Why the dollar isn't going anywhere, and Pakistan isn't defaulting

From the navy bases to Georgetown’s School of Foreign Service

Farooq Tirmizi was born and raised in Karachi into a navy family — his father and grandfather both served — which meant a childhood of moving between Karachi, Islamabad, and one stint in the US. He went to naval schools until class five, then a string of others, finishing at Karachi Grammar School after a gap year in which he memorised the Quran and, by his own account, walked into A-levels with a full beard. The principal admitted him in part because, in a more secular institution than it is today, it would be “a fun experiment.”

The figure he most admired as a young man was his mother’s uncle, a foreign service officer from the last batch to sit the joint India-Pakistan civil service exam. So Tirmizi went to Georgetown’s School of Foreign Service — the school the US set up in 1919 in anticipation of building a professional foreign service, so closely tied to the institution that to this day Georgetown schedules no activities on the weekend of the foreign service exam. He studied international political economy because he wanted to understand how politics and economics actually move together, and finished in three years because he couldn’t afford a fourth.

Wall Street’s plumbing, and the year the algorithms took over

A frank conversation at the Pakistan embassy ended his foreign-service dream — “beta, you’re too outspoken, you won’t make it in” — and a student loan pushed him toward finance. This was 2007, when half of Harvard’s class went into investment banking. He didn’t get the banking job he chased; he got a research analyst seat at an electronic brokerage, “a fintech before fintech was a phrase.”

His description of the work is one of the most useful threads in the episode. Almost all of the internet, he argues, was built for two customers — the Pentagon and Wall Street — and the brokerage he worked for was part of the plumbing, the layer that lets a trade execute a fraction faster than the next firm’s. By the time he left, he says, 75% of US trading involved no human placing an order. It was algorithms trading with algorithms.

His read on that is measured. The algorithms are only as good as the data they’re trained on, and that data is human. They “work beautifully until they stop working, and then you have to keep building new ones.” The first algorithmic trading fund, Long-Term Capital Management, went bankrupt. The humans didn’t leave the system; they just changed shape — instead of recruiting an aggressive trader, you recruit an MIT physics PhD. A US visa lottery — his was the first year there was one — sent him back to Pakistan.

Karachi in 1994, and being the smartest person in too many rooms

Tirmizi came home in the worst years of the war on terror, and the violence didn’t faze him. His benchmark for danger is 1994 Karachi, the bloodiest year of the MQM operations, when as a nine-year-old he watched a neighbour get shot. He’s honest that it desensitised him for a long time, and that it took years to relearn that this was not normal — a quiet exchange that Muzamil, an Islamabadi, presses on as the kind of trauma his Karachi relatives narrate too casually.

What actually frustrated him about coming home was professional. “A 23 or 24-year-old should not be the smartest person in the room,” he says, and there were too many rooms where he was. At Faysal Bank’s asset management arm he learned the Pakistani markets cold, but he found a business with no appetite for interesting work — a firm whose only equity exposure was a third of its smallest fund, while 90% of management’s attention went to that sliver and the rest sat in government bonds and bank deposits.

Why Pakistanis don’t invest — and the 401(k) lesson

Muzamil keeps returning to the same puzzle: every guest says Pakistan has huge potential and a young population, yet the number of people buying stocks never seems to move. He recounts his own attempt to open a brokerage account — excruciating paperwork, and one firm that told him it had shut its servers over Eid “for security reasons.”

Tirmizi’s answer is contrarian and, to him, settled. “In no country in the world that has a large base of investors was investor education the thing that made people invest. It’s always one thing and one thing alone — retirement savings.” America had only 3.5% of people holding any investment account in 1978. Then came the 401(k), letting people route retirement money into the markets, and participation climbed to 62%. Even now, two-thirds of Americans say their first investment was through a company retirement account.

He’s surprisingly generous about Pakistan’s regulator. The SECP, he says, has clarified again and again that this can all be done digitally — it even published an API-connection document. The blocker isn’t regulation, it’s incentives. Asset managers are either small shops with no distribution, or bank-owned. And banks read investing as a competitor to deposits, where the net interest margin runs from 4% in a bad year to 8% in a good one. The real competitor to investing, he insists, is the roughly $1.5 trillion sitting in Pakistani real estate — $150 to $200 billion of which, in his view, has no business being there — against an industry deposit base of around $90 billion.

The pension bomb, and the one law Pakistan got right

Pakistan, Tirmizi argues, has quietly written some of the best retirement-savings law in Asia. The Voluntary Pension Scheme regulation came in 2005, individualised provident funds and the rest by 2008, with what he calls “incredible foresight” — permissions for products that still don’t exist in the local market, and that don’t exist at all in India, Bangladesh, Indonesia, or Malaysia. The problem is that almost no one has built on it.

The model he’d recommend has three parts: individualised accounts with strong, safe defaults because most people don’t know where to invest; a tax penalty to stop people pulling money out before retirement; and the ability to borrow against the balance so they don’t feel trapped. The private-sector framework already allows all of this. The harder, more expensive job is moving the government onto it — and the part he’s most worried about, because the bureaucracy is united against pension reform in a way it isn’t against privatisation. Meanwhile, as Muzamil notes from a conversation with a former KP finance minister, the government’s pension liability is, in Tirmizi’s words, “exploding as we speak.”

