Concern About the Dollar Is Exploding. Even Tucker Carlson’s Worried.

Distress about the future role of the dollar in international payments and as the global reserve currency is so pronounced that it has jumped from technical circles to mainstream media almost overnight. The topic is so hot and so troubling that even #1 ranked cable TV host Tucker Carlson has weighed in, as described in this article.

(By the way, this article not only covers the topic but includes an embedded link that launches a Tucker Carlson TV monologue that can be viewed on your browser).

In February 2022 and the months that followed the Russian invasion of Ukraine, the U.S. launched an unprecedented set of financial sanctions on Russia intended to wreck the Russian economy and force Russia to withdraw from Ukraine or to seek peace on terms favorable to Ukraine. The most extreme war hawks in the Biden administration even suggested that the sanctions would be so harsh as to force regime change in Russia and the end of Vladimir Putin.

In addition to sanctioning oligarchs, banning U.S. investment in Russia, kicking Russia out of the SWIFT international messaging system as well as freezing and seizing assets, the U.S. sanctions went so far as to seize the U.S. dollar reserves of the Central Bank of Russia. In effect, causing a default on U.S. Treasury debt held by Russia.

I said at the time that not only would these sanctions fail to hurt Russia, but they would also boomerang and do extreme damage to the United States. Events over the past year have proved me right.

When other countries saw the U.S. seize the assets of a major central bank, they asked themselves the obvious question. What if the U.S. doesn’t like my policies or actions in international affairs? Will the U.S. seize my central bank assets too?

Many countries, including China, India, Brazil, Turkey and Malaysia decided the answer might be “yes.” They took steps to reduce their holdings of U.S. Treasury debt and to make arrangements to pay for imports in their own currencies. This became an immediate threat to the status of the U.S. dollar as a payment currency and a long-term threat to the status of the dollar as a reserve currency.

(As an aside, if you’d like a brief but detailed discussion of the difference between a payment currency and a reserve currency, you might want to watch an interview I gave a few days ago on Fox & Friends available here.)

By weaponizing the dollar, the U.S. has caused trading partners to flee the dollar, which weakens the dollar hegemony the U.S. has enjoyed since the end of World War II.

It seems the greatest threat to the dollar is not the actions of China, Russia or others. The greatest threat to the dollar comes from the incompetence of Treasury Secretary Janet Yellen and her equally incompetent subordinates at the U.S. Treasury.

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