Despite the consensus narrative, what we are currently experiencing globally is not “de‑dollarization,” but a broad loss of confidence in developed economies’ fiat currencies and sovereign debt as a reserve asset for central banks and institutions. This fundamental loss of confidence in the solvency of developed economies’ sovereign issuers is boosting demand for gold. However, the latest data shows no crossover or fiat alternative substitution. The US dollar’s central role in the fiat system remains intact.

Gold over debt: the key shift

MMT supporters state that monetary sovereign nations can issue all the debt they want without inflationary and confidence risk. However, monetary sovereignty is not a given; it is not perennial and governments face three limitations when it comes to issuing debt. Domestic and global confidence in sovereign issuers begins to decline once they surpass those limits.

The three limits for governments are: the economic limit, when more government debt leads to stagnation and productivity growth decline; the fiscal limit, when interest expenses and debt burdens soar despite central bank easing and rising tax receipts; and the inflationary limit, when the loss of the purchasing power of currencies becomes large and persistent, eroding citizens’ standards of living.

Over the last few years, the most important trend in global reserves has been the rotation from government bonds of advanced economies toward gold, not “out of dollars,” as some media highlights, and even less so into other fiat currencies.

Many analysts blame the recent sanctions against Russia as a factor that has triggered the move to other forms of reserve. However, this does not seem like a plausible cause when most of the gold reserves that have been added globally are stored in countries that enforce those sanctions. The evidence is more complex and different: Central banks globally stopped trusting in developed nations’ debt as their core asset in 2021 when inflationism and lack of fiscal responsibility started generating losses at major central banks. Sovereign debt stopped being the quality, stable, and income-generating asset that provided real economic returns to institutions all over the world.

Despite the media and social media comments, the slump of euro and yen assets as reserves has been more aggressive than that of the US dollar. Bloomberg and the World Gold Council data show central banks and sovereign funds have doubled the pace of gold purchases in roughly three years, accumulating around 80 metric tons a month and driving record demand and record prices. This buying comes on top of strong private-sector investment demand, turning gold into the main beneficiary of rising concerns about debt sustainability and currency debasement in the US, Europe, Japan, and the UK. At the same time, analysts at JP Morgan highlight that much of this official gold buying is opaque, with significant “unreported” flows via hubs such as Switzerland, which reinforces the idea of a stealth shift into a real asset outside the fiat system.

The real underlying driver is the deterioration in the fiscal and monetary credibility of developed economies. Government debt is close to peacetime record levels, while long‑term spending commitments, unfinanced liabilities, weak growth, and aging populations make future fiscal consolidation politically challenging. Since the pandemic, major central banks have combined ultra‑loose policy, large balance sheets, and implicit financial repression to maintain the illusion of solvency of sovereign issuers, which has strengthened the view that fiat currencies will be used to manage debt through inflation and negative real rates for a long time. The freezing of Russian reserves in 2022 and the weaponization of sanctions only served as a confirmation of the debasement risk and convinced many emerging‑market central banks that holding large stocks of G7 sovereign debt and deposits entails growing political and legal risk. Faced with a mix of fiscal excess, financial repression, and geopolitical risk, reserve managers have finally returned to the strategy of adding reserves in an asset with no counterparty risk. The famous “gold is money, everything else is debt” sentence becomes more relevant than ever.

Dedollarization requires a fiat alternative crossover.

The same sources that show soaring gold demand also show that there is no true “dedollarization” in the sense of a fiat‑to‑fiat substitution. This also makes sense. The US dollar is the world’s strongest weak currency because it has a higher level of liquidity, more independent institutions, and better legal and investor security than any alternative. The US dollar is losing its place as a global reserve to gold but not losing its position relative to the euro, yen, pound, or yuan.

IMF COFER figures show that the US dollar’s share of allocated FX reserves remains at 59.6%, and when adjusted for exchange‑rate moves, the IMF itself concludes that the dollar’s share has been broadly stable, with recent declines explained mostly by valuation effects, not active selling. The euro, at 20.3%, is not even close to being a contender. The euro, yen, sterling, and even the Chinese renminbi have not captured the supposed “lost” dollar share. Their combined importance in reserves is flat or declining, while the rising share belongs to gold and “other assets,” including silver, oil, or domestic equities in the case of Japan.

BIS FX turnover and SWIFT payment data allow us to reach the same conclusion. The dollar is on almost 90% of all FX transactions and roughly half of global SWIFT payments, with the euro a distant second and the renminbi still only a low‑single‑digit share. There is no crossover where another fiat currency replaces the dollar’s role in trade, finance, or reserves. The real story is that all major fiat currencies are losing relative trust to an asset outside the system, like gold.

Institutions all over the world have suffered losses with sovereign debt since 2021 and see no end to the inflationary currency debasement policy, while solvency is under question as governments reject any form of spending control.

