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Category: Monticello College Comments: 3

The Shrinking Hegemon: a fourth turning reality

Dr. Shanon Brooks

August 28, 2021

In 1944, the allied “soon-to-be-victor” nations met in Bretton Woods, NH for the United Nations Monetary and Financial Conference. At that time, the world economy was very shaky, and the allies met to discuss the prevailing issues that plagued currency exchange. The Bretton Woods Agreement which resulted from the meeting, set the stage for all global economic systems for the next 75 years. 

Bretton Woods Inn, New Hampshire

This new global economy was based on the gold standard and the US dollar as the world reserve currency. All other currencies were then based on the dollar. World Reserve Currency is the currency chosen to provide stability for global economics. To explain this further I have included a few excerpts from an article written by Kathy Jones of the Charles Schwab Financial Group on March 19, 2021: 

We are often asked if the U.S. dollar will lose its status as the world’s reserve currency. Investors are concerned that the Federal Reserve’s easy monetary policy, combined with rising budget deficits, will undermine confidence in the dollar. The recent drop in the dollar over the past year has heightened these concerns. While we agree that there can be unforeseen consequences from the current policy mix, we believe the dollar’s role as the dominant global currency looks secure. 

What are Reserve Currencies?

Reserve currencies are typically issued by large, developed countries with records of financial stability. To be held in reserve by a foreign central bank, a currency typically needs to:
• be freely convertible (not pegged by the government)
• have a large and liquid debt market that foreign investors can access
• have an independent central bank
• and be widely used in trade and global transactions 

In addition to the U.S. dollar, the euro, the Japanese yen, British pound, Swiss franc, Australian dollar, and Chinese renminbi are all held in reserve. However, the dollar is by far the most widely held currency at 60% based on 2020 data from the IMF. 

The U.S. dollar is also used in about 40% of global trade and nearly 80% of all global cross-border transactions. Most commodities and many other goods are traded in U.S. dollars—oil, copper, and agricultural goods—to name a few. Investors need to hold dollars to trade in these goods and services, and need to have a large and liquid bond market to in which to invest those dollars. 

Having the world’s reserve currency affords the U.S. some privileges. It means there is underlying demand for U.S. bonds from foreign central banks and other large investors looking for a safe market in which to invest. That allows the U.S. to borrow at lower rates than would otherwise be possible. Many years ago, former French President Valéry Giscard d’Estaing used the phrase “exorbitant privilege” to describe the benefits accruing to the U.S. from having the world’s reserve currency. It’s still the case today. 

In short, this means that most foreign governments hold a large supply of US dollars (considered the most stable currency) in reserve to ensure they can purchase vital international goods such as food, industrial products, and crude oil. 

This unique status afforded the US in 1944 was primarily based on its performance during WWII, or more clearly, US military hegemony—we were the biggest, baddest, toughest guys on the block and as such, it is reasoned, we had the respect or fear of all other countries. Until two weeks ago, we had for the most part retained that image—that image is beginning to crack. 

What happens to a country’s economy that has been at the top of the game for 75 years and then suddenly is no longer “king of the hill?” How does loosing world reserve status effect a national economy and the standard of living of the millions of people who live there? Does the loss of such status change how our allies and enemies see us?

For the first time since WWII, US allies are scratching their heads and beginning to rethink relationships. The current Afghanistan debacle is changing the way the US is being viewed around the world and US allies are beginning to wonder if the US can continue to be counted on as the protector of democracy and western values. If this perception changes, if our allies loose confidence in US military might and our enemies no longer fear us, the US world reserve currency status will begin to erode and eventually crumble.* When that happens, the once robust US economy will fail and our lives will change forever. 

Afghans cling to military flight out of Kabul

Thinking men and women can clearly see that legislation that adds trillions of dollars to our national debt, an executive administration that is ordering new pandemic lockdowns, and a continued nationwide social breakdown can only serve to weaken us as a nation.  The utter failure of the US withdrawal from Afghanistan not only adds to our decline, but will have decades of negative impact for the region and potential adverse effects on global events for the foreseeable future. 

