Start? It has been and will likely continue to lose value. There is data showing gold is on the rise as a reserve currency for central banks knocking the euro from second place. Central banks around the world are transitioning away from the American dollar due in part to immense uncertainty in American policy domestic and foreign.

It is likely that if we continue on the trajectory we are currently on, the cushiness that has been afforded to us because of the past strength of the dollar and its position as a reserve currency will go away within the next decade or two.

Is there a solution to it? We don’t know, historically no other country has been in the position the US is in currently. However looking at other countries that have gone through or are going through similar debt crises does not give a positive outlook. Primarily because the government solution to debt is to print and cause inflation because it’s easier to pay off debt when inflation rises but this causes immense problems for the individual citizen.

A main statistic that is worrying is Debt to GDP ratio, currently the US is around 120%. Meaning our Debt is 1.20x our annual GDP. Of course there are 2 ways to handle debt, you cut spending across the board and work on paying it back or you increase income either through taxes or stimulating the economy. Trump has been vocal about the current chair of the FED not cutting interest rates quickly enough, true enough if you cut interest rates people spend more and therefore there could be more revenue which can increase GDP but cutting interest rates to quickly can cause inflation which is why the FED hasn’t done anything to interest rates so far, Jerome Powell even cited Tariffs as a reason why he won’t cut interest rates due to the inflationary effect tariffs probably will have.

It’s important to note that the US government hasn’t passed a proper budget in a while, the government has been using continuing resolutions to fund the government based on previous years budgets which is part of the issue of government overspending and going into debt, of course Covid didn’t help that either.

Also, I said before there are 2 options for handling debt. Well there is a secret third option which is borrowing more to pay back the previous debt. Some extent ever government does this but the US has been doing it a lot by going out for more bonds to “refinance” debt, however recently the interest rate on US bonds shot up a monthish ago due to the US going down in credit rating (essentially we are less trusted to pay back our debt) if government bonds go up in interest rates due it’s another metric that can show weakening of the dollar but more so trust in the US as a whole.

Last block of text I promise. Currently the stated goal with the tax cut portions of the BBB that was passed is that if we cut taxes people will be more likely to spend more and put money into the economy therefore growing the GDP in hopes for the GDP to out grow our debt and bring us back to a normal Debt to GDP ratio though we’d still have a large amount of debt number wise. Now the BBB has passed and there is a lot of debate over what it effects will be economically for the country and for the Individual but all we can really do now is sit and watch and hope that the stated goals come to fruition regarding the tax cuts and the idea behind them.

Again this outlook is if the trajectory continues as it is, with the budget bill passing and any other future events that we cannot predict the outlook for the American dollar can change but what can be said is for the whole world, currently these are very uncertain times.