Difference between revisions of "Essay: The terrible track record of forecasters predicting rapid de-dollarization and/or the imminent demise of the U.S. dollar"

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[[File:50 star flag.png|thumbnail|350px|right|Flag of the [[United States]] ]]
 
[[File:50 star flag.png|thumbnail|350px|right|Flag of the [[United States]] ]]
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The United States dollar is the world's reserve currency. According to Investopedia, "A reserve currency is a large amount of currency held by central banks and major financial institutions to use for international transactions."<ref>[https://www.investopedia.com/terms/r/reservecurrency.asp#:~:text=Even%20with%20de%2Ddollarization%2C%20the,and%20liquid%20form%20of%20exchange. What Is a Reserve Currency? U.S. Dollar's Role and History], Investopedia</ref>
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The United States dollar is the world's reserve currency. According to Investopedia, "A reserve currency is a large amount of currency held by central banks and major financial institutions to use for international transactions."<ref>[https://www.investopedia.com/terms/r/reservecurrency.asp#:~:text=Even%20with%20de%2Ddollarization%2C%20the,and%20liquid%20form%20of%20exchange. What Is a Reserve Currency? U.S. Dollar's Role and History], Investopedia</ref> According to a 2026 International Institute for Strategic Studies (IISS) article, "America’s unrivalled balance-sheet depth, mature financial markets, legal reach and established market confidence reinforce the greenback’s dominance, despite efforts at de-dollarisation."<ref>[https://www.iiss.org/online-analysis/six-analytic-blog/2026/01/the-future-of-dollar-dominance/ The future of dollar dominance], International Institute for Strategic Studies, 2026</ref>
  
 
The United States dollar has been the world's primary reserve currency for over 60 years.<ref>[https://home.treasury.gov/system/files/206/Appendix1FinalOctober152009.pdf An Historical Perspective on the Reserve Currency Status of the U.S. Dollar], Treasury.gov</ref><ref>[https://siepr.stanford.edu/news/secret-dollars-success-nope-its-not-trade The secret to the dollar’s success? Nope, it’s not trade.], Stanford University, 2023</ref>
 
The United States dollar has been the world's primary reserve currency for over 60 years.<ref>[https://home.treasury.gov/system/files/206/Appendix1FinalOctober152009.pdf An Historical Perspective on the Reserve Currency Status of the U.S. Dollar], Treasury.gov</ref><ref>[https://siepr.stanford.edu/news/secret-dollars-success-nope-its-not-trade The secret to the dollar’s success? Nope, it’s not trade.], Stanford University, 2023</ref>
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• Geopolitical Safe-Haven Demand: Regional conflicts and energy market pressures periodically elevated safe-haven flows into U.S. assets.
 
• Geopolitical Safe-Haven Demand: Regional conflicts and energy market pressures periodically elevated safe-haven flows into U.S. assets.
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== 2026: Russia's push to replace the U.S. dollar with China's yuan collapses ==
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2026: Russia's push to replace the U.S. dollar with China's yuan collapses.[https://www.tradingview.com/news/seekingalpha:b71c35257094b:0-russia-retreats-from-china-s-yuan-as-u-s-sanctions-bolster-dollar/] Russia has sharply reduced its reliance on China's yuan for international trade as U.S. sanctions discourage Chinese banks from processing transactions.
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This deals a setback to Beijing's ambitions to expand China's yuan global role. First, China’s share of global GDP has fallen in nominal terms from 18 to 16.5 per cent, while the US share has risen to 26 per cent and now this! [https://www.ft.com/content/0dbbef33-059b-4ec9-b504-31f37a0c4053?syn-25a6b1a6=1] USA! USA! USA!
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"Cross-border payments between Russia and China now carry fees and commissions averaging 15% to 20% of transaction values, according to logistics provider STT Logistics. Meanwhile, the yuan has slipped to fifth place in global payments tracked by SWIFT, although Chinese officials maintain that transactions through China's domestic payment network demonstrate broader international adoption."[https://www.tradingview.com/news/seekingalpha:b71c35257094b:0-russia-retreats-from-china-s-yuan-as-u-s-sanctions-bolster-dollar/]
  
 
== 2025: U.S. dollar typically weakens during trade negotiations. US Deputy Treasury Secretary Michael Faulkender said he expects “a lot more deals” ==
 