This is such a profound concept that I think I need to restate it in greater detail. This change has the potential to reset the US economy to “second world” conditions (economically if not politically) in a short period of time. This will mean for the most part, the abolishment of the Welfare State (this immediately impacts roughly 1/2 of the American population). This change will lead to economic convulsions and civil unrest beyond anything experienced during the Great Depression.

This change would mean sudden denial of nearly all personal credit, forcing almost all Americans to live within their means, which for the vast majority would be far below their current standard of living. Nearly 70% of Americans have little to no emergency fund.** This kind of change will make the housing collapse of 2008 look like a Sunday picnic, not 6 million American families displaced from their homes, rather tens of millions of defaulted mortgages and evictions. 

There are of course other reasons for a decline in global dominance; internal social decay, a loss of national identity, greed and avarice, poor governance, natural disasters, etc. and this has been the case for every other major historical power; the Egyptian Empire, The Roman Empire, the Ottoman Empire, Chinese Dynasties, just to name a few. Now it seems to be  our turn.

Those who are proactive to this coming change can actually benefit or at least not suffer from it. Those who rely on Normalcy Bias***, will lose most of what they have and struggle for decades. 


In 2009 Oliver DeMille and I published the book Thomas Jefferson Education for Teens as a way to alert the youth to what was coming and how to engage it, particularly focused in chapter 7 “Success in the Next Twenty Years.” Offered as a solution to our current predicament, here is an excerpt from that chapter: 

History runs in cycles, and there is a pattern of four seasons repeated over and over, each about 20 to 25 years long. Like the seasons of the year, one naturally follows another and each feels different, and accomplishes a different purpose for the grand scheme of things. In their book, The Fourth Turning, authors Strauss and Howe call these four seasons “turnings,” like phases of a cycle. We strongly recommend you purchase and read this important book. The four seasons are: 

1st: Founding. New institutions are built up to solve the great problems that culminated in the last cycle. Like the United Nations, Social Security, World Bank, International Monetary Fund (IMF), NATO, and other organizations created right after the Great Depression and World War II. Lots of businesses flourished in this period also. 

2nd: Awakening. Youth grow up and challenge the old establishments, like the counter- culture movement of the 1960s at Woodstock, or the Civil Rights Movement iconically lead by Rosa Parks and Martin Luther King, Jr. among others, and strong pushes for Feminism and Environmentalism, etc. 

3rd: Unraveling. Two (or more) big viewpoints and political parties fight for power, and everything seems like it is coming apart. Economies boom. The last unravelling happened between 1984 and 2001, and the one before that in the “Roaring 1920s.” 

4th: Crisis. Big problems come. Actually, crisis seasons usually consist of three crises in a row, sometimes overlapped. First, is the wake-up crisis that shakes everyone, like the Boston Tea Party, the election of Abraham Lincoln, or the 1929 stock market crash, which started the Great Depression. In recent times it appears that the 2008 housing crisis was likely such an event. 

Second, comes as a major economic crisis, and then third, usually a major war, pandemic or a mixture of these and other calamitous elements all at the same time. The last several crisis seasons included,The Revolutionary War and subsequent Depression, The Civil War and Depression, and The Great Depression and World War II. Sounds bad, huh? 

Good News, Bad News                                                                                                            The bad news, which is also the biggest challenge in all this, is that when the crisis comes, almost everyone over thirsty years of age is totally immersed in the rules, conventions, and patterns for success of the last phase. This means that even though the economic boom times and long periods of peace are apparently over for a time, most people keep making choices that reflect what used to work—even though now all the rules have changed. 

They make a lot of ineffective choices, because they don’t realize that the rules have changed. For example, parents educated in 2nd or 3rd seasons often think their kids should see education as job training. For 4th and 1st seasons, however, that is a big mistake. In these seasons, teens need to be prepared for entrepreneurship and initiative much more than job-specific skills. There are many other differences between seasons. 

Here are the leading rules of success in each turning. In each season, success is found in:
2nd and 3rd: Big institutions, Professional Careers, Investment, Credentials and Resume, Leisure and Entertainment. 

4th and 1st: Family and Community Relations, Entrepreneurial Ability, Initiative and Leadership Skills. 

