alt Hacker NewsDe-dollarization: Is the US dollar losing its dominance? (2025)
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At the risk of sounding like shameless self promotion, I recently wrote about how Zoltan Pozsar predicted this over three years ago: https://philippdubach.com/posts/pozsars-bretton-woods-iii-th...
Empires are very adept at dethroning themselves by way of greed.
Up until about a month ago, I’d have argued it’s overblown. However, I think this time it’s a real possibility and perhaps even certain. This country is absolutely going down the toilet and China is using this opportunity to strengthen its position. Things will get far worse as the economy rolls over this year and AI bubble pops. It’s a perfect storm.
Dollar milkshake theory
One can only hope.
What world do you guys live in? The dollar is not held by some mythical rules and polices. It has it's status because of aircraft carriers and 30000+ fighter jets US has. No other country is even remotely close to that level of offensive military power.
It's not going to be replaced any time soon, there's no realistic replacement at the moment, but there is a slow movement away from it. We've already seen a stampede into gold from central banks. And pimco have said they're going to relocate funds out of dollar debt.
After the nonsense with Greenland no one really wants to give anymore financial power to the US so we'll see more assets kept in local currency or different reserves currencies like the Euro, Yen, Sterling, or ChF.
The reason de-dollarization should be concerning to US citizens and many don't understand is that having the dollar as a reserve currency is a huge asset to the US. The US has control over how many dollars are created and where they are spent. If countries are willing to sell to us for dollars, then the world becomes a friendly market for raw materials and products to be vacuumed up here.
Losing the dollar as a reserve currency is losing the empire.
Key Takeaways from the JP Morgan Research:
• Despite a smaller share of global trade and output, the dollar still dominates in transactions like trade invoicing.
• Dedollarization is advancing in central bank reserves, with USD share at a two decade low.
• Foreign ownership of US Treasuries has declined for 15 years, signaling reduced external reliance on the dollar.
• The shift is most visible in commodities, where an increasing share of energy is priced in non USD contracts.
Part of the strength came from trust and participation in a community. The US has become untrustworthy and hostile toward community.
Yes
De-dollarization is one of those things economists love to talk about.
The chance of the dollar losing its reserve currency status is slim-to-none. No matter how bizarre the US is, nobody trusts the Chinese Communist Party (CPP). And although the US can manipulate the value of the dollar, its tools are limited compared to the CPP.
Plus, the US is still the only country that's willing and able to prop up the world financial system with no immediate benefit (see Argentina). The US can and will intervene when necessary. And as history has shown, the Euro Zone can't really make decisions quickly and effectively. How many times has the Euro been on the verge of collapse in the last 20 years? And is proximity to Russia is, well, risky.
In any case there is no currency big enough to take the dollar's spot at this point in time. Trillions of dollars flow through the financial system every day.
I'm hopeful that any loss in dominance translates directly to economic pain for all Americans. Nothing will rose those sleepwalking through the rise of fascism faster than not being able to make ends meet.
The article is written by JP Morgan which is a little odd but even stranger is they mention of all places China as being a great investment place to put your money, when in reality they can literally take your money away from you and nationalize your business under their current laws.
I'm surprised that people are so surprised by this. Funds operate with risk management models and practices. As the US becomes more unstable, politically, these will weigh in on how much money people keep in US markets. US threats to annex Canada and invade greenland. US kidnapping foreign heads of state. Actively using federal agents as shock troops against blue cities. All of this has true economic impact, either real in terms of losses but also USD as a stable currency run by legitimate people.
Would they implement capital flight controls? if you invest in the US, can you get your money out? No one knows but it seems increasingly less likely. Red lines are being crossed weekly.
The country is heading towards a decline into a developing world style authoritarian dictatorship.
Countries are learning that the USA is no longer what it used to be, on the surface they are trying to please Trump to avoid getting more tariffs but on the ground they are no longer depending on the dollar.
Wait until Greenland drama goes sideways, then you will see the dollar getting washed out as the international currency.
What if the goal is to crash/burn and consolidate ownership? This time with the money system?