== 2025: U.S. dollar typically weakens during trade negotiations. US Deputy Treasury Secretary Michael Faulkender said he expects “a lot more deals” ==
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[[Image:Alexis de tocqueville.jpg|center|thumb|300px| "The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults." - [[France|French]] historian and politician [[Alexis de Tocqueville]] ]]
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[[Image:Alexis de tocqueville.jpg|center|thumb|300px|"The great privilege of the Americans does not simply consist in their being more enlightened than other nations, but in their being able to repair the faults they may commit" - [[France|French]] historian and politician [[Alexis de Tocqueville]] ]]
 
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For more information on this topic, please see:
 
For more information on this topic, please see:

Latest revision as of 17:44, November 12, 2026

Flag of the United States

The United States dollar is the world's reserve currency. According to Investopedia, "A reserve currency is a large amount of currency held by central banks and major financial institutions to use for international transactions."[1] According to a 2026 International Institute for Strategic Studies (IISS) article, "America’s unrivalled balance-sheet depth, mature financial markets, legal reach and established market confidence reinforce the greenback’s dominance, despite efforts at de-dollarisation."[2]

The United States dollar has been the world's primary reserve currency for over 60 years.[3][4]

In January 2024, Yahoo Finance rated the U.S. dollar the strongest currency in the world.[5] In April 2024, Forbes magazine ranked the U.S. Dollar the 10th strongest currency.[6]

The unlikelihood of rapid de-dollarization or the imminent demise of the dollar

In 2024, the Investing.com article De-Dollarization: A Far-Fetched Reality? indicated:

“ Despite the rising discourse on de-dollarization, the idea that the US dollar will lose its global dominance appears improbable. While countries like China and Russia actively pursue strategies to reduce their reliance on the dollar, the global financial system's entrenched dependence on the greenback remains robust.

The dollar's supremacy is underpinned by the extensive size and stability of the US economy, its influential geopolitical position, and the deep liquidity of its financial markets. These factors create a resilient foundation for the dollar, making a sudden shift towards alternative currencies highly unlikely.[7]

”

On October 17, 2024, The Economist stated concerning the United States:

“ Over the past three decades America has left the rest of the rich world in the dust. In 1990 it accounted for about two-fifths of the GDP of the G7. Today it makes up half. Output per person is now about 30% higher than in western Europe and Canada, and 60% higher than in Japan—gaps that have roughly doubled since 1990. Mississippi may be America’s poorest state, but its hard-working residents earn, on average, more than Brits, Canadians or Germans. Lately, China too has gone backwards. Having closed in rapidly on America in the years before the pandemic, its nominal GDP has slipped from about three-quarters of America’s in 2021 to two-thirds today.[8] ”

Articles:

Predictions of the U.S. dollar's demise that did not come true

  • "Stephen S. Roach revisits his prediction in 2020 of a dollar crash and explains why he got it perfectly wrong." - Wrong on the Dollar – for Now by Stephen S. Roach

25 history of the US dollar going up and down and still remaining the world reserve currency

"From a historical perspective, there’s nothing sinister about recent falls in the U.S. dollar, says Eurizon SLJ Capital’s Stephen Li Jen in a note. “Despite global upheavals, the U.S. dollar remains the dominant reserve currency,” the CEO says. The dollar has traded between around $0.83 and $1.60 against the euro in the past 25 years and throughout this period there was little talk about the dollar losing its hegemonic status as a reserve or international currency, he says. However, the dollar’s share in the world’s reserve holdings should drift lower, albeit retaining its number-one spot, he says. Eurizon SLJ Capital sees fair value for the euro against the dollar between $1.20 and $1.25. The euro is last up 0.1% at $1.1380." - Dollar’s Recent Falls Don’t Endanger Its Dominant Reserve-Currency Status, Wall Street Journal, May 26, 2025

Can the Euro replace the US dollar as the world's reserve currency?

Europe, which is less religious than a majority of the world, has a subreplacement level of births, is projected to have a population that is 30% less smaller by the end of the century[9]

See also: Decline of Europe and Euro

The euro (symbol €) is an abbreviation for the 27-member European Union and is also the common currency in its Eurozone (a population of more than 320 million).

