Trumponomics Why the End of US Dollar Dominance Is Now Possible
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Aug 13, 2025 
Barry Eichengreen, a renowned economics professor at UC Berkeley, joins Saleha Mohsin, a Bloomberg correspondent and author, to discuss the potential decline of the US dollar's dominance. They delve into how U.S. fiscal policies and national debt are shaking investor confidence. The conversation highlights the rise of alternative currencies and the shifting dynamics in global finance. They also explore the implications of transitioning from a dollar-centric system, raising questions about the future stability of international trade and economic relationships.
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Commerce And Security Drive Reserve Status
- Two forces determine a currency's global role: economic/clout (Mercury) and security/alliances (Mars).
- The dollar rose after WWII because the U.S. led in trade, finance, and provided security guarantees that encouraged dollar holdings.
Alliances Lower U.S. Borrowing Costs
- Losing alliance-driven demand would raise U.S. borrowing costs by roughly 50–70 basis points.
- That increase would also pressure the dollar exchange rate and U.S. financial conditions.
Narrative Matters As Much As Fundamentals
- Markets are pricing a "sell America" narrative amid tariff shocks and weak fiscal outlooks.
- Concerns about U.S. public finances and policy unpredictability drive foreigners to reduce dollar exposure.
