Hope for the best but prepare for the worst is a good motto in economics, as in much of life. It comes readily to mind when I think of what Donald Trump will do to the world economy.

If we’re lucky, the financial markets will take a Trump victory more or less in their stride. The dollar, as has been indicated for these many past weeks, will take a tumble, but otherwise the world will, hopefully, wait to find out precisely what Trump has planned. If we’re very lucky, Trumponomics – tax cuts, deregulation and protectionism – will stimulate enterprise, investment and job creation, put trade relations with the rest of the world on a fairer, more sustainable, footing, and, as they say, make America great again.

Things might not turn out like that. Perfectly plausible is that Trump's victory will instead prove the catalyst for the next financial crisis. In truth, that crisis has been in the making for many decades and it will represent the third chapter in the trilogy that has the banking crash and the great recession as its first two episodes: the great dollar crisis of 2017 will be the final reckoning of the long boom and the era of financial irresponsibility.

US Election results: Donald Trump takes the White House

Trump is now in charge of nuclear weapons and the biggest armed forces in the world. Far more terrifying, though, and surprisingly little discussed, is that President Trump is in charge of economic weapons of mass destruction: the dollar, the world’s only reserve currency; the world’s largest economy (the US is about one third of global GDP), and its largest blocs of debt.

For example, the world’s investors – one third Americans, two thirds foreign – have lent the US government a colossal, unimaginable, sum: the best part of $20 trillion; some $19,809,400,298,300 last time I looked. Stacked as dollar bills it would go to the moon and back. Individuals, companies, pension funds and nations lend the US government such absurd sums because they trust the US Treasury and expect to get paid back. There is some doubt Trump will be able or willing to do so. Imagine, if you dare, what that might to do to an already overstretched Chinese commercial banking system (China holds $1.3 trillion of these US government bonds).

