So how likely is any of this?
Right now, mercifully, not very.
But the reasons why are not actually that comforting. The fact is, whether we like it or not, the world has few alternatives to the dollar.
Economist and former bond supremo Mohamed El-Erian told the BBC that many are trying to reduce dollar holdings, “the dollar is overweight and the world knows it, which is why we have seen a rise in gold, the euro and the pound, but it’s hard to move at scale so there’s really very few places to go”.
“The dollar is like your cleanest dirty shirt, you have to keep wearing it.”
Nevertheless, the future of the dollar and the world’s benchmark asset – US government bonds – is being discussed at the highest levels.
The governor of the Bank of England recently told the BBC that the levels of US debt and the status of the dollar is “very much on [US Treasury] Secretary Bessent’s mind. I don’t think the dollar is fundamentally under threat at the moment but he is very aware of these issues and I don’t think it is something that he underestimates.”
Debt of $37tn is an unfathomable number. If you saved a million dollars every day, it would take you 100,000 years to save up that much.
The sensible way to look at debt is as a percentage of a country’s income. The US economy produces income of around $25tn a year.
While its debt to income level is much higher than many, it’s not as high as Japan or Italy, and it has the benefit of the world’s most innovative and wealth creating economy behind it.
At home I have a book called Death of the Dollar by William F Rickenbacker in which he warns of the risks to the dollar’s status as the world’s reserve currency. It was written in 1968. Mr Rickenbacker is no longer with us – the dollar is.
But it doesn’t mean that its status and value is a divine right.