Remember when Western sanctions on $300 billion of Russian reserve assets ushered in the dawn of a “new monetary world order” defined by the “bloc-i-fication” of trade and finance and the triumphant rise of “BRICS Coin”?

I’m kidding. And yes, that’s a thinly-veiled jab at a couple of would-be contrarians with delusions of analytical grandeur and misplaced pretensions to geopolitical expertise.

In the wake of Vladimir Putin’s decision to pursue a bloody, revanchist fever dream in Ukraine, the counter-narrative echo chamber (which, by the way, is comprised in part of people whose family members would be in harm’s way should Putin decide to broaden the scope of his imperialist project) was alive with talk of the dollar’s imminent demise. Treasury overreached in weaponizing the world’s reserve currency to preserve sunsetting US hegemony, an audacious gambit destined to backfire, critics said.

To be completely fair, some parts of that tale were borne out. Concerns about the allegedly “capricious” use of Treasury sanctions have increased, rumblings about alternatives to the dollar-based system are arguably louder than they’ve ever been and the West ultimately wasn’t able to crush Russia’s economy which proved a semblance of resilient thanks in part to assistance, economic and otherwise, from the China bloc. More broadly, Bitcoin and gold both ascended new record highs.

And yet, global savings, trade and commerce remain overwhelmingly dominated by (and denominated in) the dollar. The US economy’s Energizer Bunny act (which looks set to limit Fed cuts in 2025, thereby keeping USD rates high relative to competitors) alongside the allure of US equities, have bolstered the greenback against pretty much every developed nation currency on Earth. There are hedges (Bitcoin and gold), but there are no alternatives.

The figure above shows you the end result for 2024: The best year for the dollar since 2015. “Dollar bears probably ought to hibernate until next summer,” SocGen’s Kit Juckes remarked.

As I’m always keen to point out, dollar strength (or weakness) isn’t a proxy for dollar hegemony, but there are areas of overlap with American exceptionalism. As noted above, for example, the dollar’s performance in 2024 was in part down to a strong US economy, and also to corporate America’s lead in the AI arms race.

Never forget, though: The whole thing — the entire “exorbitant privilege” edifice — rests on foundational assumptions about the rule of law in America. If those assumptions are disproven by the incoming administration, all bets are well and truly off.