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I've been in this game for nearly 50 years. I've sat across from Paul Volcker. I've worked alongside George Soros. I've managed money through the inflation of the 1970s, the 1987 crash, the dot-com bubble, and the 2008 financial crisis. I've seen a lot. But sitting here in 2026, what I see coming for the US dollar is something I've never seen before in my entire career.
Not because the numbers are new. I've been warning about these numbers for years. But because we've now crossed a line where the trajectory is no longer debatable. It's measurable. And the measurements are not good. So today, let's talk about what's really happening with the dollar, what I believe comes next, and most importantly, what you should be thinking about doing about it.
First, there's a fundamental misunderstanding I see everywhere, especially on college campuses when I talk to young people. Most people think America's reserve currency status is some kind of permanent economic law. It's not. It's It's a trust relationship. When Saudi Arabia prices its oil in dollars, it's not because physics demands it.
It's because the world has trusted for decades that the United States would act responsibly with the dollar. When Japan holds US Treasuries as its main reserve asset, it's not because Treasuries are magically better than every other option. It's because they trust that America will honor its debts, won't inflate them away, and won't weaponize the dollar so aggressively that holding it becomes a risk.
Trust. That's the entire foundation. And right now in 2026, I'm watching that trust erode. Slowly in some places, faster in others. Let me give you the hard numbers, because I'm a practitioner, not an academic. I believe in measuring things. The US national debt is now over 36 trillion dollars. Just the interest payments on that debt not paying down a single dollar of principal are approaching 1 trillion dollars per year.
Think about that. We're spending nearly a trillion dollars every year just to service old debt before we buy one aircraft carrier, build one mile of highway, or fund one Medicare prescription. And that number is rising fast. We're running a 7% budget deficit at full employment. Something that has literally never happened in American history.
A few years ago at the Robinhood conference, I said that if rates stayed where they were, interest expense would reach 4.5% of GDP by 2033. By 2043, just 17 years from now, it would hit 7% of GDP. That's more than 144% of all current discretionary spending combined. Defense, education, infrastructure, research, everything the government spends today, plus 44% more, just on interest.
And when I shared those numbers in Washington, the response was mostly a shrug. That shrug scares me more than the numbers themselves. Now, let me talk about what I believe was one of the biggest blunders in US Treasury history. When interest rates were near zero in 2020 and 2021, every smart American homeowner refinanced their mortgage.
Every corporation extended its debt. Every private equity firm locked in cheap long-term money. Everyone refinanced except the US Treasury. Janet Yellen chose to issue short-term two-year notes at almost 0% when she could have locked in 30-year bonds at just 1.8%. I've been in this business a long time.
Going all the way back to Alexander Hamilton, I can't find a comparable mistake. The result? All that cheap short-term debt is now rolling over into a much higher interest rate environment. That's why the interest bill keeps climbing every single year. There's no easy way out. And here's why this matters so much for the dollar.
Investors have been tolerating these massive deficits and this exploding debt only because the dollar is the world's reserve currency. That tolerance is not unlimited. I said publicly that things could start getting murky by late 2025 or early 2026. Well, here we are in April 2026 and we're seeing exactly that.
The dollar has already dropped roughly 10% on a trade-weighted basis since the start of Trump's second term. And those drops didn't happen smoothly. They came in sharp disorderly lurches. One after the tariff announcements, another around Davos when geopolitical rhetoric heated up. When the world's reserve currency moves in violent spikes instead of gradual adjustments, the market is sending a message.
I'm listening. The dollar's share of global foreign exchange reserves has fallen from 71% in 2000 to about 57% today. Foreign ownership of US Treasuries has dropped from over 50% at its peak to around 30% now. That means Americans, the Fed, banks, and pension funds are increasingly forced to buy their own debt.
Meanwhile, central banks around the world are doing something I've never seen at this scale in my career. They're buying gold aggressively and systematically. China has bought gold every single month for over a year. Russia, Turkey, India, and Brazil are all in on it, too. Central bank gold purchases hit record levels in 2024 and 2025.
Central banks don't buy gold when they trust paper currencies. They buy it when they want an asset no government can print more of. They're buying it because they see 7% deficits at full employment and a shrug in Washington. The petrodollar system, one of the strongest pillars of dollar dominance for 50 years, is also quietly being chipped away.
More oil is being priced and settled in yuan. Middle Eastern countries are increasing non-dollar settlements. Swift data from early 2026 shows the dollar's share of international payments dropped from 47.5% to 43.8% in just one quarter, the largest quarterly decline in history. BRICS nations are building alternative payment systems that are now processing real volume.
It won't replace the dollar overnight, but it doesn't have to. It only needs to slowly reduce the structural demand for dollars, and every percentage point lost chips away at America's exorbitant privilege. If this continues, I'm not predicting a sudden collapse. The dollar will probably outlive me, but I do expect a grinding erosion of purchasing power and a gradual loss of the enormous benefits reserve currency status has given every American for generations.
Foreign investors will demand higher yields to hold US debt. Treasury yields rise, mortgages rise, corporate borrowing costs rise. The stock market reprices lower because every valuation model depends on the risk-free rate. A weaker dollar makes everything America imports, oil, electronics, food, medicine, more expensive.
That cost gets passed straight to you at the gas pump, the grocery store, and the pharmacy. That's how dollar weakness turns into inflation, the 1970-style risk I've been warning about. Geopolitically, America's power is deeply tied to the dollar. Sanctions work because the world needs dollars, but as alternative payment systems grow, that leverage quietly fades.
I want to be balanced. The dollar is still dominant, 57% of reserves, 89% of forex trades. The Eurozone has its own problems. The yuan isn't freely convertible. Bitcoin isn't replacing the dollar anytime soon. And in real crises, capital still flows into dollars and treasuries. But history shows reserve currencies don't fall in a day or a year.
They erode over decades because the issuing country makes enough mistakes for long enough that the weight eventually becomes unbearable. The British pound didn't collapse overnight. It faded because Britain bankrupted itself through wars and debt until one day the numbers passed the point of no return and trust broke suddenly.
I learned the most from Paul Volcker. He was willing to be deeply unpopular. He caused a painful recession to crush inflation and restore credibility. Because he did the hard thing for 18 months, America enjoyed 20 years of prosperity. Today, I don't see anyone in Washington willing to make the tough calls.
The Fed declared victory on inflation too early. Fiscal policy is on autopilot toward a wall. Solutions exist, but the political system has no appetite for the pain they require. So, what should you do? I'm not your financial advisor and I won't give specific investment advice, but conceptually, cash is not a safe haven when its purchasing power is being steadily eroded.
Gold deserves serious attention. Central banks are voting with their reserves for a reason. International diversification can protect against over concentration in a single currency whose reserve status is under long-term pressure. And position sizing matters more than being right or wrong. My mentor George Soros taught me that.
I've been wrong plenty of times. I was wrong on the exact timing of 2008. I've missed some inflation calls. But on the long-term direction of US fiscal policy and what it means for the dollar's reserve status, my view hasn't changed in over a decade. The math has only gotten worse. The political will hasn't appeared and the rest of the the is quietly diversifying away from an arrangement they see as unsustainable.
The real question isn't whether you believe me. It's what you're going to do with this information because when the market eventually prices all of this in fully, and it always does, the people who were paying attention will have options that others won't. That's all I've got. Think about it.
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