April is the cruelest month. Especially in the banking sector. In the middle of a war.

It seems that not a day passes that the Institute for the Study of War tells us of the impending gloom on the Russian front; no weapons and an imploding economy at home, though anecdotal stories on the streets of the Red Square would seem to deny any validity to the wasteland of the Russian plateau. Yet a specter is haunting Europe. A specter of “confidence.”

The confidence issue is key when you operate in “fiat” currencies. When Ptolemaic historians predicted the “end of history” in the 1990s: that universal victory of liberal democracy and markets, which would sweep aside the authoritarian, the traditional, and… well, everything, they forgot to account for geopolitics. Joe Biden said the ruble would be reduced to rubble. The French finance minister said the Russian economy would collapse. But despite these various pronouncements, the sanctions and freezing of assets of Russian individuals and firms, along with the foreign exchange reserves of the Russian Central Bank, have not produced any significant tsunami of regime change. It is simply that power and economic power calls the shots—Bismarck’s “blood and iron.” This might not suit the flaky new class of privileged U.S. and UK graduates of the public sector elites, steeped as they are in all-inclusive public sector economic security; the trahison de clercs of modernity. Realpolitik, that of Machiavelli, Carl Schmitt, and Henry Kissinger, didn’t go away. It has taken a back seat amidst the bread and circuses but is now back firmly in the driving seat.

Fiat currencies are promises to pay debts. Hence, they are vulnerable to economic shocks. Now, U.S. and European banks, invested heavily in bond portfolios, are reliant on “confident” consumers and investors. The citadel of capital is made of paper money, fluttering in the winds of change. In that way, the economies of fiat currencies rely on confidence. But the economies of resource commodities are immune to “confidence.”

The economic caesura can go back to the United States ending the crude gold standard in 1971. It was more strategic than economic. This adoption of petro-dollars above gold ushered in a revolution of dollar dependency worldwide. Out of this, the United States was now both militarily and economically the godhead, just as the Papacy had once been—Roman locuta, causa finita (Rome has spoken, so the case is closed). This expansion was based on a dual dialectic; at once the United States needed to solidify hegemony and military Keynesianism was the answer.

Now this house of cards, built on confidence, has gone bipolar. Yet the writing was on the wall. The movement to resource-backed currencies has been accelerated by the U.S. acknowledgment of the trend and its attempt to reverse it, ostensibly through the Ukraine debacle. Zoltan Pozsar, who then was at the New York Federal Reserve, published a report on the switch, which signaled this hiatus and the journey to resource economics. In times of high stress (such as now in Ukraine) commodity prices become volatile, driving instability. This is due to the fact that these commodities are used as collateral for many other debt instruments.

The revolution in economics is not Bitcoin, but resource-based currencies. The West has hastened its own demise. Pozsar moved to Credit Suisse, ironically, and the rest is history. “Hoisted by his own petard,” as they say.

The hastening began with the Ukraine war, with the United States forcing the West into a round of sanctions against Russia. With the Russians placing a limit on the price of their gold, Russian investors were stuck with an undervalued ruble, therefore forcing it to rise vis-a-vis the dollar. In the last six months, the ruble has steadily strengthened. Then Putin added the double whammy that oil purchasers must buy in rubles. Or gold. If they buy in gold, they are effectively getting a discount on the oil. This also heaps pressure on the supply of gold, raising the price.

In effect, the West’s commitment to burn the ruble has backfired. The strengthening of the oil price has had a concomitant strengthening effect on the ruble. The upshot of this? In the land of paper, commodities are king. Russia and China are now able to control the prices of gold and oil, which is epoch-defining. We are moving away from Westworld.

