The World Dumps Trump’s Dollar?

In the first 100-plus days since DJT reclaimed the White House, things have not been going as swimmingly as Mr. 47 probably expected. Tariffs tanked stocks and the dollar.

But as visible as all of that has been, there’s a deeper problem we should consider.

US business leaders are all over the media these days complaining that they A) cannot project their operational expectations with any degree of certainty, B) have already started laying off workers because of costs that are rising shockingly, and C) are dealing with interrupted, global supply chains that threaten the livelihood of small, American businesses.

Foreign investors see this—and that is the big worry.

America needs—like, desperately needs—foreign investors. That’s particularly true in the Treasury bond market.

There, Uncle Sam relies heavily on foreign buyers to snap up a not-insignificant portion of new bonds that the Treasury Department regularly auctions off to keep the lights on in DC. Amid reduced demand, the government will have to offer higher interest rates to sweettalk investors into stuffing more US debt into their portfolio.

Yet overseas investors are rightly worried that America under the Trump administration doesn’t give two shakes of a rat’s tail about rule of law or contractual obligations. So, they’re increasingly keeping their money at home and, equally worrisome, are pulling cash out of the US to take it back overseas.

Thing is, foreigners can read.

They see the stories about Trump and his advisers contemplating fundamentally transforming the dollar into a weaker currency (as I’ve written about) and the notion kicking around that, just maybe, Trump’s Treasury Department forces countries to replace their existing US Treasury debt with zero-coupon century bonds that carry no semi-annual interest payments and mature in 100 years, when the holder will receive the accrued interest payments.

That would define a default—big bad news—though the administration would certainly couch it to make it sound like the smartest strategy ever invented by man.

Moreover, they see stories about the Trump administration potentially imposing a “user fee”—perhaps 1%—on foreign investors holding Treasury bonds. Though Trump has backed away from that idea (for now), the fact that such a notion—among others—is flowing through an administration that’s clearly hostile toward foreign nations tells foreign investors that Team Trump has little regard for the rules of law that have given America the gift of “safe-haven” market.

US markets are already seeing that in real time,

The dollar is already down about 10% during Trump’s time in office.

Stocks, meanwhile, were down as much as 20%—all in the wake of tariff announcements.

That’s the world coming to the conclusion that America is no longer a port in the storm.

It is the storm.

Per Forbes:

“The preconditions are now in place for the beginning of a major dollar downtrend,” Deutsche Bank analysts George Saravelos and Tim Baker wrote seen by MarketWatch in a note, pointing to a huge shift in U.S. trade policy and a global reassessment of U.S. geopolitical leadership and predicting the end of a “higher for longer” dollar.

“Given the historical developments of the last few months our [euro/dollar] forecasts now anticipate the dollar entering a long-winded downcycle,” the Deutsche Bank analysts wrote, adding that, “in a world of extreme uncertainty and rapidly shifting policy norms, the risk of market dislocations and regime breaks remains high.”

The warning echoes the concerns of Goldman Sachs’ head of [foreign exchange] who told Bloomberg this week that the U.S. dollar’s weakness is “here to stay,” as the world adjusts to the new tariff-based international trade order established by Trump.

Meanwhile, Jay Jacobs, the head of thematics and active exchange-traded funds (ETFs) at the world’s largest asset manager BlackRock, has predicted “geopolitical fragmentation” will be a “megaforce that drives the world forward over the next several decades.”

I’ll note by “geopolitical fragmentation,” the BlackRock poohbah is basically referencing de-dollarization, or the world’s continued move away from the dollar.

I’ve written many times about what this means, so I’ll just sum up here by urging you to prepare.

Get at least a portion of your wealth out of the dollar—and fast.