The dollar doomsday narrative’s not difficult to write.

After years of practice, it’s an exercise in rote recitation for me. In 2015, a James Bond (or it’s probably more accurate to say an Austin Powers) villain taught me how to marshal my political science background, alongside whatever rudimentary market knowledge I picked up from business school, in the service of penning compelling tales of the greenback’s “inevitable” demise.

I became quite adept at telling that story, and a lot of other scary stories besides. I grew weary of that after about a year. The geopolitical propaganda racket’s not for the faint of the heart, nor is it necessarily compatible with a fifth-a-day liquor habit. And make no mistake: Dollar doomsday narratives are almost always geopolitical propaganda.

That doesn’t mean everyone who pens them is a witting propagandist, though. Take it from someone who knows that racket: The most effective propagandists are the ones who don’t realize they’re trafficking in propaganda.

The nuance of such narratives in “Trump 2.0” is that while his second-term policies are indeed conducive to a fundamentals-based (i.e., non-propagandist) dollar doomsday story, the very fact that he’s in a position to implement those policies and pursue an agenda that in so many places upends the post-War global architecture which established dollar dominance in the first place, is a consequence of propaganda.

That speaks to the insidious genius of the Kremlin’s efforts from 2015 forward: Moscow managed to sow enough discord across the Western world, and particularly in America, that disinformation self-fulfilled. You can see that in NATO’s fracturing and you can also see it in the dollar story.

In a, for him lengthy, note published this week, SocGen’s Kit Juckes quoted Dennis Snower, of Oxford’s Said Business School, who in November wrote,

President Trump’s second term has brought fiscal recklessness, politicized monetary policy and weaponized finance. The result: Confidence in the US dollar as the world’s reserve currency is eroding fast. The consequences of that loss could make the 2008 financial crisis look mild by comparison.

Agree, except not. Agree that it’s easier to make an honest case for the dollar’s demise now, and to my points above, that isn’t an accident nor any kind of coincidence. And agree in that the dollar’s overnight demise would be a disaster of epic proportions considering this is the mother of all “TINA” debates.

Disagree, because for all the damage Trump’s done, the dollar project, unlike Congress, SCOTUS and American democracy itself, is an institution too strong and embedded for his capriciousness to upend.

In the note mentioned above, Juckes delivered an apolitical, concise assessment of the problem with the “crumbling dollar” story in 2026. This is one (i.e., an exceedingly rare) case where my paraphrasing would water down, rather than enhance, the original analysis.

With that in mind, I’ll leave you with a few excerpts from Juckes’s take, which is well worth considering as you ponder the merits of dollar doomsday 2026. Kit, you’re reminded, is a decades-tenured FX veteran.

Via Kit Juckes (I dropped in the chart for the Fed calculation he mentions for illustrative purposes):

The dollar will probably weaken somewhat further this year, because the Fed has a bias to cut rates, whereas most other major central banks are toying with the idea of raising rates, despite their economies under-performing the US. When trends in relative interest rates diverge from trends in relative economic performance, the currency market’s first instinct will be to respond to rates. However, the market already prices rate hikes this year by the ECB, Bank of Japan, Bank of England and the Reserve Bank of Australia (but nothing from the Fed). Those expectations will need to be surpassed (Fed easing and bigger/faster rate hikes elsewhere) if we are to see more than a modest dollar fall. Further down the road, it is very hard to imagine the Fed being able to sustain lower rates than other central banks unless the economy slows down.

Furthermore, modest dollar weakness has to be seen in a historical context: The dollar reached a 40-year high in real terms at the start of 2025, and an all-time high in nominal terms. It needs to lose well over a third of its value to get back to the lows it reached in 2011.

The Fed calculates an ‘Index of international currency usage’ for the dollar, which comes in around 75%, three times as high as the next largest (the euro, at 25%) and completely out of line with the US share of global GDP or global trade.

What the world needs, is for the US share of currency usage to fall to something closer to 50%, but that requires the euro and yuan to take on more important roles. How does that happen, when Europe and China rely on exports for growth and the US needs capital inflows to finance its AI investment boom? I’m sympathetic to Professor Snower’s concerns but the dollar is too embedded into the global economy to fail. If investors become wary of US fiscal policy, a softer dollar will lead to disinflationary pressures in Europe/Asia and even a modest steepening in the US yield curve will attract inflows from abroad. It would be better if we saw a coordinated move to tackle global savings/investment imbalances, than if US policies reduced capital flows and starved the US of investment. It would be better if Europe/China had policies more conducive to domestic growth. But as long as aging populations in Asia/Europe generate excess savings that are desperate for a more dynamic economy into which they can be invested, the status quo is likely to remain remarkably sustainable.