illusion ends, the ruthless new era of real assets and state capitalism officially begins. Serdar AYDOĞAN @geosserdar