Collapse Incoming? The Greenback's Fall Threatens U.S. Dominance
By Michael Snyder/Economic Collapse Blog April 17, 2025
Share this article:
For many years, pundits have been warning us that the U.S. dollar would collapse. In 2025, it is actually starting to happen. The U.S. dollar hit a three year low against other global currencies last week, and on Wednesday the crash of the dollar resumed. Overall, the U.S. dollar is now down about 9 percent over the past 3 months.
The currency that has benefitted the most is the Swiss franc. The USD/CHF recently hit the lowest level that we have seen in 14 years. What we are witnessing is literally a bloodbath, and many experts are suggesting that our reserve currency status is now in serious jeopardy.
Many were hoping that the dollar would bounce back this week, but there was more carnage on Wednesday...
The dollar resumed its fall on Wednesday with both safe havens and risk sensitive currencies outperforming the greenback as traders waited to see if U.S. President Donald Trump's administration reaches new trading agreements with partners.
The dollar tumbled last week on concerns over the economic impact new tariffs will have, and as investors shifted allocations overseas due to uncertainty over the erratic implementation of the trade levies.
To me, one of the best ways to evaluate the strength of the U.S. dollar is to look at the price of gold.
Needless to say, the price of gold in U.S. dollars has been absolutely soaring lately, and on Wednesday it went up another 3.1 percent...
Gold prices extended their record run on Wednesday, to breach $3,300 per ounce, as a weaker dollar and escalating U.S.-China trade tensions pushed investors towards the safe-haven asset.
Spot gold climbed 3.1% to $3,327.78 an ounce.
During times of financial chaos, investors tend to flock to gold.
And times are definitely very chaotic right now.
If the dollar continues to become more unstable, other global currencies will inevitably become a lot more attractive.
At this point, we are being warned that the dollar's role as the primary reserve currency of the planet is "looking increasingly uncertain"...
Specifically, the dollar's status as a reliable "safe haven" has been tarnished, and its role as the de facto global reserve currency has been looking increasingly uncertain.
Signs of growing dissatisfaction with the dollar can be seen in the breakdown of its longstanding correlation with other markets.
Having the primary reserve currency of the world has been a major advantage for us, but there are other currencies that are widely used in global trade.
In recent weeks, the euro, the Swiss franc and the Japanese yen have all done extremely well...
For decades, the dollar, the Swiss franc and Japanese yen were among the most popular options for investors seeking calmer ports in volatile markets.
But while the yen, franc and euro have shot higher over the past few weeks, the ICE U.S. Dollar Index, a popular gauge of the dollar's value against its main currency rivals, sank to its lowest level in three years. By comparison, the Swiss franc recently climbed to its strongest level in 14 years.
Could the euro or one of the major currencies in Asia eventually take the place of the U.S. dollar?
It is entirely possible.
The truth is that the status of the U.S. dollar has already been slipping.
According to MarketWatch, "the dollar's share of global central-bank reserves has been shrinking since the late 1990s"...
By some measures, the world has been shifting away from its dependence on the dollar for decades. Data from the International Monetary Fund show the dollar's share of global central-bank reserves has been shrinking since the late 1990s.
When the dollar is strong, U.S. government bonds are attractive to foreign investors.
This keeps our borrowing costs down.
But in recent weeks we have witnessed a "major sell-off" in bonds at the same time that stocks have been going down...
During the financial crisis of 2008, investors around the world bought more Treasury bonds, confident that despite the crash, this was the safest place in the world for their money. That is how things usually go: The bond market moves in the opposite direction as stocks.
This time, as the stock market took a nosedive, an alarming trend emerged. Investors were dumping their U.S. government bonds. The yield on the 10-year Treasury jumped from 4% to 4.5% in a week, a huge jump for the bond market that indicates a major sell-off. Investors were putting their money into euros, yen, pounds, and gold instead of into dollars.
We haven't seen a financial crisis like this in a long time.
And we only have a limited amount of time to turn this around before things start getting really messy.
If this new crisis begins to spiral out of control, there will be an immense amount of pain, and we could witness a collapse of confidence in the U.S. dollar.
One expert is warning that the U.S. dollar has now been put on a "watch list"...
"It is too early to call if we are seeing the demise of the dollar, but the dollar has certainly been put on a 'watch list,'" says Kevin Gallagher, director of the Global Development Policy Center at Boston University. For the rest of the world, "The U.S. is no longer innocent until proven guilty, but the opposite."
Sadly, most Americans simply do not understand how important the strength of the dollar is.
Our primary export is currency.
For decades, we have been exchanging the world's dominant currency for goods manufactured in poorer nations all over the planet.
If the U.S. dollar becomes much weaker, our standard of living will go way down.
Unfortunately, it appears that there are those in positions of power that want to see the value of the U.S. dollar drop.
The chairman of the White House Council of Economic Advisers, Stephen Miran, believes that devaluing the dollar is the best way to reduce our trade deficit...
For Miran, tariffs and moving away from a strong dollar could have "the broadest ramifications of any policies in decades, fundamentally reshaping the global trade and financial systems".
Miran's essay argues that a strong dollar makes US exports less competitive and imports cheaper, while handicapping American manufacturers as it discourages investing in building factories in the United States.
"The deep unhappiness with the prevailing economic order is rooted in persistent overvaluation of the dollar and asymmetric trade conditions," Miran wrote.
It is true that if the dollar is substantially devalued our trade deficit will be reduced.
But in the process our standard of living will be greatly diminished.
This would particularly be true for those on the bottom levels of the economic food chain.
And if another global reserve currency ultimately takes the place of the U.S. dollar, that would be absolutely catastrophic for our standard of living.
At this stage in our history, the strength of the United States is dependent upon the strength of our currency to a very large degree.
If the dollar crashes and burns, so will our society as a whole.
Originally published at The Economic Collapse Blog
