The post-WWII order is restructuring in real time.
The post-1945 international order — built on American military supremacy, the dollar as reserve currency, NATO as the Western security architecture, and multilateral institutions as governance mechanisms — is undergoing its most significant structural challenge since its creation. This is not a sudden rupture but a gradual tectonic shift that has been building for two decades and has accelerated sharply since 2022.
BRICS has expanded from its original five members to ten, with over 23 nations formally applying for membership and dozens more expressing interest. The bloc now represents 45% of the world's population and approximately 37-40% of global GDP on a purchasing-power-parity basis — exceeding the G7. The military dimension is equally significant: global defense spending has reached all-time highs, with the steepest year-on-year increases since the Cold War. The US requested the first-ever trillion-dollar defense budget. European military spending has surged, with NATO adopting dramatically higher spending benchmarks.
Trade realignment is the third axis. US-China trade volume has declined 22% from its peak, with decoupling accelerating across technology, energy, and financial sectors. The vast majority of trade among Shanghai Cooperation Organisation nations is now conducted in local currencies, bypassing the dollar entirely. The petrodollar system, which has underpinned dollar hegemony since the 1970s, faces structural challenges. The transition from a unipolar to a multipolar world order is the defining geopolitical trend of the 2020s, and it intersects with every other dimension of the Crisis Index.
What each metric measures, why it matters, and what the current reading tells us.
Central bank gold purchases are the most significant geopolitical demand signal because they represent strategic, long-duration allocation decisions by sovereign institutions. The trend is structural: central banks in emerging markets are diversifying away from dollar-denominated reserves and toward a neutral, apolitical asset. The acceleration began after the freezing of Russian central bank reserves in 2022, which demonstrated to every non-aligned nation that dollar-denominated reserves could be confiscated for geopolitical reasons. Gold's share of global foreign reserves has risen significantly as Treasuries' share has declined.
The current military spending surge is the largest since the Cold War, driven by the war in Ukraine, new NATO spending benchmarks, US-China competition, and Middle Eastern instability. But the more significant trend is the rapid increase in spending by European and Asian allies. The fiscal implications for European governments — already dealing with aging populations and welfare state obligations — are enormous. This level of military spending reallocates resources from domestic investment to defense, compounding existing fiscal pressures.
The decline in bilateral trade reflects deliberate decoupling across multiple sectors. Technology export controls, semiconductor restrictions, and investment screening have accelerated the separation of the world's two largest economies. The concept of 'friendshoring' — relocating supply chains to aligned nations — is producing new trade corridors while weakening old ones. The decoupling is most advanced in technology and energy, with financial decoupling as the next frontier.
BRICS now represents a larger share of global GDP than the G7 on a purchasing-power-parity basis — a milestone crossed in 2023. The expansion adds strategic depth: with recent members, BRICS controls a significant share of global oil and gas production and spans every major region. The New Development Bank is preparing to issue bonds in multiple local currencies, explicitly diversifying away from dollar-denominated financing. Whether BRICS consolidates into a genuine institutional counterweight or remains a loose diplomatic forum will be determined by its next phase of development.
Prediction markets assign roughly one-in-eight odds to a Taiwan conflict within the next few years. Any military escalation would represent the most consequential geopolitical event since World War II, with implications for semiconductor supply chains (Taiwan produces over 90% of advanced chips), global trade, the US-China relationship, and the broader international order. China's military spending trajectory and its exercises around Taiwan are leading indicators. The probability may seem low, but the consequences are so severe that even 12% represents an enormous expected cost.
How this dimension looked during previous crisis periods.
The interwar period marked the final decline of British global hegemony. Britain's share of world manufacturing had fallen precipitously over decades. The pound sterling was being displaced as the primary reserve currency. The League of Nations failed to prevent aggression. Today's dynamics — a dominant power's relative decline, the rise of challengers, the weakening of multilateral institutions, and increasing resort to bilateral power arrangements — mirror the 1930s more closely than any subsequent period.
The 1970s saw the creation of the petrodollar system, in which Saudi Arabia agreed to price oil exclusively in dollars in exchange for American security guarantees. This recycled Middle Eastern oil revenues into US Treasury bonds, creating artificial demand for dollars and enabling the US to run persistent trade deficits without currency consequences. The current erosion of this arrangement — through Saudi engagement with BRICS, alternative currency oil contracts, and the structural decline of oil demand from EV adoption — threatens a pillar of dollar hegemony that has been operative for 50 years.
The Global Financial Crisis marked the moment when China emerged as a systemic rival rather than a development partner. China's stimulus response was larger relative to GDP than America's, its recovery was faster, and its growing confidence produced more assertive foreign policy. The Belt and Road Initiative, launched in 2013, was the first large-scale infrastructure program designed to create an alternative to Western-dominated trade and investment networks. Everything that has followed — BRICS expansion, alternative payment systems, de-dollarization — represents the maturation of forces that became visible in 2008.
Perspectives from the major cycle and macro thinkers.
Dalio's Big Cycle model identifies the current period as a classic great power transition, with the US facing a rising challenger while dealing with internal disorder and fiscal strain. He emphasizes that these transitions historically involve trade wars, technology wars, capital wars, and sometimes military conflict. He warns of scenarios analogous to the freezing of Japanese assets before World War II, noting capital wars as an increasingly visible dimension of competition.
Gromen argues that countries like China, Russia, and India are forcing gold back into the international monetary system as a neutral reserve asset to replace Treasuries. He sees the transition as structural and irreversible, warning that the US cannot sustain economic confrontation without eventually imposing capital controls — which would mark a dramatic escalation in the fracturing of the global financial system.
The Strauss-Howe framework observes that Fourth Turnings historically climax with major geopolitical confrontation. The American Revolution, the Civil War, and World War II each involved existential external conflict. The framework does not predict the specific form but suggests that some form of decisive geopolitical event is likely before the current cycle resolves.
Leading indicators that could shift this score.
Any military escalation around Taiwan would be the most consequential geopolitical event since World War II. China's military spending trajectory, naval exercises, and diplomatic signaling are leading indicators. Watch also for US semiconductor policy and TSMC's expansion of manufacturing outside Taiwan as hedging behavior.
Whether BRICS consolidates its expansion, establishes formal membership criteria, and advances operational alternatives to dollar-based systems will determine whether the bloc becomes a genuine institutional counterweight or remains a loose diplomatic forum. India's presidency and the potential admission of additional major economies are key variables.
If NATO members move seriously toward dramatically higher GDP spending targets, it would represent the largest sustained military buildup in the Western alliance's history. The fiscal implications for European governments — already dealing with aging populations and welfare state obligations — would compound existing domestic pressures and reshape the global security environment.