“The lack of fiscal unity within the eurozone and the sheer depth of US capital markets remain as significant constraints on the EUR replacing the USD as global reserve currency; however, that doesn’t mean that the EUR and other currencies such as the CNY will not chip away at the USD’s crown." - Jane Foley, head of FX strategy at Rabobank, 2025[10]

Europe's declining population and its effect on its economy

"Europe is experiencing a long-term demographic decline, meaning its population is shrinking and its aging. This is largely due to low birth rates and increasing life expectancy, leading to more deaths than births in many countries. The EU's population is projected to decline by 6.6% by 2100, even with migration, and could decrease by 34% without considering migration." - Europe losing population

Due to Europe's aging population which is projected to shrink and its various current and projected problems, international relations scholar John Mearsheimer stated: “Europe doesn't matter anymore. You know, Europe is basically a giant museum.”[11]

For more information on this topic, please see:

Size of a working age population in a country and its correlation with national GNP in advanced economies. The ability of the United States to attract some of the best and brightest workers in the world

Europe's stagnating economy

"Europe, home to some of the world's largest and most advanced economies, has been experiencing nearly two decades of economic stagnation, falling behind the USA in raw output. Despite high living standards, competitive salaries, and excellent education, the continent faces self-inflicted issues in innovation, immigration, industry, integration, and energy." - Video: How Europe Sabotaged Its Own Economy, 2025

"Europe’s economy is stagnating. Since the turn of the millennium, real disposable income in the U.S. has grown nearly twice as fast as in the EU – while China’s economy continues to outpace them both. At the same time, the EU is pushing a green transition that could have devastating consequences for both our economy and standard of living." - Video: Is Europe Falling Behind? – The Decline of Competitiveness, March 2025

In 2026, Europe's economic problems have made the Euro look weaker and raised the relative strength of the US dollar. The dollar had gained approximately 5% against the euro during 2026 and reached an 18-month high

In 2026, Europe's economic problems have made the Euro look weaker and raised the relative strength of the US dollar.

According to Reuters reporting on October 8, 2026, the dollar had gained approximately 5% against the euro during 2026 and reached an 18-month high.[12]

According to Reuters reporting on October 8, 2026, the dollar had gained approximately 5% against the euro during 2026 and reached an 18-month high

In 2026, Europe's economic problems have made the Euro look weaker and raised the relative strength of the US dollar.[13]



Key Drivers of 2026 US Dollar Strength [1]

• American Exceptionalism & AI Boom: Continued massive capital inflows into U.S. equities—driven by artificial intelligence enthusiasm and major initial public offerings (IPOs)—have supported continuous foreign demand for the greenback.

• Hawkish Federal Reserve: A shift in market expectations toward a tighter or more hawkish stance (including repricing around potential Fed rate paths under leadership like Kevin Warsh) kept U.S. yields attractive relative to peers.

• Growth Divergence: Stronger and more resilient U.S. economic performance compared to sluggish growth in the Eurozone and other major economies widened the growth gap in favor of the dollar.

• Geopolitical Safe-Haven Demand: Regional conflicts and energy market pressures periodically elevated safe-haven flows into U.S. assets.

2026: Russia's push to replace the U.S. dollar with China's yuan collapses

2026: Russia's push to replace the U.S. dollar with China's yuan collapses.[2] Russia has sharply reduced its reliance on China's yuan for international trade as U.S. sanctions discourage Chinese banks from processing transactions.

This deals a setback to Beijing's ambitions to expand China's yuan global role. First, China’s share of global GDP has fallen in nominal terms from 18 to 16.5 per cent, while the US share has risen to 26 per cent and now this! [3] USA! USA! USA!

"Cross-border payments between Russia and China now carry fees and commissions averaging 15% to 20% of transaction values, according to logistics provider STT Logistics. Meanwhile, the yuan has slipped to fifth place in global payments tracked by SWIFT, although Chinese officials maintain that transactions through China's domestic payment network demonstrate broader international adoption."[4]

2025: U.S. dollar typically weakens during trade negotiations. US Deputy Treasury Secretary Michael Faulkender said he expects “a lot more deals”

The US dollar typically weakens during trade negotiations.[14]

Please see: White House ‘close to the finish line’ on some trade deals, says Treasury official, CNBC, 2025 (Deputy Treasury Secretary Michael Faulkender said he expects “a lot more deals” could be announced before President Donald Trump’s 90-day tariff pause expires.)

What is the Genius Act, and can it really cement US dollar supremacy?