At last year’s St. Petersburg Economic Investment Forum, the CEO of Gazprom forewarned about the shift to a new dynamic: “The game of nominal value of money is over, as this system does not allow to control the supply of resources.” It signals the emergence of “outside money,” to quote Poszar again, rather than “inside money,” i.e. the use of debt and fiat currency. The post-Lehman Brothers world has been built on the property stripping of the world, using cheap debt for institutional investors to wrest more and more property under their umbrella. The world of the dollar reserve system is coming to an end. Inside money has been artificially inflated by the West in order to cheaply buy the assets of the Orient. Now it’s payback time for the Orient. The West emphasizes rules and laws as a means to accrue wealth; in the Orient, the workhouse of the world, wealth is created through labor and invention. This is the fundamental malaise of the Anglophone world: it is not the absence of fruit in the supermarket post-Brexit; it is the civilizational surrender of the very ethos which gave the nations their success in the first place.

The war in Ukraine has seen outside money taking back some of the inside money of the Davos oligarchs. It is Russia clawing back the real world of commodities, of realpolitik.

The dollar is still the reserve currency. This seismic change will not happen overnight. But the seeds are sown. The present banking crisis, at Credit Suisse, at Deutsche Bank, and at others, are symptomatic of the weakness of the fiat system. During pressures, the banks are less inclined to risk the inside money game; the currencies are not backed by commodities. However, with outside money, the currencies are supported by hard commodities. This is the allure of the new system. In times of banking pressures, the central banks are forced to step in and print new money; hence the currency is further weakened. This is now playing out in the West; the gradual death of fiat currencies.

Meanwhile, the Eurasian Economic Commission is preparing for a commodity-backed currency, based on a commodity bundle of gold, water, oil, grain, and metals. For them, the confiscation of dollar reserves by sanctions is pushing new ideas along. It is the reverse of globalization. Globalization, like colonialism before it rested on a false nomos—the Greek word for the real underlying forces of the world. The sun is rising on the new nomos of the earth; a resource-based order of territorial aggrandizement, of realpolitik. The West will be putting out the wildfires of this new history for a long time, with Ukraine being only the first of many.

In Collapse: How Societies Choose to Fail or Succeed, Jared Diamond argues that civilizations crash for a variety of reasons: environmental, population, the loss of trade partners. The problem of integrated globalization and the outsourcing of the original ethos to rival states such as China falls within the Diamond schema. He particularly cites the “courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible.” He states that elites can prove disastrous in this context as they practice short-term divisive policies at odds with the teleology of society. This is the Achilles’ Heel of economic liberalism: Short-term deindustrialization and deterritorialization have led to a shattering of the telos of the West. Societies lack meaning and elites substitute a self-destructive cultural philosophy to hide extraction and accumulation.

The Easter Islanders, who lived an idyllic agrarian lifestyle with a spiritual teleology based on the building of Moai statues to collect the spirits of tradition and the past, are a warning about forgetting and uprooting.  From the fifteenth century onwards, two groups, the Tu'u and the Oto Itu, lived in separate parts of the island. They clashed in the mid-eighteenth century over claims of ancestral hegemony. The result was a period of statue-toppling, in which the rival groups neglected core values and sought to destabilize the rival’s cultural power embodied in the Moai. Famine and homelessness followed as elite groups took control.

A warning to history. Yet nothing is learned from history. It is an epic Spenglerian cycle of rise and fall, of shifting civilizations, of statue toppling in the West. The telos of success is forgotten and the values of the past are cast away for the pyrrhic victory of liberal fetishes.

Brian Patrick Bolger studied at the LSE. He has taught political philosophy and applied linguistics in universities across Europe. His articles have appeared in the United States, the UK, Italy, Canada, and Germany in magazines such as The National Interest, GeoPolitical Monitor, Merion West, Voegelin View, The Montreal Review, The European Conservative, Visegrad Insight, The Hungarian Conservative, The Salisbury Review, The Village, New English Review, The Burkean, The Daily Globe, American Thinker, The Internationalist, and Philosophy News. His book, Coronavirus and the Strange Death of Truth, is now available in the UK and the United States. His new book, Nowhere Fast: The Decline of Liberal Democracy, will be published soon by Ethics International Press.