The Hormuz Yuan Toll: A Spontaneous Mengerian Event
In March 2026, India quietly settled sixty million barrels per month of oil purchases in Chinese yuan and UAE dirhams. During the active phase of the Iran war, the Iranian government began charging yuan-denominated tolls on commercial vessels transiting the Strait of Hormuz. In June 2024, nearly two years earlier, Saudi Arabia had simply not renewed the informal arrangement through which, since 1974, its oil had been priced exclusively in dollars.
None of these events was announced with great fanfare. There was no BRICS summit resolution. No treaty. No currency union. No new multilateral institution. In every case, individual parties — each acting in their own rational self-interest in the face of a specific set of constraints — chose a medium of exchange other than the U.S. dollar, and the choice propagated without coordination.
This is not geopolitics, strictly speaking. It is Carl Menger's 1892 essay On the Origin of Money, reproduced in the present tense.
What Menger actually said
Menger's monetary theory, compressed into a single sentence, was this: money emerges spontaneously from the individual decisions of traders to accept more saleable goods in exchange for their own less saleable goods, in order to facilitate later exchange for the goods they actually want. There is no designer. There is no authority. There is only the spectrum of saleability — what Menger called Absatzfähigkeit — along which goods are ranked by how easily and on what terms they can be resold.
The critical line, from the opening of the essay: "The theory of money necessarily presupposes a theory of the saleableness of goods." Every analysis of money that skips the saleability step is dealing in accounting identities rather than economic causes.
Menger identified the characteristics that confer high saleability: widespread demand, divisibility, durability, transportability, homogeneity, and — importantly — the absence of serious risk that the good will be confiscated, debased, or politically weaponized between the moment of acceptance and the moment of later use. When a previously-dominant monetary good fails one or more of these criteria for a given market participant, that participant is pushed by simple rationality toward the next-most-saleable alternative that satisfies their constraints. If enough participants are pushed at the same time by the same constraint, the monetary regime itself begins to shift. Not by legislation. By arithmetic.
Menger was emphatic on this final point: "Money has not been generated by law. In its origin it is a social, and not a state institution." Governments can ratify what has already happened. They cannot manufacture saleability.
What made the dollar the most saleable good
The post-1974 petrodollar system worked because it stacked Mengerian saleability criteria on top of the dollar:
- Widespread demand, because every nation needed oil and every oil transaction required dollars.
- Divisibility and homogeneity, through the standardized instruments of the U.S. Treasury market.
- Durability, through the largest, deepest, and most liquid sovereign bond market on earth.
- Transportability, through the infrastructure of SWIFT, correspondent banking, and the eurodollar market.
- Absence of weaponization risk, because the dollar was understood to clear transactions without regard to the political disposition of either counterparty.
Only the last of these has changed. And it has changed decisively.
The 2022 freeze of roughly $300 billion in Russian central-bank reserves was the pivotal event. It demonstrated to every central banker in the world that dollar reserves — previously the highest-saleability asset on the planet for a sovereign — could be rendered un-saleable overnight by an executive decision in Washington that the holder had no vote in. The saleability of the dollar, in Menger's sense, became a conditional function of the holder's political alignment. For aligned holders, it was unchanged. For non-aligned holders, the saleability had quietly collapsed.
The aligned holders are irrelevant to the question of monetary evolution, because they were never going to diversify. The non-aligned holders are everyone who matters. And they began — without coordination, without announcements, without treaties — to do exactly what Menger said they would do: trade down the saleability curve for alternatives that, while inferior to the pre-2022 dollar, were superior to the post-2022 dollar under their specific constraints.
The three 2026 data points
Consider the three events of 2024–2026 in the light of Menger's framework.
Saudi Arabia, June 2024: The informal petrodollar arrangement was allowed to lapse quietly. There was no announcement because there was nothing to announce. The agreement was never a treaty. It was an understanding that oil would continue to be priced in dollars because the Saudis had concluded that dollars were the most saleable thing they could receive. When that conclusion shifted — under some combination of sanctions risk, Chinese demand for yuan-priced oil, and a general reevaluation of dollar political risk — the arrangement simply stopped. This is exactly how Menger described monetary transitions: not by decree, but by the quiet withdrawal of the assumption that sustained the old arrangement.
India, March 2026: Sixty million barrels per month settled in yuan and dirhams. This is not a symbolic volume. At current oil prices, it represents on the order of $5 billion in monthly flow that is no longer recycled through U.S. Treasuries. The rationality is straightforward: India needs oil, India has yuan and dirham reserves available through trade with China and the UAE, and the transaction cost of settling in those currencies is now lower than the transaction cost of assembling dollars under the current sanctions regime. No Indian policymaker announced a break with the dollar. No bilateral treaty was required. The transactions simply began to happen because, at the margin, they made sense.