The Genius Act is "designed to strengthen the U.S. dollar's global dominance, particularly in the digital realm, by creating a clear and safe regulatory framework for stablecoins. By requiring stablecoin issuers to hold reserves backed by U.S. dollars and short-term Treasuries, the Act aims to enhance consumer confidence and reduce the risk of instability in the digital economy. Additionally, the Act's focus on Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations helps to strengthen national security and reduce the risk of illicit activity involving digital assets."[15]

For more information, please see:

Why the BRICS de-dollarization dream remains a fantasy

See also: The 2023 BRICS Summit was a bunch of hoopla. We still don't live in a multipolar world

The countries that comprise BRICS — which stands for Brazil, Russia, India, China, and South Africa, and now five new members—are an informal grouping of emerging economies that hope to increase their sway in the economic/political order in the world today.

In 2024, the Bloomberg News article Why the BRICS De-Dollarization Dream Remains a Fantasy stated:

“ “It’s everywhere you want to be.” That was the tag-line of an advertising campaign launched for Visa credit cards in the 1980s. The slogan works equally well for the US dollar, despite a lot of angst over the status of the world’s main reserve currency.

And that’s true even in places you might not expect—like Kazan, Russia, where President Vladimir Putin—a champion of reducing the international role of the dollar—hosted the annual BRICS summit this week. Despite all the enthusiasm for de-dollarization, the confab’s organizers advised attendees to bring greenbacks (or euros) with them to the city on the Volga. (Non-Russian Visa cards won’t work, they added.) It’s difficult to imagine a better example of how hard it is to disengage with a currency that’s dominated the global financial system since the end of World War II.[16]

”

For more information, please see:

2024: Dollar climbs after Donald Trump’s BRICS tariff threat and French political woes

2024: 5 main BRICS currencies lose value in 2024

News items concerning the U.S. dollar

2025 strength of the US dollar. It's still strong!

U.S. dollar vs. Chinese yuan graph. The Chinese yuan will never replace the US dollar as the world’s reserve currency

U.S. dollar to Chinese yuan exchange rate graph

U.S. dollar to Chinese yuan exchange rate graph as of January 3, 2025.

2025: The Chinese yuan will never replace the US dollar as the world’s reserve currency

2025: China capitulates as U.S. dollar keeps rising

2024: De-dollarization is not working out in China, where businesses are hanging onto their US dollars

U.S. dollar to Chinese yuan exchange rate in June 2024


U.S. dollar to Chinese yuan exchange rate on April 19, 2024.

In January 2024, Yahoo Finance rated the U.S. dollar the strongest currency in the world.[17] In April 2024, Forbes ranked the U.S. dollar the 10th strongest currency.[18]

See also:

*Will the U.S. Dollar Be Dethroned? by Charles Schwabb, April 2023

*What It Would Take for the U.S. Dollar to Collapse, Investopedia, 2024

Alexis de Tocqueville: The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults



"The great privilege of the Americans does not simply consist in their being more enlightened than other nations, but in their being able to repair the faults they may commit" - French historian and politician Alexis de Tocqueville

For more information on this topic, please see:

Cultures change slowly. So world orders generally change slowly as do world reserve currency statuses

Map of the British Empire.

The British pound kept its position as the world reserve currency a long time after Britain had lost its dominant position politically and economically.[19]

See also: Cultures change slowly. So world orders generally change slowly and How long will the American civilization last? Strong reasons it could be a very long time

Source: How fast do global orders change? How often do major shifts in the world order happen?

For more information, please see: Cultures change slowly. So world orders generally change slowly

For more information, please see:

The British pound declined slowly as a world reserve currency despite Britain losing its dominant position due to the decline of British Empire

See also: British Empire

DNB executive vice president Harald Serck-Hanssen about how the British Pound declined slowly as a world reserve currency: “Look at the British pound. It kept this position long time after Britain had lost its dominant position politically and economically.”[20] See: Collapse of the British Empire

The United States will be the leading power in the world for the foreseeable future

See also: The United States will be the leading power in the world for the foreseeable future

Will the United States be the leading power for the foreseeable future? Or will it be China or Russia? What are the strengths and weaknesses of the United States, China and Russia? What is the future of Europe in terms of its influence on international relations?

While I do believe the USA, China and Russia are three major powers, I also believe that both China and Russia have some major problems that are not going to go away anytime soon. In this essay, I argue that the United States has a brighter future than China and Russia for the foreseeable future. So while China and Russia will remain major powers for many years, out of the three major powers, America will remain the strongest power out of the three major powers for the foreseeable future.