I mean, it sure looks like the goal.
The US is losing respect in general. Its foreign policy which was never really friendly, now is really really bad. Many countries on Africa genuinely prefer countries like Russia. That's something unheard of 20 years ago.
Well the real question: Is the US losing interest in reserve dominance?
Contrary to popular opinion, IMO PRC doesn't want reserve currency trade off (triffin / trade deficits etc). What PRC wants is to secure her own interests with RMB, which is mostly happening, energy contracts, lots of bilateral trade happening in RMB now. What PRC also wants is to make maintaining reserve USD onerous, i.e. high rates, high debt servicing... which already indirectly limits US in real ways like reduced defense acquisitions in last few years.
PRC wants USD exorbitant privilege to be just exorbitant.
Then US incentivized to dump system (etc debasing) which will fuck over global USD users and tank US reputation even more. A lot of US actions make sense when you realize Trump doesn't want to deal with an increasingly unprofitable global utility. PRC doesn't want to step in to build new pipelines, they want to see US (mis)manage existing US owned plumbing that everyone is using so poorly it fucks up things at home and for everyone else, meanwhile PRC has comfy off the grid setup for herself and her guests.
Let's hope so. The USA has become very aggressive under the TechBro rule.
so nobody read the article and instead regurgitated pre-existing sentiment, while forgetting the golden rule of journalism:
if an article ends in a question mark, the answer is no.
> the greenback dominated 88% of traded FX volumes — close to record highs — while the Chinese yuan (CNY) made up just 7%, according to data from the Bank for International Settlements (BIS).
> Likewise, there is little sign of USD erosion in trade invoicing. “The share of USD and EUR has held steady over the past two decades at around 40–50%.
there is currently no other alternative to meet the global liquidity demands
uhm, they need to proof thier article "This increased demand has in turn partly driven the current bull market in gold, with prices forecast to climb toward $4,000/oz by mid-2026."
I usually read piaeces like this as bullish for the US .. the truth is .. neither the author nor anyone else can really call how this plays out .. but what is clear (and f***g obvious) is that there’s still no country as economically dynamic or creative as the US .. and if not the dollar .. then what realistically takes its place ... the euro, RMB, rupee? None come close yet in terms of depth, liquidity, or trust ... these type of de dollarization makes for an interesting news cycle and discussion, but it’s a super long road from theory to reality ..
Trump will go down in history as the clearest marker of the United States’ decline.
The biggest problem of all social sciences is that they measure only what can be measured or is easier to measure. Sorry for the redundancy, but they don't see what is hard to see and, therefore, think it doesn't exist.
I suspect there might be a lot of "de-dollarization" going on in realms that might not be easy to measure. To be specific: it is interesting that crypto-currencies have emerged as the currency of choice for illegal activities.
The export driven economies like China or the EU rely on the dollar to weaken their own currencies for competitive trade. Without it, natural FX mechanisms would naturally begin to appreciate their currencies and make their exports uncompetitive.
If Trump announces some toady lunatic to run the Fed, watch out below, because the dollar is going to crash. I know I have moved a bunch of money into international stocks and currency and I suspect when the right leaning crowd finally catches on it will be a stampede.
The most important thing to understand is where the value of the US dollar comes from. It's the US military. More generally speaking, it's US foreign policy. The US military is the force that enables foreign policy.
Understand this and you'll avoid falling into various traps and conspiracy theories. For example, there are people who believe that the US invasion of Iraq was caused by Iraq wanting to sell oil in euros instead of dollars.
This is a nonsen theory because every oil transaction could be denominated in euros tomorrow and it wouldn't change anything. The same demand for US dollars would still exist so people would simply convert to euros, buy oil then convert back.
This same understanding debunks the "threat" of a BRICS alliance.
The real problem, if you can call it that, is we have an administration who is both incredibly inept AND intent on destroying the post-WW2 world order. Wealth inequality is getting so bad and the deficit is so bad. Worse, nobody expects either to improve anytime soon. I'm not saying the budget needs to be in balance. It doesn't. A country doesn't work like a business when you can print your own money. But at some point, crippling public debt (in terms of GDP) will devalue the dollar.
