When Dollar Hegemony Meets SHA-256: The Triple Anchoring Role of Bitcoin in the Breakdown of Petrodollars

Original Title: An Excerpt From The Satoshi Papers: The Banker Revolution

Original author: Natalie Smolenski

Source:

Compiled by: Daisy, Mars Finance

This article is excerpted from the introduction of "The Collected Works of Satoshi Nakamoto," tracing how 20th century America eroded the foundations of freedom through the centralization of money, law, and state power, and reshaped the global financial order.

In the early 20th century, the United States initiated a process of power centralization, interpreting it with a new federal authority that replaced the core elements of the traditional spirit of liberty. The participants of the Jekyll Island Conference in 1910 drafted the Federal Reserve Act, which was legislated in 1913, thus establishing the central bank of the United States - the Federal Reserve. The Federal Reserve was given a dual mandate: to curb inflation and ensure employment, with its core tools being the regulation of money supply and controlling the price of money through the federal funds rate. When the unprecedented financial crisis of 1929 evolved into the "Great Depression" economic disaster, the newly formed Federal Reserve failed to prevent or alleviate the crisis, but economists and political leaders concluded that "the state needs to strengthen economic control."

The authoritarian turn that emerged in the United States mirrored the trajectories of multiple countries: In 1933, U.S. President Franklin D. Roosevelt signed Executive Order 6102, which compelled all American citizens to surrender their gold to the Treasury and suspended the obligation to convert dollars into gold—this asset seizure policy was similar to the actions taken by authoritarian leaders such as Winston Churchill, Joseph Stalin, Benito Mussolini, and Adolf Hitler at the same time.

During the two World Wars, America's allies used gold to purchase American-made weapons, allowing the U.S. to accumulate the largest gold reserves in the world. As World War II was nearing its end, the Allies held a conference in Bretton Woods, New Hampshire, to plan the framework of the post-war international monetary system. The conference established the U.S. dollar as the global reserve currency convertible into gold, while also creating the International Monetary Fund and the World Bank. These multinational lending institutions ostensibly have the mission of promoting international trade balance and development, but their complex legacy includes ensnaring dozens of poor countries in an inescapable web of debt slavery.

At the same time, the rise of the post-war military-industrial complex in the United States has not only maintained a normal state of wartime readiness in peacetime, but also boosted GDP growth through arms trade with allies and other countries. From the Korean War to Vietnam, Laos, Lebanon, Cambodia, Grenada, Libya, Panama, and other military operations – not to mention the myriad covert operations and proxy wars of the same period – the regular acts of war, which were central pillars of U.S. anti-communist foreign policy, inevitably needed to be funded. This practical need eventually prompted the Nixon administration to end its dollar-gold obligations in 1971 and to reach an informal agreement with the Saudi government a few years later: the oil trade would be denominated in dollars and the dollars would flow back to the U.S. economy. The petrodollar agreement, which has the character of a treaty, was concluded entirely in secret by the administrative system, in part to circumvent the constitutionally required congressional treaty ratification process.

Now that the petrodollar system itself is falling apart, the world's major oil producers are pricing oil in other currencies. This is an inevitable reaction to the foreign policy of the United States since the end of the Cold War, which has always sought unipolar hegemony to dominate international trade and military operations. In particular, the 9/11 terrorist attacks in 2001 became a pretext for the United States to declare an indefinite war on terror, spend trillions of dollars on military operations abroad, and militarize or divide countries that had tended to be stable. The most far-reaching impact is that through the establishment of the Northern Command and the Department of Homeland Security, the United States has officially entered a state of militarized control.

The militarization process on American soil—this phenomenon that the founding fathers detested—has, in the name of counter-terrorism, thoroughly strangled the last remnants of citizens' privacy rights through the comprehensive implementation of Anti-Money Laundering/Know Your Customer mechanisms (AML/KYC). The roots of this trend can be traced back to the 1970s, well before the era of the war on terror. In fact, the 1970s can be regarded as the decade when the "banker's revolution" reached full maturity and the American experiment in freedom completely collapsed.

The Bank Secrecy Act passed by Congress in 1970 marked the beginning of a dark decade. This legislation requires U.S. financial institutions to record all financial transactions that are "of high value to criminal, tax, and regulatory investigations or litigations," as interpreted by the Treasury Department, and to provide these records upon request from law enforcement agencies. Additionally, financial institutions must report any cross-border movement of funds exceeding $5,000. The Treasury Department subsequently issued regulations stipulating that transactions over $10,000 conducted domestically must also be reported—this reporting threshold has remained in place to this day, even though, by conservative estimates, the purchasing power of the dollar has depreciated by nearly 90% since 1970.

The Bank Secrecy Act constitutes an unprecedented erosion of the Fourth Amendment's protections against warrantless searches. Despite legal challenges, the Supreme Court's "third party doctrine" established in United States v. Miller (1976) upheld the law: U.S. citizens have no expectation of constitutional protection for records held by third parties. The verdict sparked a public outcry and prompted Congress to pass the Financial Privacy Act two years later, in 1978. However, the law sets 20 significant exceptions, which further weaken privacy protections. The Foreign Intelligence Surveillance Act (FISA), passed that same year, purported to curb abuses by federal intelligence agencies (a lesson learned from the Nixon administration), legalized illegal surveillance by creating a "kangaroo court," the Foreign Intelligence Surveillance Court (FISC), a secret court that could issue confidential warrants for any government surveillance needs.