Iran at Hormuz, spring 2026: The wartime yuan toll is the purest Mengerian moment. Iran, facing a dollar system entirely closed to it, exercising physical control over a chokepoint through which roughly a fifth of the world's traded oil passes, chose to price access in yuan. Not in rials (because the rial collapsed in December 2025). Not in gold (because gold does not clear at the speed of oil logistics). In yuan, because yuan was the next-most-saleable good available to the parties on both sides of the transaction. The Islamic Republic of Iran is not conducting BRICS monetary strategy. It is a sovereign under maximum constraint, reaching for the next-most-saleable instrument in reach. The result looks like a geopolitical policy. It is actually emergent rationality.
Why this cannot be reversed from Washington
Washington's instinct in response to observations of this kind is to treat them as problems of enforcement: more sanctions, more secondary sanctions, more tariffs, more Treasury auctions to absorb whatever capital is loose. The Mengerian observation is that this instinct is directionally wrong.
A saleability shift operates at the level of individual rational decision. Each trader, each central bank, each oil ministry is making a localized choice to optimize for its specific constraints. There is no central node to attack. There is no spokesperson to sanction. There is no entity that "decided" to challenge the dollar. The phenomenon is diffuse by construction, and the policy levers that Washington has developed over seventy years are all calibrated for a different class of problem — contesting the behavior of specific state actors rather than interdicting an emergent preference shift across millions of independent transactions.
Worse, each additional sanction, each additional round of secondary enforcement, each additional tariff against a non-aligned trading bloc, marginally increases the weaponization risk factor in Menger's saleability calculation for the dollar. The enforcement instinct is self-reinforcing in the wrong direction: it addresses the symptoms of a saleability decline by creating more saleability decline.
This is the structural parallel to Rome's debasement of the denarius, the Byzantine emergence of the solidus as a private-sector reserve asset (eventually crowding out the debased alternatives), and the post-WWII transition from sterling to dollar. None of these transitions was arranged by treaty. Each was the aggregation of millions of individually rational responses to a saleability erosion in the previous regime.
What the dollar still has
This analysis does not predict imminent dollar collapse. It predicts a gradual, probably decades-long erosion of dollar saleability for non-aligned actors, partially offset by deepening saleability within the aligned bloc. Dollar share of global reserves has fallen from roughly 72% in 2000 to approximately 58% in 2026. That trajectory is real but slow. The dollar still constitutes 89% of all foreign-exchange trades. The U.S. Treasury market remains the deepest and most liquid on earth. U.S. capital markets still provide returns and optionality that no alternative can currently match.
But the trajectory is unmistakable, and it is precisely the trajectory Menger's framework predicts. The dollar is neither collapsing nor invulnerable. It is being quietly, continuously re-evaluated on a transaction-by-transaction basis by participants whose saleability calculations have shifted. The outcome of those re-evaluations, aggregated across trillions of dollars of annual trade flow, is the slow emergence of a multi-polar monetary environment in which the dollar occupies first place but no longer monopolizes saleability.
What this means for policy and for portfolios
The policy implication, if Washington were listening, would be: abandon the enforcement instinct. Every sanction that weaponizes the dollar is a marginal contribution to the saleability decline. Every freeze of foreign reserves teaches the next foreign reserve manager to diversify preemptively. The path to preserving dollar primacy runs through reducing political risk on dollar holdings, not through increasing it. That path is institutionally closed in the current policy environment, which is its own telling datapoint about the trajectory.
The portfolio implication is simpler. In a Mengerian transition, the winners are the instruments that rise in the saleability ranking as the incumbent declines. These are not primarily the political favorites (the yuan is unlikely to displace the dollar in aligned-bloc commerce). They are the politically neutral instruments that become relatively more attractive as the dollar's neutrality erodes: gold, high-grade physical commodities, select hard-asset equities, and — for the first time in monetary history — digitally-native instruments that are architecturally resistant to political intervention. Each of these is a partial reach up the saleability ladder. None is a full replacement. The aggregate effect is what Fekete called, in a different context, "the gold basis widening" — the visible measure of the spread between the incumbent monetary good and its emerging alternatives.
The Hormuz yuan toll, read correctly, is not a headline about Iran. It is a datapoint in a long sequence that Menger would have recognized instantly. A monetary good is being demoted by a distributed process of individual re-evaluation. The demotion is proceeding at its own pace, in its own sequence, beyond the reach of any single institution to accelerate or arrest. This is how money has always changed. The surprise in 2026 is not that it is happening. The surprise is how few observers recognize it for what it is.
Next in this series: a proposal for quantifying the Mengerian saleability spectrum — a decay function of marketability that renders Fekete's gold basis concept into a computable metric applicable across every modern financial instrument.