The Dollar Is Down—But It's Not Dead Yet
Why the greenback still rules global finance (for now)
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Gold is surging. Treasuries are wobbling. But let’s not bury the dollar just yet.
Three years of decline.
That’s what the U.S. dollar has seen.
It’s enough to get the headlines rolling:
“Is the Dollar Dying?”
“Gold Soars as Faith in USD Falters.”
“De-Dollarization Begins.”
But while fear sells, facts matter. And the truth is more complicated—and more interesting.
Let’s break it down.
What’s Driving The Dollar’s Slide?
There are a few major culprits:
Tariffs and trade tensions. U.S. trade policy has become more erratic, spooking markets and international partners.
Investor exit. Confidence in U.S. government debt has taken a hit. Treasuries have sold off. Stocks followed. So did the dollar.
A flight to gold. Central banks and private investors are buying gold aggressively. Gold is up 53% year-over-year, outpacing the S&P 500 by a mile in 2025.
And perhaps most telling of all: the dollar is no longer moving in tandem with 10-year Treasury yields.
Usually, they rise and fall together. Lately, they’ve diverged. That’s rare—and troubling.
Red line is USD; blue line is the 10-year Treasury yield.
Why The Dollar Still Matters
Despite the weakness, the dollar remains the core of the global financial system. It is:
The default currency for global trade
The anchor for energy pricing (like oil)
The world’s primary reserve currency
There is no replacement waiting in the wings. Not the euro. Not the yuan. Not bitcoin. Not even gold.
A Strong Dollar Can Still Break Things
Let’s not forget: a too-strong dollar can wreak havoc.
Countries that borrow in USD feel more pressure when the dollar rises.
Oil-importing nations see prices spike.
U.S. companies exporting abroad get punished by unfavorable FX rates.
In 1985, when the dollar hit peak strength under Paul Volcker, the world had had enough. This led to the Plaza Accord, in which major economies coordinated to weaken the dollar.
We could be heading toward a similar moment—Mar-a-Lago Accords?
What’s Different This Time? One Word: China
China doesn’t want to replace the dollar but wants to weaken its grip.
This chart tells the story:
U.S. still dominates GDP, stock, and bond markets.
In real terms (PPP), China is closing in fast—thanks to lower costs and faster output.
China makes ~30% of the world’s goods. That kind of leverage can pressure the dollar over time.
Still, China’s renminbi isn’t built for global reserve status. Not yet.
But Beijing is building alternatives—trade in yuan, digital currency experiments, and deals that bypass the dollar.
It’s a long game. And one worth watching.
What Could Actually Kill The Dollar?
Here’s the real risk: not China. Not inflation. Not even gold.
It’s the U.S. itself.
The dollar is mighty because people believe in it—and in the system behind it.
That trust erodes if America:
Undermines the rule of law
Turns trade into a mafia-style negotiation
Burns alliances for short-term gain
Lets debt spiral without a credible plan
Lose credibility, and no currency is safe—not even the dollar.
Final Thought
The U.S. dollar may be down. But it’s not out.
Not yet.
There’s no real alternative waiting to take the throne. But the pressure is rising. And if America wants to keep its currency at the center of the global economy, it needs to earn that position—every single day.
In The Markets
Continued volatility—every day, so it barely makes sense to post an update.
The markets are trading on headlines:
Nvidia’s write-off—stocks down
Talks with Japan are going well—markets up
Here’s one thing worth looking at: Someone has been doing well since Liberation Day.
Yes! The line going straight up since April 2nd is Trump Media. The U.S. dollar and stocks are down.
Who’s winning?
What’s Next/What To Follow
The first is Hidden Forces
I can’t recommend
’ work highly enough. His model is free for the first hour, with no ads. If you want the second hour, which includes a deeper discussion, you have to pay.I encourage you to sign up for Hidden Forces. Demetri is a great interviewer and a thoughtful host, and the preparation is impressive.
The takeaways are:
The WhiteHouse meeting with Zelensky signaled a schism with Europe—capital is going home
Capital’s search for the location where it is best treated creates massive cross-border flows, which are spiking currency volatility.
Current account deficit’s mirror image is capital account surpluses (buying Treasuries and U.S. stocks). If we aim to reduce one, we should also expect the other to decrease.
The next is Lex Fridman
I would not recommend the entirety of this podcast. The conversation starts at 30:00. It’s worth listening to the first 20 minutes after that.
It’s a great example of a leader laying out very, very specific set of steps and a time-frame for executing his plan for Argentina.
If only our leaders could do the same.
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That part about the dollar no longer moving in tandem with 10-year Treasury yields really caught my eye. Could you explain a bit more about why their divergence is so unusual, and what it might signal?