Will 2026 be the year dollar empire meets its demise?

 All indications are pointing in that direction.

Throughout history, empires have fallen when their economies have become dysfunctional and currencies have lost value.

Prime example of this, in recent history, is the British Empire that once boasted that the sun never sets upon Britain. World War II hollowed out Britain, its currency lost value and its empire disintegrated, thereby proving wrong the myth the sun never sets on the empire.

The loss of Britain’s empire and standing in the world, left a void into which US jumped eagerly by creating dollar-based empire and has ruled unchallenged for almost 80 years. Simply by printing dollars and denominating everything into dollars – especially oil, it created dependency on dollar. Everything was priced into dollars. This gave undue advantage to USA over global economy and the sovereignties of world’s nations.

By using dollar as a weapon, it could force any “wayward” nation to its knees, by imposing sanctions, punitive tariffs, asset freeze etc., forcing the recalcitrant nation to amend its behavior and follow USA’s diktats again. The European nations merrily went along as it also suited their interests – keeping western dominance, a neo-colonial aspect alive.

The threats of sanctions and tariffs were enthusiastically supported by European nations.

Prime examples of this are Russia and India.  By imposing sanctions on Russia –following in US’s footsteps the European nations forced others to support those sanctions even if it meant a hit to the economic well-being of other nation and its people.

India’s external affairs minister, Dr. S. Jaishankar, once remarked that Europe’s problem are not India’s problems and Europe should abandon that “colonial” mindset. In his recent meeting with Polish Deputy PM and Foreign Minister Sikorski, Dr. Jaishankar made clear his displeasure of such selective, unjust and unjustified tactics.

Still the Nations went with dollar as the reserve currency, but unprecedented and unjust actions of deranged Donald Trump jolted many nations, including European nations, to their senses that they cannot allow sovereignty and well being of their people to be held hostage by Washington.

Trump’s threats of outright invasion and capture of Greenland, a sovereign territory under the Danish Kingdom and threats of imposing tariffs on EU nations if they do not agree to sell Greenland, only jolted EU out of stupor they had fallen into - blindly accepting US national interests as their own.

In response to Trump’s threats, the outraged EU nations have called for retaliatory measures.

France has opened the possibility of deploying “Anti-coercion Instrument” called trade “bazooka” – a mechanism that would extend not only to punitive tariffs amounting to several billion dollars (108 Billion), but also would extend to financial sector, intellectual property rights etc. The range of measures is staggering and capable of crippling US economy.

Danish pension fund has already started the process. 

From CBS.com… Danish pension fund to sell $100 million in U.S. Treasuries due to "poor U.S. government finances" …A Danish pension fund is planning to sell its entire holdings of U.S. Treasuries — about $100 million — over concerns about the U.S. government's financial stability. …"The decision is rooted in the poor U.S. government finances, which make us think that we need to make an effort to find an alternative way of conducting our liquidity and risk management," Anders Schelde, Chief Investment Officer of Akademiker Pension, told CBS News in a statement.

 And, now the floodgates have opened. Latest news is coming from Sweden.

 

From Reuters… Swedish pension fund Alecta cuts US Treasury holdings, citing policy uncertainty  …STOCKHOLM, Jan 21 (Reuters) - Swedish pension fund Alecta has sold most of its holdings in U.S. Treasuries over the last year because of the increased risk and unpredictability of U.S. politics, the fund's chief investment officer said on Wednesday. "Since the beginning of 2025, we have reduced our holdings in U.S. government bonds in several rounds, and together the reductions account for the majority of our holdings," Alecta's Chief Investment Officer Pablo Bernengo said in a statement to Reuters. …..

The US treasury guarantees that all its debt obligations will be fulfilled by the “full faith and credit of the United States government” - means that the U.S. Treasury guarantees the repayment of a debt, using its taxing and borrowing authority if necessary.

Given the exploding budget deficit along with rising interest costs and credit rating agencies knocking US credit rating a notch down from its perfect triple AAA credit, the investors have begun to lose faith in US assets and looking for some other greener pasture like BRICS.

European Union has started to look at other nations and blocs to sign a just and free trade agreement to shore up economic security in today’s chaotic world – handiwork of deranged Donald Trump.

It recently signed agreement with “Mercosur” bloc of Latin America, comprising Argentina, Brazil, Paraguay and Uruguay.

But the mother of all deals – in the words of Ursula Von Der Leyen, President of EU – will be the mega free trade deal with India, a the fastest growing economy with stable and democratic institutions and adherence to international law.

The deal is estimated to represent around 25 to 30% of global GDP.

The cherry on the pie would be that the trade will not be dollar-based; it could be a mix of Indian Rupee and Euro. Germany has already opened a vostro account with Indian banks.

The already shaky US finances and US dollar are going to be severally hit when in July 2026, BRICS grouping will announce launching of CBDC - Central Bank Digital Currency. With 30 to 35% of the global GDP and transactions being settled in national currencies of BRICS member countries, there will not be any need for dollars.

With transactions getting settled bank-to-bank of members’ countries, this will simply bypass the choke point of SWIFT and take the trade out of control of US.

This nightmarish scenario is already dawning on the US that it is about to lose control of not just the currency but control over the global trade as well.

Ballooning deficits, shaky and chaotic political situations, unsound economic policies etc., US is soon going to find out that it is very hard to convince nations to buy its debt. The era of cheap, easy money will be over.

One does not have to be an economist to understand that what follows will be catastrophic for US – it will be an era of rising inflation, higher interest rates, crumbling social infrastructure, and depressed economic activity, leading to societal breakdown just like Iran.

This is going to fuel growing political turmoil, leading to violence.

The world is witnessing the utter lawlessness perpetrated by Trump administration – especially ICE, Trump’s Gestapo; complete disregard of the constitution and rule of law, whimsical nature of policy making etc., in all its glory and deciding to turn away from US.

The inability to finance the debt: The US soon could find itself in the company of countries like Argentina – a country with a long history of sovereign debt defaults.

That is a far-off scenario – whether it materializes or not, no one knows, but the stars are aligning to wreak havoc on the US economy.

The EU-Mercosur trade deal, India’s free trade deal with Australia, New Zealand, Oman, Israel, Britain and now with EU – the mother of all deals, all this will involve payment transactions based not on dollar. but either euro or national currencies.

With 30 to 35% percent of global GDP of BRICS conducted in national currencies and about 30% of India-EU deal conducted in currencies other than dollar, the prognosis of “King Dollar” is very bleak.

It might, finally, get dethroned, but rest of the world will joyfully sing in unison “Hallelujah” as it frees itself from the oppressive shackles of “King Dollar” and its ugly dollar-based empire.