The turning points of history are often inscribed upon specific geographical coordinates. When the walls of Constantinople crumbled under Ottoman cannon fire, the millennium of Byzantine glory was sealed in dust. When the Union Jack was reluctantly lowered over the Suez Canal, the canal hegemony of the British Empire changed hands. When the bricks of the Berlin Wall fell amidst the cheers of millions, the Soviet Union's superpower status vanished forever. The decline of an empire begins with the loss of a strategic stronghold.
While the fall of an empire is not an overnight event but a protracted ebb and flow of comprehensive national power, historical scripts are never short of dramatic climaxes. The Strait of Hormuz, the chokehold on the world's energy lifeline, is fatefully becoming the proving ground for hegemony in the new era. Once control over this critical strait is lost, the American hegemony built upon the petrodollar foundation will face its final chapter.
As the United States prepares for potential ground operations, those of us in the financial markets can only feel the uncertainty beneath our feet, struggling to discern the future course. Many may indulge in calculating the loss of individual battles, only to miscalculate the long-term direction. Yet, the truly prescient can hear the overture of global wealth restructuring in the sudden shifts of geopolitics.
As the ten-day deadline threatened by Donald Trump approaches, Ray Dalio, founder of Bridgewater Associates, made a notable assertion: if the US loses control of the Strait of Hormuz, even partially, it would replay the tragedy of the British Empire losing the Suez Canal. This signifies the collapse of American hegemonic credit, and it would be irreversible.
As a top global investment master, Dalio's insight cuts to the core. However, history's reflection is not a simple case of marking the boat to find the sword. Today's United States is still in its prime, far from the Britain fading after World War II. In fact, this Hormuz conflict stirring global winds, for the US, more closely resembles an ancient mirror—the "Imjin War" during the mid-to-late Ming Dynasty. Similarly a tactical victory seemingly defending an alliance system, it unexpectedly exposed the flaw that the cost of the empire maintaining its global order had already surpassed what its national power could bear.
History does not repeat itself simply, but it often rhymes. As ground warfare in the Strait of Hormuz seems imminent, this analysis draws parallels with the "Imjin War" over four hundred years ago. Following similar historical threads, it builds an analytical framework encompassing "strategic intent," "war costs," and "war outcome" to deeply project the trajectory of the Hormuz event and conclude with how it will reshape the landscape of global wealth and financial markets.
First, the war intent from a military perspective—using the Imjin War as a mirror, compare and analyze the US-Iran conflict, exploring why a costly tactical victory often evolves into a strategic failure. Second, the war cost from a fiscal perspective—from Zhang Juzheng to Donald Trump, imperial reformers inevitably resist fate, yet unsolvable fiscal predicaments注定注定 war is always expensive. Finally, the war outcome from a financial perspective—within the global financial structure, why might the collapse of the "silk-silver" and "petrodollar" systems herald the return of gold and A-shares as kings.
**Imjin War & US-Iran Conflict: War Intent from a Military Perspective** During the Wanli era of the Ming Dynasty, Japan under Toyotomi Hideyoshi brazenly invaded Korea. The Wanli Emperor issued an edict to aid Korea with the full strength of the nation. This was not merely a matter of tributary relations but a hegemonic defense war launched by the Ming to maintain its "tribute system." Within this system, the Korean Peninsula was not only a physical barrier protecting the capital and isolating Japanese threats but also a political symbol of the "Celestial Empire's" radiant influence and the orderly hierarchy between Hua and Yi.
Centuries later, the cornerstone of American hegemony is the "petrodollar" system. By ensuring global major oil transactions are settled in US dollars, the US controls the flow of world capital, supporting its massive military expenditures and treasury credit. The Strait of Hormuz, as the choke point for over one-fifth of global oil trade, naturally becomes the empire's "Achilles' heel" in the new era. Any challenge to its freedom of navigation essentially shakes the foundation of dollar hegemony.