US Presidential election: key moments in pictures Show all 12 1 /12 US Presidential election: key moments in pictures US Presidential election: key moments in pictures The 2005 Access Hollywood video which showed Mr Trump bragging to Billy Bush NEW YORK, NY - JANUARY 20: Donald Trump (R) is interviewed by Billy Bush of Access Hollywood at "Celebrity Apprentice" Red Carpet Event at Trump Tower on January 20, 2015 in New York City. (Photo by Rob Kim/Getty Images) Getty US Presidential election: key moments in pictures Hillary Clinton and her health concerns NEW YORK, NY - SEPTEMBER 11: Democratic presidental nominee former Secretary of State Hillary Clinton arrives with an unidentified woman at the September 11 Commemoration Ceremony at the National September 11 Memorial & Museum on September 11, 2016 in New York City. Hillary Clinton left a September 11 Commemoration Ceremony early after feeling overheated and went to her daughter's house to rest. (Photo by Justin Sullivan/Getty Images) Getty US Presidential election: key moments in pictures Hillary Clinton and her health concerns Democratic presidential nominee Hillary Clinton gets in her van after leaving her daughter's apartment building after resting onSeptember 11, 2016 in New York, New York. Clinton departed from a remembrance ceremony on the 15th anniversary of the 9/11 attacks after feeling "overheated," but was later doing "much better," her campaign said. / AFP / Brendan Smialowski (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images) Getty US Presidential election: key moments in pictures Mr Trump suggests gun-supporters could kill Hillary Clinton to prevent her from picking the supreme court justices U.S. Republican presidential candidate Donald Trump attends the National Rifle Association's NRA-ILA Leadership Forum during their annual meeting in Louisville, Kentucky, U.S., May 20, 2016. REUTERS/Aaron P. Bernstein - RTSF81G Reuters US Presidential election: key moments in pictures Melania Trump plagiarises Michelle Obama’s speech Melania Trump, wife of presumptive Republican presidential candidate Donald Trump, addresses delegates on the first day of the Republican National Convention on July 18, 2016 at Quicken Loans Arena in Cleveland, Ohio. The Republican Party opened its national convention, kicking off a four-day political jamboree that will anoint billionaire Donald Trump as its presidential nominee. / AFP / Robyn BECK (Photo credit should read ROBYN BECK/AFP/Getty Images) Getty US Presidential election: key moments in pictures Mr Trump said that judge Gonzalo Curiel would not be able to rule fairly, as he was of Mexican heritage Gonzalo Curiel - Mexican judge Trump insulted United States Federal Court/AP US Presidential election: key moments in pictures Donald Trump anxious over securing black vote Republican U.S. presidential nominee Donald Trump looks back at supporters holding signs at a campaign rally in Lakeland, Florida, U.S., October 12, 2016. REUTERS/Mike Segar Reuters US Presidential election: key moments in pictures Hillary Clinton and concerns about securing black vote TOPSHOT - New American Makia Nunes kisses a cardboard cutout of Democratic presidential nominee Hillary Clinton as volunteers and supporters of Republican presidential nominee Donald Trump and Clinton were on hand outside the Los Angeles Convention Center, to greet and help recruit new voters following their Naturalization Ceremony on October 18, 2016 in Los Angeles, California. / AFP / Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images) Getty US Presidential election: key moments in pictures Pope Francis Questions Donald Trump's Christianity Pope Francis leads a mass for the Jubilee of Inmates, on November 6, 2016 at St Peter's basilica in Vatican. One thousand prisoners -- including some lifers -- take part in a special event at the Vatican this weekend, along with 3,000 family members, prison staff and volunteers. The prisoners from 12 countries will had yesterday the opportunity to confess and walk through the "Holy Door" at Saint Peter's Basilica, a Jubilee tradition by which Catholics can ask forgiveness for their sins. / AFP / VINCENZO PINTO (Photo credit should read VINCENZO PINTO/AFP/Getty Images) Getty US Presidential election: key moments in pictures Donald Trump and his relentless remarks against Mexican people View of an "Alebrije" -Mexican folk art traditional sculptures representing fantastical creatures - with a figure representing US Republican presidential nominee Donald Trump during the tenth Monumental "Alebrijes" Parade and contest organized by the Folk Art Museum, on October 22, 2016 in Mexico City. More than two hundreds "Alebrijes" take part in the event. / AFP / YURI CORTEZ (Photo credit should read YURI CORTEZ/AFP/Getty Images) Getty US Presidential election: key moments in pictures Donald Trump and the sexual assault allegations LOS ANGELES, CA - OCTOBER 22: Attorney Gloria Allred holds a photo of jessica drake (R) with Donald Trump, taken in 2006 during an event where Drake alleges now-Republican presidential candidate Trump behaved in an sexually inappropriate way toward her, on October 22, 2016 in Los Angeles, California. This is the first news conference at which Drake has spoken to the public about her allegations against the candidate. Trump has been falling further behind Democratic presidential rival Hillary Clinton in the polls as women continue to come forth to accuse him of inappropriate sexual behavior. (Photo by David McNew/Getty Images) Getty US Presidential election: key moments in pictures FBI director announced that there would be no charges for Hillary Clinton amid email scandal US Democratic presidential nominee Hillary Clinton speaks during a campaign rally at the Pasco-Hernando State College in Dade City, Florida, on November 1, 2016. FBI agents are plumbing hundreds of thousands of emails in search of potentially incriminating evidence against Democratic nominee Hillary Clinton, in a high pressure probe seven days before the US presidential election. What will come out of it and when is not known, but the impact of the FBI's bombshell discovery of a new trove of Clinton emails is already reverberating in the neck-and-neck race for the White House. / AFP / JEWEL SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images) Getty

The most dangerous idea he has put forward as a way to deal with America’s debt is to buy it back at a discount. Some have interpreted that as an offer to pay back 85 cents in the dollar on outstanding debt, but the precise “haircut” is anyone’s guess – itself quite a cause of uncertainty. What is certain is that it would represent – in effect – the first modern default by the federal government on its debt, with, as a direct consequence, a spiralling devaluation of the world’s sole reserve currency.

