Sridhar Vembu, chief scientist at Zoho Corporation, delivered a strong warning on Sunday, April 7, about the state of the global financial order, describing it as a "house of cards" based on unsustainable American debt.
In a comprehensive post on X (formerly known as Twitter), Vembu argued that the system that has governed global trade for the past 50 years is on the verge of collapse, Business Today reports.
“To understand the present crisis, it is useful to understand how the global system has ‘worked’ for the last 50 years,” Vembu wrote.
He added, “The US imported far more than it exported, issued dollars, those dollars got multiplied (in the global banking system through monetary alchemy!) and such global dollars (US issued + multiplied) ‘fund’ almost all global trade and almost all global investment among nations.”
He emphasised that the system compelled the United States of America to incur permanent debt to sustain global commerce and investment, at the expense of its own industrial base. "That is what happens when you have to keep importing more than you export for a long time," he wrote.
“Even as of 1985 (Japan/Germany then playing the role of China now) the system suffered from huge friction due to US manufacturers being outcompeted by lower priced imports...Japan also agreed to ‘voluntarily’ curb its exports to the US,” Vembu added, referring to the 1985 Plaza Accord, where the US had once sought to rebalance its trade relationships.
As tensions between the United States and China rise, fueled by retaliatory tariffs, rare earth export bans, and restrictions on defense-related companies, Vembu emphasised the need for a dramatic rethinking of global trade foundations, suggesting that Gold or Silver could make a comeback as a global trade settlement currency.
“This will massively reduce imbalances, because the prospect of running out of gold is a real limit on imports,” he added.
Vembu's warning comes as US President Donald Trump imposes sweeping tariffs on imports from a number of countries, raising concerns about a potential global recession.
