Dollar's Value Erodes Amid Rising National Debt and Loss of Trust
The US dollar's value is eroding due to a loss of trust in its backing as a fiat currency, which means it has no intrinsic value and relies on people accepting it as payment. Central banks are buying less US debt and more gold, with gold recently surpassing US treasuries as the world's top reserve asset.
The dollar's decline can be attributed to the rising national debt, currently over $40 trillion, which is unsustainable compared to the economy's growth. In 2026, gold makes up 27% of global reserves, while US treasuries and dollars account for 22% and 20%, respectively.
The trend has been building since the pandemic when trillions of dollars were printed, causing inflation and devaluing the dollar. Even Russia's invasion of Ukraine in 2022 contributed to countries reevaluating their reliance on US debt, with some turning to gold as a safer alternative.