End of Dollar Empire (Uncut) 03-28-2025

End of Dollar Empire: How America Weaponized the World’s Economy, Dedollarization Is Irreversible

Welcome back to World Affairs in Context, everyone. Thank you so much for being here. The Financial Times published an article titled How America Weaponized the World’s Economy.

Even several months ago, it used to be perceived as anti-American, anti-US, to admit that using the US dollar as a weapon by imposing financial and economic sanctions on other states is a failing policy and will end up backfiring. Now this simple truth appears to be an undisputed fact. Although the article is not free of pro-Western bias, it does point to the reasons why the global majority seeks to reduce reliance on the United States currency.

This perspective doesn’t come from them. It doesn’t come from the global South or the global majority. It comes from voices in the United States, and this is why I would like to focus on this article.

The reason why I would like to focus on this particular piece is that even though the entire world has started to point out the hypocrisy actively of weaponizing the US dollar, US policymakers still appear to be in denial. The Trump administration is now celebrating. It is announcing April 2nd as America’s liberation day because that is the day when President Trump’s tariffs go into full effect.

The Financial Times says it is because of US economic policies that the global majority is looking to de-dollarize. Doubling down on these quiet, aggressive policies will likely only make matters worse and accelerate the initiative for alternative financial options. In the 1960s, the French complained of America’s exorbitant privilege.

Forty years later, as the global financial crisis wreaked havoc, China called for a shift from the dollar. In the context of a discussion on the rise of China as a global power, John Mearsheimer, in one of his articles, asked an excellent question. He asked, why should we expect the Chinese to act any differently than the US did? And of course, he meant it in the context of foreign policies.

Similar to the United States, any state would want to protect itself by all means possible, with currency being the backbone of their economic strength. Just like the United States would never want to rely on the currency of other states, so are China, Russia, and other countries unwilling to put blind trust into the US government. In fact, they would be naive to do so after being burned so many times.

The trend to reduce reliance on the US dollar and to enhance currency multipolarity is likely 100% irreversible at this point. The trend to amplify currency multipolarity is just one of many features that accompany the transition from unipolarity to multipolarity. It was the United States’ ability to print endless supply of US dollars and then export it abroad that solidified US monetary hegemony.

Of course, the monetary hegemony is not the only thing that is declining. It is the United States’ image as a global leader in diplomacy, in human rights, in economic power, among other things, that is declining. And we don’t have to look far, just look at the US direct involvement in the Middle East, and of course, the enablement of the tragedy in Gaza.

Then we don’t have to look far here domestically. The country is broke under the weight of its national debt. We’re sitting on around 36 trillion dollars last time I checked and counting.

Since access to the dollar system was essential for government and businesses around the globe, Washington could punish adversaries without firing a bullet by blocking their ability to transact in dollars. When Iranian students stormed the US embassy in Tehran in 1979, President Jimmy Carter imposed sanctions. Carter’s response included a freeze on some 12 billion dollars worth in Iranian assets, a blow that ultimately helped bring Tehran to the negotiating table.

The dollar was no longer just a currency, but a weapon that could augment US power. Now, 1979 was the year when the United States’ puppet regime in Tehran, the regime of Iranian Shah Pahlavi, came to an end. And so that is what this portion of the article is referring to.

There’s a lot to be said about that event that is referenced here in this article. We won’t go into historic context, but just keep in mind that the end of the US-backed regime in Iran in 1979 is what’s driving nearly four decades of US policies towards the Islamic Republic of Iran. Economic warfare is the new normal of US foreign policy, emphasizes Financial Times.

The brain in Washington will have disastrous effects for years, if not decades. At a minimum, the approach to economic warfare will become much less strategic and far more heavy-handed. American economic warriors often shoot from the hip, forced to react to crises without much advanced planning.

And yes, I fully agree with that statement. It is because of poor planning and lack of understanding of other countries’ policies and the brain drain in D.C. that we keep doubling down on economic policies that have already proven a failure. For example, take nearly 20,000, I believe the number is much higher actually, but somewhere around 20,000 sanctions put on Russia.

Yet three years later, the International Monetary Fund reports that Russian economy is actually developing at a faster pace than the economies of the European Union. The EU shot itself in the foot by giving up Russian energy. But now, of course, its population, the EU population has to pay for the incompetence and warmongering tendencies of its leaders, many of whom, of course, are unelected, such as Ursula von der Leyen and the top EU diplomat, Kayakelas.

Now, moving forward, the might of Americans’ economic arsenal hinges on continued dollar dominance. Reducing reliance on the U.S. dollar is a natural move to protect economic sovereignty, and it is regarded as a hedge against all associated risks. It’s no longer discussed in the context of a boogeyman, such as China or Russia or Iran, seeking to inflict the most damage on the United States.

No. And in fact, it has never been that way. It has never been about that, because given that the U.S. dollar is a global reserve currency, and global trade and the flow of foreign direct investments benefit emerging economies, it has never really been about ditching the U.S. dollar.

The point is to create alternatives, which, of course, would work to reduce demand for the U.S. dollar, weaken it as a reserve currency, but it would also bring more stability, ultimately, in the long run, to a world where multiple centers of power balance each other and coexist without attempting to become a new hegemon. Currency dominance contains the seeds of its own undoing. It makes sanctions so potent that policymakers are tempted to use them more and more, thereby spurring the search for alternatives and ultimately weakening both sanctions and dominance.

Both current and potential future targets of sanctions are searching for non-dollar systems to hedge their risks. Most remarkably, Financial Times wrote that it is the United States that is to blame for the demise of its arguably most valuable asset, the U.S. dollar, as a global reserve currency. The loss of trust in the U.S. dollar is driven by U.S. policymakers’ choices, not by Iran, China, Russia, or anybody else.

They too suffered damages as the result of the United States using the dollar as a weapon. The greatest threat to dollar hegemony is that Washington might destroy the pillars underlying the currency’s appeal, rule of law, contract enforcement, government transparency, the unquestioned safety of U.S. treasuries. Even though the article does have some bias, I think it is a great read.

You’re welcome to read it on the Financial Times. It was published today. It does spell out simple truth that I have been covering here on my channel for years.

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Enjoy the rest of your day and I will see you back here tomorrow. Bye for now.