The way to fail in 4th and 1st seasons is to try to live by the rules of the previous seasons. The way to succeed is to engage the new reality.

Those who will thrive in times of recession, depression, slow-growth economies, even war, and other major crises are the ones who focus on home, community, and entrepreneurship. 

As for real life from now through the 2030s, 2040s, and maybe into 2050s, it is time to get real! Success now, and for most of your life, will be determined according to the rules of the 4th and 1st Seasons. The new 4th turning society and economy is here, and the realities with it. These new realities need all your idealism and enthusiasm, but they can’t and won’t be the past, which too many adults are desperately trying to cling to, or just beginning to mourn over. Those days are gone. 

The Long View                                                                                                                  

Another key of leadership is to focus on what’s next, not on the past or even the challenges of now. Overcoming current challenges is important, but the focus should be on what’s ahead. 

Because of cycles and seasons, some of the most important classics to study as a teen are those written during 4th and 1st seasons by authors who lived through them. 

One of the best of these, with a focus on family and entrepreneurship, is Our Home by C.E. Sargent. Sargent lived through the 4th turning of the Civil War period and built his career and family in the 1st turning that followed. Here are a few of the “rules” for financial success, family leadership, and overall happiness in 4th and 1st seasons as thought by C.E. Sargent: 

1 – Embrace the new and the now.
2 – Articulate and write down your personal rules for life. Live them.
3 – Make meaning a central focus of your learning, conversations, and thinking. Be grateful, look for the silver lining.
4 – Make marriage the central focus of your life. 5 – Embrace entrepreneurship, the only path to stability in uncertain times.
6 – Develop creativity and inventiveness. Figure things out.
7 – Dig Deep and find your inner resiliency. Stay optimistic and enthusiastic.

If any of these ideas create a desire to know more, read the entire 7th chapter of Thomas Jefferson Education for Teens.

Finally, consider our campus solution called the “New Economy.” We are training students to see the world differently and to consider the viability and value of: 

  • Getting a world class liber education
  • Building a home without a mortgage
  • Learning to live with off-grid energy
  • Growing all of one’s own food
  • Starting one’s own business

This idea is discussed in detail in my latest book AMERICAN: Killing the American Dream.

There can be no doubt that things are changing. All students of history know that society tends to be fluid, not fixed and rigid. Those who can’t change with the times are doomed to suffer the consequences. Emerson said it well: 

Trust thyself: every heart vibrates to that iron string. Accept the place the divine providence has found for you, the society of your contemporaries, the connection of events. Great men have always done so, and confided themselves childlike to the genius of their age, betraying their perception that the absolutely trustworthy was seated at their heart, working through their hands, predominating in all their being. And we are now men, and must accept in the highest mind the same transcendent destiny; and not minors and invalids in a protected corner, not cowards fleeing before a revolution, but guides, redeemers, and benefactors, obeying the Almighty effort, and advancing on Chaos and the Dark. 

We are past the point of speculation, the writing is on the wall, the proof is in the pudding. If you have made it to this closing paragraph, it is likely that we share this view. 

My question then is, are you prepared? Have you already implemented these kinds of changes in your life? If your answer is yes, Thank God for your foresight, now please go help others. 

If your answer is no, what in the world are you waiting for? 

*The gold based Chinese renminbi (Chinese money) is positioning to replace the US dollar as the new world reserve currency, and being used even now regional as such.


*** Normalcy bias is a cognitive bias which leads people to disbelieve or minimize threat warnings. Consequently, individuals underestimate the likelihood of a disaster, when it might affect them, and its potential adverse effects.

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Comments (3)

  • William DeMIlle

    Awesome message, Thank you Dr. Brooks.

    September 5, 2021 at 7:42 pm
  • Allen Levie

    Thank you. Well put and with insights I wouldn’t have realized, tying Middle East to China and the 4th & 1st generations together in this same context to current events.
    There ought to be a follow up discussion, perhaps between holidays after the students are done with their studies.

    September 5, 2021 at 11:29 pm
    • Shanon Brooks

      I am not opposed, I think you should lead out.

      September 6, 2021 at 1:40 pm

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