Absent a nuclear war, a major conflict, another global pandemic or a gigantic comet crashing into planet Earth, the Dollar losing its status as the world’s reserve currency is the worst potential problem we face.
If that were to happen the dollar would lose its relative value compared to other currencies—What we sell to other nations, we would get less in return and what is imported here would cost more. And talk about inflation—”You ain’t seen nothing yet”!!!
And also when converting and trading our dollars into the currencies of other nations we would be getting diminishing rates of return and this would be especially true with presumably China and the Chinese Yuan if “crowned” the new Global Currency!
Also when other nations deal with and buy oil from OPEC, these transactions now are almost always conducted in U.S. dollars. As a result, banks all over the world keep a large amount of dollars in their reserves, sometimes more than their own currency.
Because of this, demand for the dollar by virtue of this fact alone keeps the value of the dollar high in relation to all other currencies. Other things to do to keep the dollar in demand would be to keep its use abundant in trading with as many countries as possible so that foreign nations and foreign corporations continue to use the dollar to conduct business with the United States and with OPEC as indicated above.
However, if the U.S. continues to overspend in relation to its budget this will have the opposite effect and sooner or later the dollar will decrease in value compared to other currencies. Right now, servicing on our national debt has become as much as our annual defense budget. Our debt to our gross annual domestic product (GDP) is currently listed at 125 percent. Other G7 countries are about the same, some even higher with Japan at 237 percent!!!
With China’s economy growing in “leaps and bounds” and the formation of the new trade alliance BRICS (consisting of Brazil, Russia, India, China and South Africa) along with its neighboring nation trading partners and with Trump alienating our trading partners such as Canada, Mexico, Britain and members of the European Union causing our major trading partners to now enter into new trade agreements with China they otherwise would not have made at the exclusion of the United States—all this making it easier for the Dollar at some point to eventually lose its status as the world’s reserve currency and let us not forget losing our lucrative major export agreement of soybeans with China to Brazil and Argentina, causing mass layoffs, bankruptcies and destroying the economic and community infrastructure in many Mid-Western farming towns.
In 2025, the federal government spent $7.01 trillion and collected $5.23 trillion in revenue, resulting in a deficit of $1.78 trillion in 2025. The U.S. spent $1.17 trillion in interest on its debt — almost double the amount it was paying five years ago and as mentioned, now spending more on interest payments than it does on defense.
And with gold going from under $3,000 an oz. to over $5,000, this price increase in gold being caused in large part by foreign governments and investors buying more in gold and less in U.S. Treasuries. is another reason we absolutely must stabilize our bond market due to the already “falling” purchases of Treasuries by foreign governments and investors especially since the announcement of Trump’s Liberation Day tariffs last April–my suggestion as explained in detail in our last issue–(in addition to the use of U.S. Stablecoin backed by U.S. Treasuries, its projected use to be $2.8 trillion by 2028) is by requiring importers to purchase Treasury bonds to help make up for the loss of U.S. Treasury bonds now not being purchased by foreign governments especially if The Supreme Court rules against Trump’s tariffs.
Also, on a recent tariff vote in Congress enough Republicans defected from the Trump tariff party-line resulting in terminating Trump’s tariffs on Canada. This is especially important should the Supreme Court rule against the constitutionality of his tariffs on the basis that tariffs are, in fact, a tax, which constitutionally is within the sole purview of Congress making a favorable decision in Congress an “absolute must” to continue the Trump tariffs.
Now, lastly, an argument could be made that if (domestic) importers were required to purchase bonds instead of tariffs wouldn’t that still amount to a tax? The counter argument would be NO, that, in fact, these bonds could be easily resold on the open secondary bond market for almost what it would initially cost the importer should a particular importer instead of keeping their bonds and collecting the bond yields would instead “opt” for immediate cash flow to invest in more purchases or other business investments which would by the way, be “way” more profitable than just what the treasury bond yields produce.
Then the argument would be that if such were the case as it would actually be “in fact” “in the real world”, large-scale institutional bond buyers would only, say, offer 50 cents “on the dollar.” Well, let’s say that’s true! But then again, someone else would then offer 60 cents “on the dollar” and still make a sizable profit. Basically the bidding amongst such institutional commercial bond buyers would probably go up to as high as 90 to 95 cents (“on the dollar”) as such domestic importers would be buying imported goods several times a year thereby having to also buy U.S. Treasuries several times a year under this new plan-proposal versus tariffs and, as a result, these institutional commercial bond purchasers could see that even at 90-95 cents “on the dollar”, a reasonable profit could still be made.
But even at this relatively minor 5-10 percent loss to the domestic importer, wouldn’t that still, in some way, be a “tax” that the importer would or could theoretically pass-on to the consumer? Well, what if “The Court” did rule that way? How ‘bout this?
The government just reimburses our domestic importer for this 5-10 percent loss so there is no potential pass-thru loss to the consumer but such reimbursement would not be with a cash reimbursement but with Stablecoin instead as our domestic importer could then use their Stablecoins to pay their foreign importer-shipper, in part, with such, further putting into circulation this new Stablecoin cryptocurrency which then these foreign businesses would redistribute throughout the world further stabilizing our bond market (since Stablecoin is backed by U.S. Treasuries) and ,thereby, also help keep our Dollar as The World’s Reserve Currency!!!