To be fair, we’ve not heard much about the Trump Plan to deal with the national debt since the summer, but, if Trump takes a “businessman’s approach” to the US debt, something like that may well re-emerge in coming months. Even if he scrapped that plan, the chances are his tax-cutting would make the government deficit and the trade deficits even bigger. He would spin America into levels of indebtedness that would prove unsustainable even in a world that wished devoutly to believe in America’s essential goodness and strength. Not all wish to: think for a moment of powers such as Russia and some in the Middle East who might be tempted to start playing games with a tottering dollar.

In any case, running away from her debts won’t make America great again. It’ll turn her into the new Greece, and confirm once and for all that the modern American economy really was just the biggest Ponzi scheme in history; a confidence trick on the entire world where the last suckers in, lose their shirts. Which is really the point. For Trump wouldn’t be anything to fear if America were not so indebted (and he can hardly be blamed for that).

Sarah Palin compares Donald Trump's election run to Brexit

The fact remains, though, that America is vulnerable because neither the US nor her economic partners have sorted out the “global imbalances”, as the economists call them. Instead, for the past two decades, the US and China, and before that Japan, have indulged in an unsustainable game whereby the Americans run up huge trade deficits and the Chinese lend them the cash to keep it going. However, the mountain of dollars now held in China is so large that it cannot in reality be spent, or even managed. If they, the Chinese and Japanese, wanted to dump anything like a substantial proportion of their $2.5trn in US Treasury bonds, they would shred their wealth, their trade with the US and the wider world economy with it. The dollar in 2016, like the big Wall Street investment banks in 2009, is in that sense too big to fail. Trouble is, that didn’t prevent the banks failing, and only America saved the world from collapse.

This time, though, who will save America? The world will have lost its last lender of last resort.

If you’re a lord of finance, then, you know what to do about a Trump's victory: “short” the dollar so you at least make some money when it falls. For the rest of us, let’s just hope for the best from The Donald, eh?

Following his win, it is likely that the dollar will drop like a stone, and everyone will be poorer. Because everyone in the world, directly or indirectly, has some dollars in their pocket, their purse, their pension fund, their bank account or in their government's reserves. Everyone in the world also has an interest in the world’s largest economy being healthy and strong. It is a little surprising that more is not made of this risk. It may not be that substantial in reality, and currencies of course bounce around all the time. Yet there is some risk that things could quite easily run out of control. If so, the consequences would be truly catastrophic, for America and for the world. Yes, Donald Trump could prove the catalyst for a world economic cataclysm, one that would make the financial crisis feel like an aperitif for the main event.

From what we know about the signs are not promising. Let’s take the foreigners. The Trump effect will be truly global. A fall in the value of the dollar will affect anyone whose pension fund is invested in United States Treasury bills and bonds; anyone whose government has stored much of its national wealth in dollar assets. Pretty much anyone on the planet, in other words. Two thirds, indeed, of the US national debt is owned by foreign entities of one sort or another, with the Japanese and Chinese owning very substantial chunks of it (over a thousand billion dollars’ worth a piece), but virtually every bank, investment fund and government in the world is invested in securities issued by the US government and its agencies. Thus, if you are the lucky person in charge of the Chinese state’s holdings of US Treasury paper, you do not want to have to tell the stony-faces in the Chinese politburo why you’ve lost so much of China’s wealth, just because you sat on your hands while all around you investors were dumping their dollar assets.

Trump victory speech calls on Americans to become 'one united people'

Some commentators regard America’ astronomical debts as a matter of national shame or intrinsic danger. Not quite, because if the rest of the world is prepared to keep buying the IoUs the US treasury produces, then everyone is happy. Foreign banks and investors get to win dollar assets, backed by the biggest economy in the world; the Americans get to borrow to invest and, well to be honest, live a little beyond their means. In particular, the People’s Republic of China, with whom Donald Trump has an equivocal relationship, has a nice stash of about $1.3 trillion of US Treasury bonds and bills, its nest egg for a rainy day.

Ironically, richer Americans with lots of such assets won’t feel the loss so acutely, because, as we found with the effects of a weak pound on the London stock exchange, companies who earn lots abroad, but report their earnings and pay dividends in dollars, will face far more damage to their financial position on the personal “balance sheets” than any putative Trump tax cut might deliver for their incomes.