For more information, please see: The United States will be the leading power in the world for the foreseeable future

The United States will likely be the strongest country for the foreseeable future and this is due to the strengths of the USA and partly due to the weaknesses of China and Russia.

See also: The United States will be the leading power in the world for the foreseeable future

Essays on why I am not bullish on China or Russia

China

The flag of China.

Russia



The flag of Russia


Personal characteristics of superforecasters according to the research from the Good Judgment Project

See also: Superforecasting: The Art and Science of Prediction and Forecasting

Superforecasting: The Art and Science of Prediction is a 2016 book about forecasting written by Philip E. Tetlock and Dan Gardner.

The book reports on a wealth of data coming from the The Good Judgment Project (started in 2011) which indicates that well-chosen selected amateur forecasters who demonstrate their ability to accurately forecast are often more accurate than subject matter experts.[21]

Characteristics of "superforecasters":[22][23]

- Temperament: Cautious (Many things are uncertain), Humble (Reality is infinitely complex), Non-Determinist.

- Cognition: Open-Minded (Beliefs are hypotheses to be tested, not treasures to be protected), Intelligent, Curious (Intellectually curious, enjoy puzzles and mental challenges), Reflective (Introspective and self-critical), Numerate (Comfortable with numbers).

- Analytical: Pragmatic (Not wedded to any idea or agenda), Dragonfly-Eyed (Value diverse views and synthesize them into your own), Probabilistic, Thoughtful Updaters (When facts change, they change their minds), Intuitive Psychologist (Aware of the value of checking thinking for cognitive biases and emotional biases).

- Work ethic: Growth Mindset, Grit (Determined to keep at it however long it takes)

The mind of a superforecaster[24]

Mindset of superforecasters



The Good Judgment Project (started in 2011) indicates that well-chosen selected amateur forecasters who demonstrate their ability to accurately forecast are often more accurate than subject matter experts.[25]

Other essays on the the United States

External links

References

  1. ↑ What Is a Reserve Currency? U.S. Dollar's Role and History, Investopedia
  2. ↑ The future of dollar dominance, International Institute for Strategic Studies, 2026
  3. ↑ An Historical Perspective on the Reserve Currency Status of the U.S. Dollar, Treasury.gov
  4. ↑ The secret to the dollar’s success? Nope, it’s not trade., Stanford University, 2023
  5. ↑ 15 Strongest Currencies in the World in 2024, Yahoo Finance, January 2024.
  6. ↑ Top 10 Strongest Currencies In The World In April 2024, Forbes, April 2024
  7. ↑ De-Dollarization: A Far-Fetched Reality?, 2024
  8. ↑ America’s economy is bigger and better than ever, The Economist, 2024
  9. ↑ Population trends 1950 – 2100: globally and within Europe
  10. ↑ Euro may replace dollar as global reserve currency: Experts, 2025
  11. ↑ John J. Mearsheimer > Quotes
  12. ↑ Europe's woes give dollar bulls fresh reason to press on, Reuters, October 2026
  13. ↑ Europe's woes give dollar bulls fresh reason to press on, Reuters, October 2026
  14. ↑ EUR/USD: US Dollar in Focus Ahead of Expected Trump-Xi Call, ECB and NFP, Investing.com, 2025
  15. ↑ Genius act strengthen the us dollar, Google AI, 2025
  16. ↑ Why the BRICS De-Dollarization Dream Remains a Fantasy, Bloomberg News, 2024
  17. ↑ 15 Strongest Currencies in the World in 2024, Yahoo Finance, January 2024.
  18. ↑ Top 10 Strongest Currencies In The World In April 2024, Forbes, April 2024
  19. ↑ US dollar on long, slow way out as global reserve currency, says DNB exec, Trade Winds website
  20. ↑ US dollar on long, slow way out as global reserve currency, says DNB exec, Trade Winds website
  21. ↑ "Unclouded vision". The Economist. September 26, 2015. Retrieved September 26, 2015.
  22. ↑ Superforecasting: The Art and Science of Prediction — Summary
  23. ↑ Sharpening Your Forecasting Skills, Credit Suisse's overview of the Good Judgement Project's research and the work of Philip E. Tetlock
  24. ↑ The Superforecasters
  25. ↑ "Unclouded vision". The Economist. September 26, 2015. Retrieved September 26, 2015.
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