Calling this “de‑dollarization” is misleading, because it suggests a transition from a dollar‑centric order to a euro‑, yuan‑ or BRICS‑centric fiat order, something the data clearly do not show. What is actually happening is better described as “de‑fiatization at the margin,” a shift away from all heavily indebted, policy‑managed fiat currencies towards real assets that do not depend on governments. The dollar remains the least‑imperfect fiat currency, with unmatched liquidity, legal and investor security, and support in trade and finance, so there is no scalable alternative that reserve managers can move into without assuming even greater risk. That is why central banks diversify some of the marginal flow into gold but keep the bulk of their liquid reserves, payment systems, and FX operations in US dollars.

The world is penalizing the fiscal and monetary excesses of developed economies by demanding less of their debt and more gold, not by building a new fiat‑currency alternative. The record highs of gold and the constant purchases by central banks indicate a lack of confidence in the long-term purchasing power and credit quality of sovereign issuers, not in a competing fiat currency. Meanwhile, the dollar’s share in reserves, trade invoicing, FX turnover, and payments remains dominant and broadly stable, with no evidence of a large‑scale substitution into euros, renminbi, or any other fiat unit.

The global system is therefore not moving from “dollar hegemony” to “yuan hegemony” or a multipolar fiat regime; it is moving from unchallenged trust in developed‑market paper to a world where gold re‑emerges as the ultimate reserve asset, and the dollar stays at the declining fiat center because nothing else can replace its security, infrastructure, and depth.

While investors legitimately worry about America’s credit credibility and the US dollar’s purchasing power, no one is naive enough to consider the euro area, Japan, China, or a basket of serial devaluators like the BRICS as viable alternatives to the US dollar.

The solution is to go back to sound money policies. However, no fiat currency issuer seems to want that shift. No government desires a strong currency because it undermines their illusion of paper promises.

The Congressional Budget Office has revised its estimates and states that the tariff increases implemented from January 6, 2025, to November 15, 2025, will reduce the primary deficit of the United States by $2.5 trillion over 11 years if they remain in place during the 2025–2035 period. Tariff revenues have risen to $90 billion between October and December 2025, compared with $20 billion in the same period in 2024. However, year-over-year inflation during that period is actually lower.

Inflation in the United States has not surged to 5–6%, as some investment banks had predicted following the tariff announcements. In fact, the year-over-year CPI, the PCE Index, and import prices reported by customs and border offices show no discernible increase in year-over-year inflation and are certainly very far away from the consensus estimates.

The year-over-year CPI in the U.S. stood at 2.7% in December, with a monthly increase of 0.3%, according to the latest data from the Bureau of Labor Statistics. The main drivers of inflation are housing and services, which have nothing to do with tariffs. Core inflation (CPI excluding food and energy) stood at 2.6% year-over-year in December, with a monthly advance of only 0.2%, the lowest level in about four years. Core inflation has stabilized around 2.6%, well below what was feared a few months ago, reinforcing the perception that underlying pressures are moderating even though services remain relatively “hot.”

The U.S. import price index rose 0.4% in the September–November 2025 period, with a 0.7% year-over-year increase for non-energy imports. Within imports, prices from China fell 3.6% year-over-year in November, while those from Japan rose 2.6% and those from the EU fell 0.1%. Customs import prices are falling, especially from countries facing higher tariffs.

Moreover, U.S. export prices increased 0.5% in the September–November 2025 period, especially in agricultural goods and motor vehicles.

According to the BLS, import prices rose only 0.1% in the twelve months ending in November, while export prices increased 3.3%. Since these figures exclude tariffs, they show that inflationary pressures are not coming from imported products nor tariffs.

If both import and export prices rise but import prices barely move, the effect of the tariffs is being absorbed throughout the supply chain, particularly in locations with the greatest excess capacity. In other words, exporters, distributors, transportation, and warehousing absorb most of the tariffs in the chain because the cost of working capital for elements of the chain with greater excess capacity makes passing tariffs on to the consumer unfeasible.

Despite this, you will read studies by Cavallo or the Kiel Institute that claim the opposite. Alberto Cavallo’s estimates use January 2024 as the cutoff for the pre-tariff trend calculation. However, after a brutal inflationary burst in 2021–2024, the last year appears artificially “disinflationary.” If one looks at the 2021–2024 series, the trend is of continued disinflation. The inflation trend in 2025 is lower than in the Biden years, even in the eighteen months that led to Fed easing and rate cuts.

The Federal Reserve Bank of Atlanta published that businesses anticipate their costs will rise just 2.0 percent over the next year, down from 2.2 percent in December, the lowest level in the post-pandemic era.

The Kiel Institute study “America’s own goal: Americans pay almost entirely for Trump’s tariffs” is statistically questionable for several technical and identification reasons. Economists like Stephen Moore and E.J. Antoni have pointed out some surprising assumptions, and John Carney wrote extensively about major statistical biases in “Debunking the myth that Americans are paying 96% of tariffs,” concluding, “It does not prove 96 percent of costs fall on Americans. It does not prove consumers pay higher prices. And it certainly doesn’t prove tariffs are an “own goal.”

