Qamar Bashir
In the vast theater of global trade, a silent drama unfolds every day: the United States buys real goods and services from across the world, not with hard-earned commodities or gold-backed guarantees, but with paper dollars—printed in abundance, backed by
confidence, and accepted globally as the world’s reserve currency.
For decades, this privilege has placed the U.S. in a position of unrivaled economic power.
It can run persistent trade and budget deficits without suffering the traditional penalties
other countries face, such as currency depreciation or reserve depletion. With over 58
percent of global central bank reserves held in dollars, according to the International
Monetary Fund, and more than $7.4 trillion in U.S. debt held by foreign governments,
global demand for dollars allows the U.S. to print money and buy real value from the rest
of the world. Whether it’s a smartphone from China, oil from Saudi Arabia, or
pharmaceuticals from India, the U.S. pays for these tangible goods with freshly minted
dollars—costing it virtually nothing beyond the ink and the click of a keyboard.
In addition to its ability to purchase real value with fiat currency, the U.S. has
increasingly turned to tariffs as a second revenue stream. President Donald J. Trump’s
administration has aggressively imposed tariffs on hundreds of billions worth of
imports—primarily from China, Canada, India, the EU, and Mexico. These tariffs,
averaging 15 to 25 percent, not only raise costs for exporters but also serve as a powerful
fiscal tool for the U.S. Treasury.
However, this economic privilege does not come without backlash. The drive toward de-
dollarization—led by countries like China, Russia, and Brazil—is a direct response to
the United States' weaponization of its currency. The U.S. Secretary of State Senator
Marco Rubio admitted that if countries stop using the dollar, the U.S. would lose its
ability to impose sanctions on them.
The U.S. currently has sanctions in place against countries representing nearly a quarter
of the world’s population, including China, Russia, Iran, Venezuela, Cuba, Nicaragua,
Syria, and Zimbabwe restricting their ability to trade, causing domestic inflation and a
collapse of industrial capacity. In response, many of these nations have begun
constructing alternative financial systems, exploring cross-border payment networks
independent of SWIFT, increasing bilateral trade in non-dollar currencies and off loading
their dollar reserves.
Suppose, in a hypothetical but increasingly possible scenario, major global powers
collectively decide to dump their dollar reserves in protest. Let us assume $4 trillion
worth of reserves are released into circulation. If the U.S. refuses to buy back these
dollars—as it has no legal obligation to do so—the entire burden shifts to open currency
markets. The consequences of such a move would be swift and profound.
For the countries dumping dollars, the sudden oversupply would drive down the value of
the dollar by 20 to 30 percent. Their own dollar reserves would lose value rapidly,
resulting in capital losses of hundreds of billions. China alone, holding over $850 billion
in U.S. debt, could see a $250–300 billion wipeout in reserve value overnight. At the
same time, their national currencies would strengthen, making their exports more
expensive and less competitive, thereby triggering trade slowdowns. Domestic instability
and inflationary pressure would follow, especially in emerging economies.
The United States would not be immune to the fallout. As the dollar weakens, the cost of
imports would rise sharply, driving domestic inflation to perhaps 5 to 7 percent annually.
Interest rates would surge as the U.S. government tries to stabilize its currency and attract
debt buyers, dramatically increasing the cost of servicing the national debt. With total
federal debt exceeding $34 trillion, even a modest 2 percent increase in rates could cost
the U.S. over $600 billion annually in additional interest payments. Financial markets
would face severe volatility, and the Federal Reserve would be forced into emergency
interventions.
Both sides suffer in this scenario, but the countries dumping dollars would experience the
most immediate and severe pain. The United States, due to its institutional, military, and
technological advantages, would endure longer. Thus, retaliatory dumping of the dollar
would amount to a self-inflicted wound.
A more strategic and potentially sustainable path would be for the world to gradually
pivot away from the dollar altogether. In this scenario, over the next decade, countries
form a consensus around a new reserve system—perhaps a gold-linked BRICS coin, a
central bank digital currency, or a commodity-backed blockchain token. Oil is priced in
yuan or a digital euro. International contracts are settled in diversified currency baskets.
The reliance on a single nation’s currency would fade, distributing global financial power
more equitably.
The consequences for the U.S. would be significant. Losing its reserve currency status
would mean losing the exorbitant privilege of paying for imports with printed dollars.
Demand for the dollar would contract. Inflation would rise. Interest rates would surge.
Government spending would need to be curtailed or financed through real productivity,
not limitless debt. Wall Street’s global supremacy would diminish, and American soft
power would decline. Yet, for the rest of the world, this could mean a more balanced
global trade system, one not subject to the whims of a single national monetary policy.
This raises a deeper philosophical issue: should global trade be conducted based on fiat
currencies at all? A more equitable system would measure international trade not in
symbolic reserve currencies, but in real economic value. A nation exporting $1 billion
worth of steel, for example, should receive $1 billion worth of equally valuable goods or
services—not just fiat notes that can be printed or devalued at will. This “value-for-
value” model would eliminate the distortions caused by currency manipulation, inflation,
and speculation. It would foster genuine reciprocity, reduce inequality, and align global
trade with tangible economic contributions rather than geopolitical leverage.
Such a system would require a new global accounting architecture—perhaps enabled by
artificial intelligence, digital ledgers, and multilateral oversight. While ambitious, it is not
an unreachable ideal. In an age where technology is redefining commerce,
communication, and currency itself, transforming how we value trade could be the next
step toward a truly just economic order.
So, is the United States looting the world with both hands? Arguably, yes. One hand pays
for global goods with fiat dollars backed by trust rather than labor or materials, and the
other hand collects tariffs and imposes sanctions on those same suppliers. This system
has allowed the U.S. to enjoy unmatched economic privilege while exporting inflation,
volatility, and fiscal burdens to others.
Yet retaliation through abrupt de-dollarization would only heighten global instability. A
gradual, deliberate creation of a new, multipolar reserve system—paired with a shift to
value-based trade—offers a more sustainable path. It promises not only financial fairness
but also geopolitical balance, autonomy, and mutual dignity.
Until that transformation is realized, the world continues to subsidize America’s
monetary empire—while the United States continues to collect wealth with both hands.
