Ditching the Dollar Is the New Popular Trump Trade

Many more stories about the Epstain scandal rocked the Trump White House over the Christmas break as over a MILLION new files were suddenly found out of nowhere, requiring (I kid you not) the sudden mass hiring of people with no experience or special security clearances to start redacting the files for their mandatory pre-Christmas release, which never happened for the vast majority of files. Team Trump must now be buying Sharpies by the truckload. I’d like to have that shipping contract.

Still, with all of that, I’m going to concentrate today on the economic stories that came through as 2025 comes to a close. The Epstain stories, however, are all available for you below.

The demise of the dollar is here

One of the important stories that has been slowly emerging this year is the demise of the dollar. That is worth noting because for more than a decade, I resisted going with the dollar-collapse narrative that is popular in the economic-collapse sphere where I write, and that always proved to be the right position. However, at the start of the year, I switched and finally began predicting the dollar’s collapse was now likely to arrive quickly—perhaps within a couple of years—claiming that the Trump Tariffs have the power to do to the dollar what nothing else has.

This week, we got to see that prediction verified in mainstream news, where the dollar’s collapse is also rarely talked about, and the publication tagged that collapse to the same forces I’ve been pointing to.

Wired Magazine published an article claiming “The Dollar is Facing an End to its Dominance.”

They predict …

2026 WILL BE the year when US dollar dilution—the quiet erosion of its global dominance as countries trade and pay in alternatives—starts to build momentum.

I agree with that timing for the increase in momentum of the dollar’s downfall. My claim this year has been that will would see the start of the dollar’s downfall as tariffs caused major pull-backs in trade that cause a huge drop in need for “trade dollars.”

Wired now agrees with this mechanism for the dollar’s demise, claiming it is now in place:

America’s share of global trade has fallen from one-third in 2000 to just one-quarter today. As emerging economies trade more with each other, the dollar is less central to the flow of goods.

You see, the trade wars are a driving force that presses nations to now do what some threatened but none other than Russia ever did because they needed the dollar for their export economies, while Russia was already sanctioned out of such trade:

Indian and Russian trade now settles in rupees, dirhams, and yuan. More than half of China’s trade now moves through CIPS, China’s own cross-border payment system, instead of SWIFT—the global messaging network long dominated by Western banks. Other trading partnerships like Brazil-Argentina, UAE-India, and Indonesia-Malaysia are also piloting local currency settlements.

Ditching the dollar becomes a newly expanding scenario when nations literally have no use for dollars (or far less use) due to significantly reduced trade with the US. With US debt also looking like it could become more wobbly as nations have trillions of fewer reasons to buy US bonds as a way of holding and moving trade dollars, the risks start rising for buyers of US debt at the same time that the actual need for dollars falls way off.

That’s when it really becomes time to ditch those dollars.

At the same time, central banks around the world are starting to accumulate currencies other than the dollar as reserves. The dollar made up 72 percent of global reserves in 1999. Today, it’s down to 58 percent—and falling. A currency is safe only if it’s perceived to be safe. But perceptions are shifting.

Perceptions are shifting as nations that long deplored the weaponization of the dollar via sanctions for decades and the dominance of the dollar over their own currency and economies, are suddenly freed by Trump from their need for the dollar because they are forced by Trump to do less trade with the US and seriously spend their resources on enhancing trade with each other.

The dollar’s deficit damage

“Big Beautiful Bill” with its huge deficit spending, of course, is not helping any:

Ballooning US fiscal deficits—projected at $1.9 trillion in 2025—together with a widening current-account gap, estimated at 6 percent of GDP, are adding pressure to the dollar.

Finally, you add all of that into the usual concerns over the dollar that come from the nation’s huge deficit that winds up having to be financed by the Fed:

On top of this is the overuse of the “printing press,” meaning the creation of large amounts of new money to finance [government] spending. Once cushioned by the dollar’s “exorbitant privilege” as the world’s dominant reserve currency, these trends now raise questions about global confidence in the greenback.

The dollar has significantly lost its “exorbitant privilege” in just one year as the Trump Tariffs have damaged dollar-priced trade world-wide, leaving the dollar unnecessary as a part of national reserves.

Even the US Treasury market, once assumed to be infinitely liquid and universally acceptable as pristine collateral, has lost its luster.

That will start to mean trouble for the $27-trillion in US debt that needs endless rolling over with new financing as old bonds mature and have to be paid off.

But large financial institutions like JPMorgan, Citi, and Goldman that have been primary dealers providing liquidity, haven’t scaled accordingly. Currently, if everyone wants to sell, there are not enough balance sheets to absorb the selling—unless the Fed steps in.

Which is likely the real reason we just heard the Fed announce it is going back to buying US Treasuries in bulk before it even finished QT, while, again, trying to pretend that is “not QE.”

Uh huh. Sure it isn’t.

So, the dollars decline gains momentum from many directions, but tariffs are the biggest cause of the avalanche. Then all the long-building downward forces cave in.

The rise of the competition

This sudden very real lack of need for dollars in global trade due to tariffs is making it much easier for the various digital currencies that other nations are experimenting with to step into a fractionalized world of trade finance. It’s the perfect weakened world for the long-marginalized competition to step in.

In 2026, the real threat to the dollar may not come from a single rival currency. Instead, it will come from alternative payment and settlement systems built to bypass dollar-based channels—especially in emerging markets that never fully enjoyed the security of dollar liquidity or reliable access to dollar networks…,

It usually takes a hundred years for one currency to overtake another. But history may no longer move at that pace. With rising technology, the spread of economic opportunity, and the diffusion of digital finance, that timeline is compressing. While the dollar is still king, the cracks are widening. In 2026, the chance of slipping has never been higher.