The Korean battlefield of the Wanli era and today's Strait of Hormuz—one fought for a "ritual governance" totem, the other for a "financial power" lifeline—are essentially fateful duels where empires are compelled to fight to protect the foundations of their hegemony. On the Korean battlefield of the Wanli period, the Ming Dynasty exhausted its national strength and eventually expelled the fierce armies of Japan's Toyotomi Hideyoshi from the peninsula. Superficially a victory defending suzerain prestige, it was actually a classic "Pyrrhic victory": First, the war depleted the treasury surplus accumulated since the reforms of Zhang Juzheng. The enormous cost of nearly eight million taels of silver plunged the imperial finances into structural exhaustion, making it difficult thereafter to effectively suppress the internal rebellions that swept the nation. Second, the campaign drained the empire's most elite Liaodong cavalry, leaving an irreparable strategic vacuum on the northern border defense line. This opened a golden opportunity for the long-dormant Jurchen leader Nurhaci to rise, ultimately indirectly cultivating the gravedigger of the Ming Empire.
The current dispute over the Strait of Hormuz seems to be repeating the mistakes of the Ming Dynasty. The US, leveraging its generational advantage in military technology, has achieved significant results in aerial combat, but inevitably faces the quagmire of Iran's asymmetric warfare. Iran's long-term, low-cost harassment and blockade of the Strait using naval mines, drones, and missiles extends the conflict beyond the Middle East. Firstly, if prolonged disruption to energy transport ultimately triggers severe global stagflation, it would add insult to injury for a US already on the edge of a fiscal cliff. Secondly, when a superpower can no longer guarantee the world's most critical energy artery at a controllable cost, its status as the "guarantor of world order" and the petrodollar system underpinning its hegemony face fundamental questioning. Finally, Washington would be forced to expend precious strategic resources and attention on a protracted struggle with Iran. Its true global rivals are likely to seize the strategic vacuum, much like Nurhaci, winning crucial development windows in great power competition.
Regardless of how the war unfolds, the US is already in a strategic dilemma where any choice leads to a difficult victory, facing three possible bleak prospects: First, Trump ultimately compromises and retreats, tacitly accepting Iran's de facto control of the strait. This would be tantamount to publicly admitting the end of US hegemony in the Middle East, triggering a domino effect: traditional allies like Saudi Arabia would be forced to accelerate their "pivot to the East," seeking new security guarantees and energy trade partners. Second, a small-scale ground war leads to a US-Iran condominium, forming the most "face-saving" stalemate. US fleets would escort tankers of some "core allies" at high cost, while Iran, leveraging its geographical advantage, continues harassment. This "US-Iran co-management" itself constitutes clear evidence of declining US hegemony. Third, the US spares no expense, launches a large-scale ground war to retake control, and becomes long-term mired in a Middle Eastern quagmire. Iran is not Iraq or Afghanistan; its vast strategic depth, large population base, and strong nationalist cohesion would turn a large-scale ground invasion into a protracted nightmare.
In summary, viewing America's Strait of Hormuz through the lens of the Ming Dynasty's Korean Peninsula will ultimately clearly reveal a pattern: when an empire is forced into a strategic quagmire, fighting a war that injures its national foundation to defend a strategic stronghold, regardless of victory or defeat, the decline of its hegemony has already begun.
**Zhang Juzheng & Trump: War Cost from a Fiscal Perspective** "The first element of war is money, the second is money, the third is still money." The insight of Dutch military theorist Simon Stevin four hundred years ago hits the mark, viewing war as the violent clearing of a nation's balance sheet. Whether the Ming's Imjin War or the current conflict around the Strait of Hormuz, both follow a冷酷冷酷 imperial destiny: imperial ambitions always exceed their fiscal carrying capacity; the cost of maintaining hegemony progressively outweighs its benefits, ultimately leading to a fiscal predicament that worsens amidst internal troubles and external threats.
Under such destiny, resistance is inevitable. In the long march towards fiscal crisis, empires always give birth to reformers attempting to "prop up the collapsing edifice"—Zhang Juzheng of the Ming Dynasty and Donald Trump of the US are like two mirrors echoing across four hundred years. The backdrop of their rise is strikingly similar: Zhang Juzheng inherited a central treasury that was technically bankrupt by the end of the Longqing era, plagued by imperial clan extravagance, bleeding border defenses, and a eroded tax base. Trump inherited an America saddled with high national debt, industrial hollowing-out, and overseas military expenditures that had become a heavy "negative asset" in the post-globalization empire. History thrust these two reformers of vastly different character onto the stage,赋予赋予 them the mission to resist fiscal destiny.