Put another way: the illusion of "safety" is at risk. It's just a question of when the vibes shift.
Trump is a populist president who sees the value of US exports (on the back of blue collar work) being more important than global dollar dominance. This plays hand in hand with his championing of tariffs (foreign goods become more expensive) and hostility towards immigrants (apply upwards pressure on domestic wages).
If you cannot see this, or cannot believe it, you should probably check if you are in a ideological bubble.
Is the world going to de-dollarize though? Probably not, shy of an EU independence, which is about as likely as Europeans adopting an American work culture. Although, I won't rule out the possibility of the EU moving it's eggs to China's basket either. What a world that would be, a Sino-Euro axis and an North American axis. Whew
Betteridge (correctly) says "no".
India will be chairing BRICS this year. And Trump decided to fuck with the wrong country, especially when India-US relations were at its peak. This year will mark the beginning of the end of USD as a global reserve.
There's one of these articles it feels like every month. And as usual, Betteridge's Law of Headlines is at play here.
There's no replacing the US dollar until a better option comes along. You need a currency that's open (which rules out Yuan), a currency that is backed up by a strong government (which rules out places like Russia, India, Japan, and the UK), and you'd want something that isn't subject to the same geopolitical rules as the US dollar (which rules out the Euro).
Yes, of fucking course it is. The US elected a convicted con artist who is incontrovertibly violating human rights law, breaking treaties with allies, militarily threatening neighbors, and in general making a global outcast of themselves.
The US is making an absolute mockery over the honor and responsibility granted to in the post-WW2 world. It has sophisticated rivals that are predictably and effectively making use of the self-inflicted crisis. So far the ruling class of the US has been happy enough to let this go, and has been too busy making rocket ships, fake computer currencies, and large estates in south Florida to deal with real world problems.
If you are in the US, buy some gold or a house so your savings aren't destroyed - utterly predictably - by the man who declared Chapter 11 bankrupcy at least 6 times.
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TLDR: Yes.
Compromised people and useful idiots within the Trump administration are being persuaded by Russia to destroy the dollar and break up NATO.
USD remains and will remain dominant. Trillions in dollar denominated debt and derivatives, insurance products and assets exist globally. No other country willing to run prolonged & massive deficits required for a reserve currency. No other country, of sufficient size, has as predictable legal and regulatory dispute resolution environment. No other country currently has capabilities to protect overseas shipping - a key component of global trade.
USD dominance isn't going anywhere despite hurt feelings over Trump or US policies.
Obama during affordable healthcare act discovered they were very dependent on other countries. This was very visible during covid and the 'supply chain' breakdown.
Obama started a process, Biden and Trump are in lockstep. They've reduced this issue by about 1/3rd by 2024. Trumps' tariffs are almost certainly going to be upheld by the supreme court.
This has led to a reshoring boom and trillions of new investment in the usa. Estimates seem to suggest only a marginal improvement of about 3%, so roughly another 20% improvement.
But fixing the very broken trade balances for the USA has long term benefit but it will result in a strong USD, but weaker reserve currency. Obviously the USA is rapidly moving away from bretton woods and being the world police.
They will drop below 50%, but nobody else is there to pick up the reserve currency crown. They get all the benefits of seignoiorage and very little of the downsides for decades.
Their dominance is over but they clearly saw that the cost-benefit was not worth continuing into the future.
Meanwhile, since they stop being the world police and reshored the important things. They dont care about the stability of global trade. Instead their super carrier groups will move to poke their nose only in their own business. You're going to see a fast shift from the usa being hated to being loved over the next 10-20 years.
Have people completely missed the stable coin move that will ensure there is a massive continuing market for USD. The prognosis is 2 trillion USD around 2028. Thats a lot of bonds that will need to be purchased to back the coin.
As a big nitpick, I found the y axis in that chart ranging between 40%...90% to be horribly misleading.