The dollar has ruled global finance for a century. But now, it’s being tested—from all sides. BRICS nations are building alternatives. Bitcoin is becoming more accepted, with America ironically leading the charge.
And what’s more, inside the U.S. itself, the very system that gave the dollar its power is being chipped away. This isn’t a hypothetical risk. The pressure is real, growing fast, and touching every piece of the dollar’s foundation.
Economists often point to big numbers—U.S. GDP, deep financial markets, high liquidity—to explain why the dollar leads. But those numbers don’t tell the full story. As historian types will tell you, power doesn’t just sit in graphs. People built this system. People can break it too. And the next people in charge might do just that.
Warburg and White made the dollar global
It started with Paul Warburg, a German-American banker who moved to the U.S. in 1902. He had worked in London, Paris, and Hamburg before marrying into the Kuhn, Loeb banking family. Warburg saw how London ran the show with trade credit and how the U.S. was dependent on sterling. That dependence didn’t sit well with him.
He pushed for a central bank. Without it, the U.S. couldn’t promote the dollar internationally. Warburg said a U.S. central bank should buy dollar trade acceptances to help grow a market for dollar-backed credit. He even helped write the 1913 Federal Reserve Act after a secret meeting on Jekyll Island in 1910. In 1914, he joined the Fed Board and wrote the rules that let the Fed buy those credit instruments. By the 1920s, dollar-denominated trade acceptances were beating London’s.
But the Fed pulled out of the market in the 1930s. Then came the banking crises. The dollar took a hit. Everything changed after WWII. That’s where Harry Dexter White came in.
White wasn’t a banker. He came from immigrant parents. His dad sold hardware. White joined the Treasury in 1934 and took over its international work during WWII. He drew up the U.S. plan for the IMF, the World Bank, and the whole Bretton Woods System. He squared off against Keynes and made sure the final draft of the Bretton Woods agreement centered the dollar. When a British delegate noticed that only the dollar would be convertible into gold post-war, White rewrote the deal overnight.
That draft swapped out “gold-convertible currencies” with “gold or the United States dollar.” The final agreement made the dollar the core of the new global order. Then came the Marshall Plan, which pushed dollars into Europe. The U.S. also supported Europe’s trade bloc and set up the General Agreement on Tariffs and Trade. U.S. military alliances like NATO gave other countries even more reason to trust the dollar.
Even after the Bretton Woods system collapsed in 1971, the dollar held its role. Why? Because of the Fed, global trade access, and tight security alliances. But now, all those things are being stressed—and not slowly.
Trump’s return puts old institutions at risk
Donald Trump is back, and in just a few months, the dollar’s support structure is wobbling. He and his team are openly questioning systems that have held for nearly a century. Trump has fired two Democrats from the Federal Trade Commission and signed an order to force “independent agencies” to submit all plans to the White House for review. That includes the Fed.
His acting Solicitor General, Sarah Harris, told the Senate that the White House should be able to fire agency heads without cause. Investors are watching. If Trump moves on Fed Chair Jay Powell, global confidence in the dollar could drop fast.
Scott Bessent, Trump’s Treasury pick, has floated a plan to convert 5- and 10-year Treasury bonds held by foreigners into 100-year debt with low interest. Stephen Miran, Trump’s pick for his Council of Economic Advisers, liked the idea of charging a “user fee” on interest paid to foreign bondholders—basically taxing them without calling it a tax. “Label it a fee,” he said, “and you don’t break treaties.”
Robert Lighthizer, another Trump guy, talked about taxing foreign purchases of U.S. Treasuries to weaken the dollar and help U.S. exports. That breaks a key promise—treating foreign and domestic investors the same. Break that, and you break one of the main reasons people hold dollars.
Foreign confidence falls as trade and alliances weaken
The U.S. used to be the biggest exporter. In the 1950s, it had 18% of world exports. Now it’s down to 11%. That alone isn’t bad—it shows other countries recovered after WWII. But if trade keeps shrinking because of tariffs, the dollar won’t hold up. Global currency power follows trade. Kill the trade, and you kill the demand for your currency.
The U.S. now uses sanctions like candy. In 2000, just 912 people were sanctioned. By 2021, it was over 9,400. The 2022 sanctions on Russia made it worse. Other countries noticed how quickly dollar assets could be frozen or even taken. That made them want out.
One Treasury official said, “If we can take Russian assets for Ukraine, what’s stopping us from doing it to anyone else?” Even allies are worried. During Trump’s first term, Europe didn’t back his “maximum pressure” campaign on Iran. That fight is repeating.
Trump has shown he doesn’t like working with allies. That creates space for other currencies to grow. Countries not involved in U.S. sanctions—China, Brazil, India—can build new systems. BRICS members are already doing that. Crypto fans? They see this and say, “Told you!”
Alliances are another problem. Countries hold reserves in the currencies of their military partners. In WWI, that was true. In the 1930s, Britain’s Sterling Area worked the same way. In the Cold War, Japan, Germany, and others trusted the USD because of U.S. troops on their land.
Today, Taiwan, South Korea, and Japan still hold a big share of their reserves in dollars. They rely on the U.S. security umbrella. But after Trump’s weird phone call with Zelenskyy and his cozy attitude toward Russia, that trust is shaky.
The Congressional Budget Office says U.S. public debt will hit 116% of GDP by 2034, 139% by 2044, and 166% by 2054. That’s if Trump’s 2017 tax cuts get extended again. Debt alone isn’t fatal. But endless cuts, fake promises to shrink spending, and bitter politics will spook foreign investors.
And when investors get spooked, they look for something else. That’s where Bitcoin and BRICS step in. Neither needs to replace the dollar to cause damage. They just need to give people options.
So, can USD stay king? Not if America keeps making enemies, burning alliances, and screwing with its own systems. And that’s exactly what’s happening.