Yet, cruelly, when an empire's internal and external problems are deeply entrenched, even genius cannot alter the dynasty's fate, especially when the rebel produced within the system, upon ascending the system's stage, has already transformed into the very system they once opposed. The tragedy of Zhang Juzheng's reforms dying with him lay in his iron-fisted suppression of vested interests, antagonizing the vast bureaucratic corps, imperial clansmen, and local gentry, without fundamentally changing the political ecology where "rule of man" outweighed "rule of law" under imperial autocracy. It was注定注定 a "strongman politics" reliant on personal authority, not a profound institutional revolution. More ironically, the fruits of his fiscal reforms ultimately became the capital for the Wanli Emperor to recklessly wage war, accelerating the central dynasty's decline.
In contrast, Trump, a president who campaigned on "anti-war" and "America First," found his personal will ultimately constrained by the deep-seated institutional forces of the empire. On the Middle East issue, this impetus stems significantly from a powerful force in American politics—pro-Israel capital and its lobbying groups. Within the US political ecosystem, any president finds it difficult to ignore or contravene the core demand of this group: ensuring Israel's absolute security in the Middle East. Consequently, a powerful Iran with potential nuclear capabilities is viewed by this interest group as a paramount threat that must be contained or eliminated.
Once the trend towards a protracted conflict in the Strait of Hormuz emerges, regardless of tactical outcomes, Trump will face a fiscal "lose-lose" situation. The first is the dead end of "debt monetization" after being mired in war. If the conflict becomes prolonged, for an economy already burdened with over $34 trillion in national debt and normalized fiscal deficits, raising huge war funds through traditional means is almost politically unfeasible. Thus, the most convenient yet dangerous path emerges: resorting to the Federal Reserve's printing press. This debt monetization would further erode global investor confidence in dollar-denominated assets and accelerate the risk of a US debt crisis. The second is the collapse of the "petrodollar system" following strategic contraction. Should the US choose strategic retreat fearing war costs, the consequences are equally fatal. This is not merely a shift of military force, but a shaking of the "petrodollar" system, established after the collapse of Bretton Woods. At that point, the process of "de-dollarization" in oil transactions would accelerate significantly, and the difficulty of issuing US Treasury bonds would sharply increase.
While the world focuses on the surface-level military contest, a more decisive, deeper struggle has long been underway in the realms of fiscal policy and debt. Whether it's the helpless printing of money after being bogged down in war or the collapse of hegemony after strategic contraction, both paths ultimately converge—leading the United States towards an unavoidable major fiscal crisis. Perhaps the twilight of an empire lies not in the smoke of the battlefield, but in the deficit on its balance sheet that can no longer be reconciled.
**Silk-Silver & Petrodollar: War Outcome from a Financial Perspective** Beyond the military dilemma and fiscal pressure, what truly deserves capital market attention is that war in the Strait of Hormuz could constitute a major颠覆颠覆 of the global geopolitical and financial order. While geopolitical maneuvering is profound, it is not the focus here. We will next compare these two fateful wars of the Ming and US empires, discussing how they could profoundly restructure the global financial order.
Prior to the Imjin War, the Ming Dynasty, leveraging its world-leading manufacturing capacity in silk, porcelain, tea, and its unparalleled land and maritime Silk Roads, had constructed a de facto "silk-silver" financial system—global markets had rigid demand for its goods, and the Ming government stipulated silver as the primary unit for tax collection and trade settlement. Many historical estimates suggest that from the 16th to 18th centuries, about one-third of global silver production ultimately flowed into China, making it the undisputed center of trade and finance. This underlying logic is identical to the modern US-constructed "petrodollar" system: after the collapse of the Bretton Woods system in the 1970s, the US, through agreements with major oil producers like Saudi Arabia, ensured global oil transactions were priced and settled in US dollars, thereby creating rigid global demand for the dollar.