This is what his own company, Elphinstone, is built against — it already serves clients including Bykea and Marcus Technologies with individualised retirement accounts. The VCs told him it was too early, and that they wanted an analogy from India or Indonesia. He can only point to America in 1978, which wasn’t a venture-backed company at all. The regulatory structure that makes it possible in Pakistan, he says, simply doesn’t exist in those other markets.

Not defaulting, and the difference between restructuring and reprofiling

When the conversation turns to the default talk, Tirmizi cuts through it. Externally, he says, the only real story is that the US used to quietly tell the IMF to go easy on Pakistan while it needed the country’s supply lines into Afghanistan — and when that need ended, so did the soft hand, which is when Pakistan’s situation got exposed.

But the deeper point is willingness. “Unlike Argentina, we have never lost our willingness to pay.” The civil service, the army, everyone who matters in Pakistani decision-making does not want to default — and as long as the willingness is intact, the means show up, whether through reforms or refinancing. He knows this because he talks to hedge fund managers who hold Pakistani bonds and buy more when they fall, on exactly that logic: it trades like Argentina but it isn’t Argentina.

He’s adamant the country doesn’t need debt restructuring. It needs reprofiling — push out the maturities, keep paying interest, possibly adjust the rate, leave the principal alone. The annual rollovers Pakistan already does are a version of this. He also thinks this IMF programme is genuinely different: a nine-month window rather than the usual two or three years, arriving at a moment when most of the painful adjustment — fuel prices, the rupee — has already happened. “What are you saving now? You might as well get it over with.” He compares it to India’s 1991 moment, with one caveat: India was embarrassed enough to never want to repeat it, and Pakistan, for the first time, may finally be that embarrassed too.

The rupee that couldn’t get out of India

The strongest stretch of the episode is on the dollar. The crypto crowd and the BRICS-currency crowd, Tirmizi says, are mostly people who never watched the current system get built, so they underrate how hard it is to replace. He tells a story instead.

When the war in Ukraine started, India wanted cheap Russian oil and tried to pay in rupees to sidestep dollar sanctions. So Rosneft opened a rupee account at an Indian bank, and an Indian oil company paid it — a clean domestic rupee-to-rupee transaction. The oil arrived, the payment cleared. Then the problem: Russia needed to pay its own people in rubles, and there’s no deep market to convert that many rupees. India’s answer was that the money couldn’t leave the country. The Russians had no use for a pile of trapped rupees.

That, he argues, is the whole point of the dollar. “The United States does not care and does not ask you any questions when you take dollars out of America.” It’s the only country that does this, and it can afford to because international trade is a small share of its GDP — it’s one of ten countries that grows its own food and one of only two with its own food and energy. India can’t let that many rupees out without crashing the currency and importing inflation. So the dollar stays the intermediary between every currency pair.

Muzamil pushes the counter-case — the changing world order, the growing frustration with American “weaponisation” of the dollar, the rumoured BRICS gold-backed currency, the global-south logic of trading directly with a cheaper neighbour. Tirmizi concedes the dollar won’t stay this dominant forever. But the talk treats it as a ten- or fifteen-year event when it’s a 50-to-100-year one. And it’s not just the currency — it’s the system behind it. People trust a JPMorgan Chase account; they don’t yet trust a Russian or Chinese bank, or a government that might one day decide their money can’t leave. The FDIC and SIPC protect non-citizens the same as citizens, and despite all the rhetoric, most people still take that promise seriously. He still sees more innovation and a younger, more dynamic economy in the US than in a rapidly ageing China. China will get more powerful; whether it surpasses the US at the US’s peak is, in his telling, genuinely debatable.

A one-way bet on Pakistan

Elphinstone takes its name from the Karachi street — now Zebunnesa Street — that held the country’s first investment institutions. The company is, as far as Tirmizi knows, the first to bring fully regulated US investing to ordinary Pakistanis: a registered investment advisor with the SEC, partnered with the brokerage Alpaca, opening individual accounts protected under US law. The pitch is simple — somewhere between one and one and a half million Pakistanis now earn in dollars, and no one was serving their need to save in dollars. Freelancers can fund accounts from Payoneer or Wise; dollar-account holders can move money with a letter explaining the foreign-exchange rules; even rupee accounts work up to the State Bank’s $25,000 limit. Money can sit in self-directed trades or a managed portfolio, conventional or Islamic — the S&P 500 has a Shariah-compliant index where 259 of the 500 companies qualify. Net of fees, he cites a ten-year stock average around 11.7% a year.

Muzamil ends by asking for an honest, caveat-free read of Pakistan in 2050 — no youth-population line, no “I hope.” Tirmizi goes further than asked. “I am structuring my life as a one-way bet that Pakistan will be one of the largest, most prosperous economies in the world by 2050.” It’s the year he turns 65, and the one he plans to retire into. His reason isn’t a forecast model. It’s a pattern he sees in the country’s history: every time Pakistanis are left free to build, they choose to build ethical things that create real prosperity. “I think we are done messing around.”