Era of U.S. dollar may be winding down

What replaces the dollar?

• Many argue there is no single plausible successor; expect a more multipolar system (USD/EUR/RMB plus others) rather than a new hegemon.
• Baskets of currencies weighted by trade flows and stability are frequently proposed; some note this already resembles how certain central banks manage their currencies.
• The Chinese yuan is seen as too illiquid, capital‑controlled, and politically manipulable to displace the dollar, though it will likely grow in regional use.
• Gold/commodity‑backed national or “stablecoin” systems are suggested, but others note:
  • Historical instability under gold standards.
  • The real constraint is institutional trust and rule of law, not what backs the unit.
• Some envision large information systems or multi‑party FX nets handling trade without a fixed intermediate currency, but critics reply that an intermediate unit naturally re‑emerges where liquidity concentrates.

Is this time different?

• Several commenters say they’ve seen “dollar is doomed” headlines for decades; they’re skeptical that the inflection point is now.
• Others argue it is different because:
  • The US has heavily weaponized sanctions and USD settlement (SWIFT), pushing others to de‑risk away from dollars.
  • Current US policy (tariffs tied to bilateral deficits, talk of gold standard, Miran/“Mar‑a‑Lago”‑style plans) explicitly aims to weaken the dollar and shrink trade deficits.
  • Perceived erosion of US rule of law and reliability undermines the main non‑economic pillar of reserve status: trust.

Why dollar dominance matters

• Benefits cited:
  • Very cheap US borrowing (permanent global demand for Treasuries).
  • Ability to “tax” the world via moderate dollar inflation and export of US monetary policy.
  • Sanction leverage and intelligence value from controlling key payment pipes.
  • Elevated American consumption relative to population share.
• Losing this would likely mean: higher US interest rates, weaker imports purchasing power, reduced soft power, and less ability to run large, painless deficits.

Crypto, stablecoins, and BRICS

• Bitcoin is floated as a “trustless” global backstop; critics counter with: extreme concentration, manipulation, hacks, lack of recourse, scaling and environmental issues.
• USD stablecoins are seen by some as strengthening dollar demand; others note they exist only because USD is already dominant and could just as easily be backed by EUR or another unit if sentiment shifts.
• BRICS de‑dollarization efforts are acknowledged but widely doubted as near‑term serious alternatives given governance, transparency, and property‑rights concerns.