Tariff turmoil

If the religious prophets that have gathered around Trump and Trump, himself, are right in claiming that God has anointed or appointed him to become the US president, then it looks increasingly like my own rebuttal to all of that at the start of Trump’s term is going to also be right, which was that it seemed more likely he was chosen to be God’s wrecking ball for America than its salvation, given that he is certainly doing a stellar job of that. Look at some of the other stories as we near the year’s close:

Trump promised that his tariffs would not cause any significant inflation, and I have called that a lie all year long, while also predicting Trump would use all the chaos he is creating in government as an excuse to delay all the financial reports that would prove tariffs are causing inflation. So, we’ve turned to other metrics as that also proved true.

Bill Bonner wrote last week that the dollar’s demise is picking up speed proportionate to how much Trump’s tariffs are killing trade with the US.

Consumer prices are already rising at about 3% per year — according to official tallies. Unofficially, the real inflation rate is probably over 5%.

This, of course, means the latest GDP number was total bunk because, when we talk about how the economy is growing, we have to subtract out inflation so that we are measuring actual growth in production (as measured in dollars) and not just measuring how much less the dollars that measure growth are becoming worth.

So, we use “real GDP.” Take out way too little for inflation, as the government’s latest report for inflation clearly did, and you wind up with a huge overstatement about economic growth, where the extra dollars in measured value of production are not more product, but just a measure of how many more dollars it takes to buy less product.

Bonner places us on this trajectory:

Consumer prices may also go up at 10% per year. Or more. And given the trends now in motion, the dollar may not exist at all, in its present form, when today’s newborns reach 65.

I’d give the dollar (in its present form) a lot less time than that.

In fact, consumer prices are clearly going up more than the government’s sieve of inflation data was capable of collecting as another article in today’s headline selection claims inflation has hit consumers so hard that they are dialing back:

“Three in four Americans say groceries are so expensive they’ve been forced to cut down on other spending”

So, we turn to other price measurements than the government’s:

Echoing its data throughout the year, Toast found that menu prices continued to climb in November, often exceeding the current inflation rate of 2.7%….

The increase is steep, too, with the median price of cold brew in November up 4.5% YoY, to $5.54, while regular coffee was up 3.5%, to $3.59, per Toast. Burrito prices were up 3% YoY, to $13.43, while burgers also rose 3% YoY to $14.57.

People are still buying beef, but opting in mass for cheaper cuts.

More than 2 in 3 respondents (67.6%) said that they’re struggling to pay grocery bills because of inflation and rising food prices, according to a survey by Swiftly, which provides digital and media solutions for brick-and-mortar supermarkets.

The consumer experience clearly has diverged widely from the government’s lack of data that got turned into an inflation report earlier this month.

More than 3 out of 4 (75.2%) responded that they’ve reduced spending in other areas to afford groceries, and in a follow-up question selected what areas they’ve cut spending in the most to pay grocery bills, with entertainment spending the most likely to be cut, followed by spending on travel, clothing, and going out to eat or drink.

Whiskeyed Away

Another bellwether of the damage the Trump Tariffs are doing to the US economy came from Jim Beam earlier this months. Beam reported how much retaliatory tariffs against their products are hurting them. The retaliatory tariffs were implemented to combat Trump’s tariffs on the alcohol produced by other nations.

Now we have a broader report on the American distillery industry that shows Jim Beam was a trend, not a one-off:

“Another bourbon distiller files for bankruptcy as sector collapses”

Another American spirits maker has gone bust, adding to growing signs that the US whiskey and bourbon boom has sharply reversed.

Ohio-based AM Scott Distillery, which filed for bankruptcy on December 22, is the latest casualty in an industry struggling with falling demand at home and overseas.…

The downturn has been worsened by a Canadian backlash against US tariffs that has specifically targeted American bourbon….

As I said early on, tariff wars are not easy to win as Trump claimed during 1.0 because the other side always fights back. So, here we are:

Its collapse comes just a week after Jim Beam, one of America’s most famous bourbon brands, announced it would halt production for at least a year at its historic distillery in Clermont, Kentucky — a rare retreat for a nearly 230-year-old name….

The steepest drop came from Canada, once one of the industry’s most important markets, where exports collapsed by as much as 85 percent after trade tensions and retaliatory boycotts tied to policies under President Donald Trump.

Other major export markets are also buying less….

Shipments to the EU, the UK and Japan — which together account for the bulk of US spirits exports — have all fallen sharply this year.

That, of course, is not the boon for American jobs Trump claimed to be bringing.

The demise of American businesses will continue as the retaliatory tariffs Trump has spawned continue to take their toll. Meanwhile inflation for Americans will continue to rise as Trump’s own tariffs raise the cost of all imported goods for Americans, and companies continue to look for every opportunity they can find to press their own increased import taxes on to the ultimate consumer, which is where all of that stuff always ultimately lands. Inflation will also rise as tariffs raise the cost of ingredients that go into American-made products.

Trickle-down price increases turn up to trickle down more readily than trickle-down tax cuts ever did. Too many hands are happy to hold onto the benefits of those tax cuts, while no hands want to hold on to the hot potato of simmering price increases any longer than they have to.

Of course, it could be that tariffs are just the engine to drive a scheme Trump has been working hard on all of this year. We saw the first presidential money issued this year. By which I do not mean the old stuff: US money with a president’s face on it, but the president’s money with the US dollar sign on it: $Trump. The prez has been particularly pushing his own crypto alternative to the buck all year. The very thought of that adds a new twist to Truman’s old saying, “The buck stops here.” Indeed, maybe it finally does.

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