Carpe Momentum: Empire Taxed: Trump's Budget is Burning Down the Dollar

Section 899 isn’t policy, it’s a fiscal ultimatum that threatens U.S. credibility, global stability, and the working class. The world is walking away, and Washington lit the match.

There’s a moment when empires no longer die with a bang, but with a bond sale nobody shows up to. That moment may have arrived.

Buried deep in Donald Trump’s so-called “Big, Beautiful Bill” is a provision known as Section 899, a clause so toxic, so shortsighted, that it may do what no foreign adversary has ever managed: break the world’s trust in the U.S. dollar.

Section 899 empowers the Treasury Department to designate countries as “unfriendly” and impose escalating withholding taxes, 5%, 10%, 15%, up to 20%, on dividends and interest paid to their investors. And this isn’t just for hostile regimes. It applies to allies like Canada, the UK, Germany, Australia, any nation with a tax policy Trump deems inconvenient. Many of these investors currently pay zero withholding tax under long-standing treaties. Section 899 rips those treaties up in the name of power politics.

It’s economic nationalism taken to a grotesque extreme. A weaponization of tax law aimed not just at shaping global behavior, but at punishing sovereign nations for refusing to bail the U.S. out of the mess it created through its own fiscal irresponsibility. Section 899 isn’t about defending the national interest, it’s about externalizing the cost of a broken economic model onto countries that no longer want to play enabler to American decline. That model includes years of reckless tax policy, most notably, massive tax cuts for the wealthy that ballooned the deficit without delivering promised growth. These giveaways hollowed out the federal revenue base, leaving a mountain of debt with no clear plan for repayment. Rather than raise taxes on billionaires or close corporate loopholes, Trump’s administration now seeks to squeeze foreign investors to offset the damage. It’s a shakedown masked as policy.

And the consequences? Catastrophic.

Foreign pension funds will dump U.S. Treasuries rather than accept taxed returns. Trust in the dollar will falter. Interest rates will rise. Imports will cost more. Inflation will spike. The global financial order, built not on dominance, but on trust, will begin to fracture.

Richard Murphy has called it a blunt tool with sharp edges. He’s being kind. This is not a policy, it’s a tantrum, codified. And it’s happening at the worst possible moment.

Vladimir Putin’s war economy is imploding. The Russian National Wealth Fund, once a symbol of economic resilience, with liquid assets projected to run out by autumn. Sanctions have cut off key technology imports and limited Russia’s access to global capital markets. Defense spending has skyrocketed, eating up an ever-larger share of the federal budget. Domestic inflation is surging, the ruble remains volatile, and systemic risks are emerging in the banking sector. Bond payments are being delayed or missed entirely, not just from foreign investor exclusions, but from a genuine shortage of hard currency reserves. Analysts now whisper the word default, not as a possibility, but as a near-certainty. And still, Putin clings to a fantasy of wartime autarky, burning economic bridges in a bid to maintain political control.

After holding over $1.3 trillion in U.S. Treasuries at its peak, Beijing has quietly sold off over 40% of that total. They aren’t just moving money, they’re moving away, and they’re not doing it quietly anymore. China is speeding up the development of alternatives: increasing yuan-denominated trade with Russia, the Middle East, and parts of Africa; establishing digital payment systems that bypass SWIFT; and doubling down on BRICS-led financial coordination. Chinese officials no longer even pretend the dollar is indispensable. China responded to Trump’s tariffs not with concessions, but by substituting sources, investing in domestic manufacturing, and using each trade dispute to justify further disentanglement from the Western-led system. In short, they’re future-proofing against U.S. instability while Washington burns its credibility for political theater.

Once the bedrock of America’s foreign investment portfolio, Japan has dumped billions in U.S. bonds. Their finance minister even called Treasuries a “negotiating card,” clearly signaling that the stability of U.S. policy is no longer trustworthy. In recent months, Japan has intensified its domestic bond purchasing program, bolstered currency intervention capabilities, and pursued bilateral trade agreements across Asia that reduce reliance on U.S. dollar settlements. Tokyo is not abandoning Washington overnight, but it is hedging, strategically repositioning itself in a world where U.S. leadership is no longer a sure bet. For a country that currently holds around $1.13 trillion in U.S. debt, the largest foreign stake in American Treasuries—that’s not just a shift. It’s a break in doctrine.

The world is not just watching, it’s walking.

Economist Richard Wolff calls this the terminal phase of capitalism: when elites, no longer able to expand outward, through war, debt, or markets, turn inward and begin cannibalizing their own institutions in a last-ditch effort to maintain control. First you hollow out the economy, replacing productive labor with speculative finance and cheap overseas outsourcing. Then you hollow out democracy, gutting social programs, stacking courts, and turning elections into media spectacles of distraction. Finally, you hollow out the dollar itself, once a global safe haven, by manipulating monetary policy, sabotaging international treaties, and alienating the very investors who held the system together. Instead of sovereignty, we have scorched earth.

Jeffrey Sachs puts it plainly: the U.S. no longer leads, it coerces. It uses tariffs like threats, turns aid into leverage, and replaces diplomacy with demands. From withdrawing from multilateral climate agreements to threatening allies with secondary sanctions, Washington has abandoned persuasion in favor of pressure. But coercion doesn’t build coalitions. It builds exits, quiet ones, as nations hedge, diversify, and detach from a system they no longer trust to play fair or last long.

Section 899 doesn’t just expose a broken policy, it exposes a collapsing paradigm. Trust is not something you can demand. We must earn, sustain, and share trust.

The U.S. maintained global trust for decades, based on economic strength and projecting stability, the rule of law, and consistent diplomacy. Trump, however, has undermined that reputation. Trump is destroying agreements. These actions offended allies. The Trump administration dispenses sanctions like favors. Ego, not strategy, dictates trade policy. The dollar once stood as a symbol of reliability. Now, it’s entangled in power games.

When the world sees the U.S. punishing allies for their domestic tax policies, bypassing treaties with a stroke of the pen, and holding the global economy hostage to internal tantrums, it does what any rational investor would do: it looks elsewhere. The Trump doctrine has destroyed trust with a sledgehammer, and rebuilding trust is not easy.

If Carpe Momentum means seizing the moment, this is it. But not to patch up what’s already rotting. Not to beg a broken empire for mercy or clarity. This is the moment to design something better, before collapse becomes catastrophe.

That means reimagining the pillars of global economic life. A cooperative world economy rooted in mutual stability, not zero-sum supremacy. Transparent currencies and capital flows that aren’t weaponized by political whims. Trade systems that prioritize ecological balance, labor rights, and national sovereignty over exploitation and extraction.

If the U.S. will burn down its own financial house just to make a point, targeting allies, shattering treaties, turning trust into a bargaining chip, then the rest of us have no choice. We need to build shelter from the fire.

Section 899 is a warning siren. The default has already begun, not just in trust, but in dollars too. We see it at the checkout line, in mortgage rates, in pension shortfalls. And as always, it’s the working class who feel it first, while the architects of collapse glide by untouched.

And the empire? It’s taxing itself to death.