Rats, Rot… and a Failing Currency

What the pounds’ collapse tells us about the dollar’s future.

Live rats and too many dead bodies.

If I tell you the next word, “England,” you will be forgiven for assuming that today I’m on about the Black Death and the plague that ravaged medieval London.

Alas, we’re only going as far back as 1979…

And before we get into that, let me tell you why England of the late 1970s is our destination today. That’s entirely due to Iran of 2026.

See, as part of the US/Israeli holy war on Persia, Iran is pushing a line of attack that is stronger than any nuclear weapon. Iran is attacking the American dollar—the true fount of Uncle Sam’s strength.

You’ve no doubt heard—or read in Field Notes—that Iran has been offering up all kinds of deals, like guaranteeing safe passage through the Strait of Hormuz for any country that proves it paid for its oil cargoes in Chinese yuan. The Persians also floated a plan by Europe in which European oil cargoes can transit the strait, unbothered, if European countries pay for their petroleum in euros or yuan. Some ships have already paid the fee in yuan.

This is precisely what I’ve been warning about for years, though primarily tied to China and the financial dagger it holds against Sammy’s frail neck: America’s addiction to debt, and its dependency on foreign countries to buy that debt, is America’s Achille’s heel.

Which is why I launched into today’s dispatch talking about 1979 England.

What Iran is doing is challenging the primacy of the American currency. But Iran isn’t the only challenger. China, Russia, Singapore, Thailand, Malaysia—a host of countries—are all working on new forms of global financial plumbing that allows countries to bypass the US dollar system.

In turn, that raises real questions about the dollar’s role as global reserve currency… and what happens if, and when, reserve status fades.

For years, I’ve been preparing readers and conference attendees for this eventuality. After all, not a single reserve currency has ever survived. All of them have died at some point.

And the last one to die… was the British pound.

What that death looked like is the focus of today’s dispatch, because I want my countrymen to understand where we’re going and why it is you need to protect against that now.

There’s this narrative that the pound lost reserve status at the end of World War II, when the dollar was crowned King of Currencies at the 1944 Bretton Woods Conference.

That’s not true.

In 1945, with the war just ended, the pound still accounted for roughly 81% of global foreign exchange reserves. It was still the world’s money.

What killed the pound’s reserve status was the next 25 years of peace.

By 1950, sterling was down to 58% of global reserves. By 1960, 35%. By 1970, 11%.

Death came slowly to the pound.

Creeping, like a cat stalking a squirrel.

Collapse did not come in a single day. There were precisely zero headlines announcing: “Pound Loses Reserve Status Today.”

Just a quarter-century of slow, silent, ever-grinding erosion while ordinary British families paid the price in ways they mostly couldn’t see.

That’s the part of the story nobody writes about. So let me tell you…

By 1979, the garbage in London had not been collected in six weeks. Black bags piled chest-high in Leicester Square were overrun by rats that had gnawed through the plastic, leaking rubbish into the gutters.

In Liverpool, grave diggers went on strike and the dead were packed away in a rented factory because there was nowhere else to put them. Hospital porters had walked out, with patients being turned away at the door.

The government had declared a state of emergency, though, in truth, no one really knew why that was important, given that “emergencies” had become the background condition of British life.

This came to be known as England’s “Winter of Discontent.”

The lights flickered out on schedule—rolling blackouts had become routine.

Inflation was running at nearly 25%, meaning the savings that a family had accumulated over a decade of thrift was vaporized in a single season of cold.

Mortgage rates ran 15%. A tank of gasoline costs a day’s wages. And the pound was trading at $1.59, down from $4.03 in the 1940s… and still sliding.

Three years earlier, Britain—the country that managed the world’s reserve currency for more than a century—had to call the International Monetary Fund for a £2.3 billion (about $4.6 billion, or about $26 billion in 2026 terms).

Let all of that stew in your noggin for a moment…

If you’d told a British citizen in 1945 that within 31 years the government would be seeking a bailout like a banana republic, they would have thought you were “touched in the head.”

And yet…

Brits lived through a 30-year grinding decline in the quality of their everyday life.
Imported goods became luxuries. A television, a decent car, anything American-branded—these moved out of reach for the working class and became strainful purchases for the middle class.

British households watched French and German families acquire refrigerators, cars, and foreign holidays while their own wages bought noticeably less each year.

Overseas travel was rationed. In 1966, the government imposed a £50 travel allowance—the maximum amount a British citizen was legally allowed to take abroad on holiday. Imagine being told by Uncle Sam’s mandarins and minions that your total foreign-spending budget for a family trip was roughly $140 in today’s money.

That’s what currency weakness looks like when it hits civilian life.

There’s a sad lesson in all of this for America.

The US is running the same script today, but most Americans assume that because there’s no dramatic collapse on the news, no screaming headlines, that nothing is happening.

Something is happening, however.

The dollar’s slow grind toward ordinariness has already begun.

Central banks for years have been selling dollars to own gold, and are buying at a pace that tops the record pace of the late-1960s, just before Nixon collapsed the dollar by taking the greenback off the gold standard.

BRICS keep expanding their efforts at building that non-dollar financial plumbing.

Oil is increasingly priced in non-dollar currencies at the margin.

Foreign holdings of US Treasuries are in decline across big buyers like China and Japan.

And the dollar’s share of global reserves has fallen from roughly 72% in 2000 to around 58% today.

This is not a collapse. It is, instead, the 1950–60s phase of the British decline.

The British experience hides three lessons in plain view for those who study these events:
There is no collapse moment. The decline happens in imperceptible, ever-grinding steps, each one individually dismissible… though collectively devastating.
Politicians, guaranteed, are going to lie about the death of the dollar because admitting it would be politically fatal and would drive fear. Bet on it.
By the time the loss of reserve currency status is undeniable, it’s irreversible. Britain could not un-lose reserve status once the world had moved on. The country could only manage the descent… and not very well.
The American lifestyle we all grew up with as our birthright is not going to disappear overnight. It’s going to fade quietly into that dark night, methodically eroding.

Most people will not connect the dots until the dots are already drawn, and even then they won’t understand how or why it happened.

I’m telling you why it’s happening, and the impacts it is going to have on your American life.

The British did not see it happening to them. Those of us paying attention have the advantage of learning from the British example.

Question is: Who’s paying attention?