Due to the news of large states beginning to settle trades in non-USD currencies, accounts on Twitter have latched on to a new narrative: the Death of the Dollar. As readers know, the world’s financial system is denominated in dollars. If you consider the financial system as plumbing, dollars are the water that runs through the pipes. The USA has used the dollar’s dominance to its advantage – pressuring allies, sanctioning enemies, and generally leveraging its position as the one who mints dollars to enforce its will on the world. However, nations have had enough and are working to de-dollarize their financial system.

The fact that de-dollaring is occurring is undebatable. Nations are settling trades in non-USD currencies, making non-USD trade agreements, and stockpiling gold. People betting on the decline of the USD amplify this news and focus on these events. And I admit, it is tempting to jump on the bandwagon here. I dislike fiat money as much as any Bitcoiner. I would love to see a return to non-fiat reserve assets – maybe gold, maybe Bitcoin, perhaps a basket of commodities, whatever. But, adopting a new reserve currency will be long, drawn out, and chaotic. It is not going to happen overnight. People clamoring for the imminent downfall of the dollar are most likely off to the tune of years, if not decades.

Weirdly, De-dollarization will likely lead to an appreciation of the dollar. Santiago Capital has hammered on this point repeatably. Fewer dollars mean fewer dollars to service US debt, which means dollars appreciate as entities buy them. The death of the dollar-based financial system seems to only make dollars more valuable, at least for a time.

Dollar appreciation may be a headwind for risk assets, but commodities like gold and potentially even BTC may do well. Tangible things like BTC, shiny metal, oil, or other commodities could be highly sought after in a chaotic, de-dollarizing world. Only time will tell.

But for now, be wary of the hype. The dollar has some life yet. Long live the greenback.