The most surprising factor is that the Kiel Institute attributes almost the entire price movement trend in the United States to tariffs while ignoring that the same trend is similar or even larger in the United Kingdom, European Union countries like Spain, or Japan. If U.S. exporters raise prices up to three times faster for the same categories than those exporting to the United States, the explanatory factor of price moves in America is not tariffs and has much more to do with other factors, as well as the widespread deterioration in the purchasing power of currencies in the countries analyzed.

The key result behind the headline circulating in the media—that exporters absorb 4% and the U.S. absorbs 96% of tariffs—is based on a coefficient of approximately −0.039 with a standard error of 0.024, which is only significant at the 10% level, showing a very noisy estimate despite having 25.6 million observations, Carney explains. With that level of imprecision, the implicit confidence interval itself allows for exporter absorption between 0% and 9%, so presenting “4%” as a precise figure creates an illusion of accuracy that the data do not support. Furthermore, the study interprets the increase in average imported prices as evidence of tariff pass-through but ignores that total imports (value and volume) fall by 28%, with low-cost suppliers exiting the market. If cheap products disappear and only mid/high-end ones stay, the average price rises even though the reality shows that prices within each category have not increased, as reflected in customs and final consumer data. Thus, the change in the quality mix can be mistaken for a price increase “due to tariffs.”

Tariffs are applied at very disaggregated levels (HS8/HS10), but surprisingly the Kiel study works with data at the HS6 level, which is much more aggregated, according to Carney. This forces the use of an average tariff rate for products with very different actual tariffs or even no tariffs at all. That poor measurement of the tariff (as an explanatory variable) introduces an error that biases coefficients toward zero, making it easier to “find” a little price response and reinterpret it as proof that almost all the cost falls on the U.S. If the same analysis is done for non-energy products in the United Kingdom, Japan, Germany, Spain, or France, for example, it would appear that tariffs are being paid by Americans and all foreigners at the same time, which is obviously ludicrous. If both tariffed and non-tariffed goods show increases in unit values, the differential comparison is artificially reduced.

Even if the estimates on import prices were correct, the study assumes without evidence that 96% is passed on to consumers, without analyzing retail prices, business margins, or the distribution of incidence along the supply chain.

The claim that it is basically a “consumption tax” passed on 96% to Americans is presented as an empirical conclusion, when in reality it is a personal extrapolation without direct statistical backing, Carney concludes.

If the report’s conclusions—based on several surprising assumptions—were correct, then year-over-year inflation, core inflation, and the U.S. PCE Index would have more than doubled the published levels. The PCE Index would have more than doubled the published levels. The study assumes that all price increases are explained by tariffs, primarily by ignoring the upward trend in individual prices and baskets in exporting countries as irrelevant. If US export prices rise three times faster than import prices, and higher if analyzed category by category, it is clear that exporters to the US are not passing tariffs to final prices. When import prices from the EU fall, and China’s prices decline is so significant, it is also a signal of easing inflationary pressure, not the opposite.

Moreover, by ignoring the fact that the most “inflationary” categories in U.S. data are services, which are not subject to tariff pressure, the analysis reaches conclusions that are surprising and raise more doubts than certainties. The data shows that services, which are not affected by tariff pressure, are the most “inflationary” categories in the U.S., leading to conclusions that are surprising and create more doubts than certainties. Furthermore, we should see rising margins and lower prices among exporters selling to the U.S., but the opposite has occurred.

Even in the Kiel Institute report, they say that exporters largely kept pre‑tariff dollar prices, which is a reduction in constant dollar terms considering that the US dollar weakened in 2025 against exporter currencies. Furthermore, the study says that their per‑unit margins in the US did not rise and they accepted lower volumes and lost market share. If Americans have consumed more, as the data indicates, and prices have not gone up in constant dollars, while exporters have lost market share and their profits haven’t improved, the report is recognizing that price changes can’t be blamed on tariffs but rather on many other factors in a complicated trading situation.

Tariffs will remain a fascinating topic of debate for a long time, and studies are always valuable, but the evidence—almost a year later—is that the components of inflation data do not show slowing but persistent inflation (a phenomenon occurring in all comparable countries) to be caused by tariffs. With the level of excess capacity that exists in the global exporting system, it is clear that the supply chain absorbs tariff costs wherever pricing power is weakest.

El PSOE se enfrenta a las próximas elecciones autonómicas con la tarea imposible de intentar hacer tragar a los ciudadanos la rueda de molino de su acuerdo de privilegios para la burocracia de Cataluña con Esquerra. 

Montero se presenta a las elecciones andaluzas con un programa “irresistible”:expoliar a impuestos a los andaluces, endeudarlos y que la Generalitat de Catalunya sea la más privilegiada, además de dictar desde Barcelona la fiscalidad de los ciudadanos de Andalucía.

El PSOE afirma que todas las comunidades ganan con un modelo que dota de 21.000 millones adicionales a las autonomías. Sin embargo, es falso. No se dotan más recursos a las autonomías, se endeuda todavía más al país.

El socialismo ofrece un espejismo de recursos públicos que solo es más deuda mientras impone una fiscalidad confiscatoria a medida del independentismo depredador.

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