The turning point for the Ming's monetary and financial order was undoubtedly the Imjin War. It completely depleted the treasury surplus accumulated during Zhang Juzheng's reforms, forcing the Ming court to impose additional internal levies, severely damaging the domestic economic base. Externally, it faced a deteriorating trade environment; silver inflows began to slow or even reverse, leading to severe inflation where "silver became expensive and copper coins cheap," causing the imperial monetary credit system to瓦解瓦解. Today, whether the US becomes bogged down in a protracted war, forced into more radical quantitative easing, or strategically withdraws from the Middle East, leading to a loosening of the petrodollar and alliance systems, a global sell-off of US Treasuries may be unavoidable. We might soon witness a Ming Dynasty-style "expensive silver" moment—a revaluation of hard assets like oil and gold relative to paper US dollars.
Once the cornerstone of the "petrodollar" system begins to动摇动摇, global capital will follow its most primal避险本能本能, embarking on an epic migration. In the initial panic and chaos phase, capital will flood into the only ultimate store of value超越超越 sovereign credit—gold. Gold will serve as the final means of settlement and the most reliable value anchor, becoming the "Noah's Ark" for central banks and large capital. We have already seen global central banks increasing gold reserves at an unprecedented rate in recent years, a defensive vote cast against dollar uncertainty. It is foreseeable that as the US faces its注定注定 strategic failure in the Strait of Hormuz, gold's proportion in global foreign exchange reserves will gradually return to, or even surpass, the high levels seen at the establishment of the Bretton Woods system. This might mean that gold prices, after experiencing a severe liquidity shock, could resume their roaring bull market once rationality returns.
Simultaneously, as the US dollar's status as a reserve currency declines, global capital will inevitably begin searching for alternatives beyond gold, with the Renminbi being the anticipated successor. First, the Renminbi has a solid real economy anchor. As the only country with all industrial categories in the UN classification, China's "world factory" status provides a value背书背书 similar to the erstwhile "silk-silver" system, based on strong commodity production capacity. Second, the Renminbi has endogenous trade settlement demand. As the world's largest trading nation, China's massive transactions with countries worldwide create the largest usage scenario for the cross-border use of the Renminbi.
As China emerges as a long-term beneficiary of the Hormuz Strait dispute, the revaluation of the Renminbi and its related assets will gradually unfold. First, the stock market, as a barometer of the economy and the most sensitive触角触角 of capital, has already initiated a value recovery journey following recent market movements. Second, the foreign exchange market: the stabilization and appreciation of the Renminbi exchange rate this year signals that global capital is beginning to strategically reassess the Renminbi's potential value. Finally, the property market: with the stabilization and rise of the Renminbi exchange rate and the continuous回流回流 of foreign capital, it is believed the real estate market is also expected to gradually emerge from its difficulties over the next two years,迎来迎来 its price inflection point after many years.
Throughout history, the decline of empires often begins with the loss of a strategic stronghold. The归属归属 of control over the Strait of Hormuz may be debated at the military level. However, the empire's destiny seems to have been提前演绎提前演绎 in the cold mirror of history: a seemingly glorious military victory inevitably comes at the cost of the irreversible depletion of the imperial treasury; while a reluctant strategic contraction means the foundation of the global financial hegemony system is亲手动摇亲手动摇. In this grand narrative concerning the disintegration of the old order and the emergence of the new, we may ultimately hear— The gunfire in Hormuz heralds not only the final chapter of dollar hegemony but also the overture to the bull markets of gold and A-shares.
When the shadows of the British and French fleets disappeared at the end of the Suez Canal, European imperial hegemony sank with them. The world's compass ceased its swing, firmly locked onto two new poles; the era of US-Soviet rivalry began. When the US aircraft carrier battle groups are caught in a dilemma in the Strait of Hormuz, the王者坐标王者坐标 of the petrodollar also blurs. The world's power no longer converges at a single pole; it is divided by rising forces, and an era of群雄逐鹿群雄逐鹿 gradually reveals its true form.
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