Bank Secrecy Act (1970), United States v. Miller (1976), The Financial Privacy Act (1978) and the Foreign Intelligence Surveillance Act (1978) form the prototype of today's comprehensive government surveillance system in the United States. These four legal instruments have killed the lifeblood of the American spirit of freedom in the era before personal computers and the Internet became widespread. Nowadays they are used as justification, requiring the comprehensive collection and sharing of data on financial transactions (and communications more broadly) generated through software platforms and digital networks, the infrastructure from which modern humans cannot escape. These laws have also spawned at least eight federal laws that expand surveillance powers: the Money Laundering Control Act (1986), the Anti-Drug Abuse Act (1988), and the Annuzio-Willi Anti-Money Laundering Act (1992). Money Laundering Suppression Act (1994), Money Laundering and Financial Crime Strategy Act (1998), Patriot Act (2001). The (2004) of the Intelligence Reform and Terrorism Prevention Act, and the Amendment to the Foreign Intelligence Surveillance Act, which contains the notorious Section 702 (2008) – This provision even allows for bypassing the oversight of foreign intelligence surveillance courts, with the authorization of the attorney general and the director of national intelligence.

Ultimately, these laws and judicial rulings have also given rise to at least three intelligence agencies specifically focused on collecting global financial transaction data: the Financial Action Task Force (1989), the Financial Crimes Enforcement Network (1990), and the Department of the Treasury's Office of Intelligence and Analysis (2004). In short, in less than a generation, the U.S. banking system, which completed its centralization in the early 20th century, has transformed into an extension of national police functions. The revolving door between Wall Street, the Federal Reserve, and the Treasury—where elites cycle through jobs in these institutions—has accelerated the collusion between lawmakers, law enforcement, and capital controllers. This machine, initially created by the "bankers' revolution" and later reinforced by the petrodollar system, continues to serve the elite class through informal coordination and official bailouts.

After the 2008 financial crisis, governments around the world not only failed to correct these flaws, but with few exceptions like Iceland, almost all countries chose to bail out bankers. During the COVID-19 pandemic in 2020, the banking industry, along with many other sectors, received assistance again. In the United States, these bailout plans were authorized, extended, and funded through bipartisan leadership endorsements and comprehensive bills that were not debated.

However, the 1970s not only merged banks with the state apparatus, signaling the end of financial privacy, but also set a precedent for "emergency rule"—the U.S. president seizing powers that the Constitution was supposed to prohibit through the declaration of a national emergency. The National Emergencies Act passed by Congress in 1976 (NEA) was ostensibly aimed at limiting the president's emergency powers, but in reality, it led to a significant increase in the frequency with which presidents declared states of emergency through procedural authorizations and broad definitions. After the Iranian hostage crisis in 1979, President Carter signed Executive Order 12170 to impose sanctions on Iran under this law, becoming the first president to invoke it. This action also invoked the International Emergency Economic Powers Act of 1977 (IEEPA)—which authorized the president to freeze any foreign entity's assets deemed to pose an "unusual and extraordinary threat" and block transactions.

The combined effect of these two laws gives the US president the power to unilaterally prohibit and punish any economic activity around the globe – simply by declaring a national emergency. Because U.S. dollar transactions typically go through U.S.-controlled financial networks, and because the U.S. dollar remains the world's main unit of account and sovereign reserve currency, the National Emergency Act and the International Emergency Economic Powers Act, two U.S. domestic laws, can punish individuals and organizations that are completely outside of U.S. jurisdiction. Eventually, the executive branch of the U.S. government — the president and the Treasury Department, which is responsible for enforcing financial sanctions — was able to exercise some form of de facto domination over much of the world.

Executive Order No. 12170 was just the beginning of the U.S. imposing foreign sanctions through presidential orders. Subsequently, executive orders have become a regular means for the president to bypass lengthy legislative procedures and quickly implement sanctions. The combined application of the International Emergency Economic Powers Act and the National Emergencies Act has provided legal basis for nearly 70 emergency declarations, resulting in over 15,000 sanctions in total. The U.S. has also manipulated the UN Security Council to pass multiple resolutions imposing multilateral sanctions on specific entities and related parties—member states must enforce this under Chapter VII of the UN Charter. These UN sanctions lack due process, and most of the sanctioned subjects have never been convicted.

Sanctions have become a preferred punitive tool for American politicians due to their ease of implementation and seemingly low costs, with approximately one-third of countries globally under U.S. sanctions. The pressure of enforcement has led to record staff turnover and case backlogs at the Treasury Department, resulting in a revolving door between the Department and private law firms/consulting companies: former officials leverage their understanding of the complex sanctions system and government connections to benefit clients.

However, sanctions rarely shake the target regime: authoritarian regimes remain stable, while sanctioned democratic countries consolidate power by increasing defense spending. With so many countries being sanctioned, it has instead prompted nations to form new geopolitical alliances and create alternative financial systems to bypass the U.S. banking system. What sanctions truly bring is a long-term poverty (if not economic collapse) for the sanctioned countries, which inevitably fuels decades of hatred towards the U.S. Even so-called "targeted sanctions" against specific industries have little effect—their limited scope and weak pressure cannot compel those in power to change policies. In practice, the execution often results in a polarizing effect: for the already prepared elites, travel bans and asset freezes are merely minor inconveniences; arms embargoes and export bans can cause collateral damage far beyond the stated scope.

Since the 1970s, there has been a fundamental paradox in the convergence of bank-state power: all of these laws are ostensibly designed to limit power—the Bank Secrecy Act restricts banks, the National Emergencies Act restricts the president, and the Foreign Intelligence Surveillance Act regulates intelligence agencies. But it backfired because of its fatal design flaw (an attempt to use federal law to achieve the goal of limiting powers, which is part of the constitutional framework). When federal law overrides the Constitution, the legal/political/military environment has regressed to what it was before the American Revolution: the state has become the central political subject, individual rights have been restructured into privileges, the law presupposes the guilt of citizens, and the state has a monopoly on power, money, and power – a political culture in deep crisis.