The Dollar Is Garbage! -

The dollar is garbage!
This may sound like an overstatement, but the dollar index fell by over 10 percent through the first half of 2025, the sharpest decline since 1973. 
In this episode of the Money Metals Midweek memo, host Mike Maharrey explains why he thinks the dollar is "garbage," or "unattractive as Swiss investment bank UBS analysts put it. He highlights some of the reasons for de-dollarization and explains what's replacing the greenback. He also explains the practical impact of dollar devaluation. 
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Mike opens the show declaring, "The dollah is gah-bage!" in his best New York accent. (Which objectively isn't great.)
He then puts the accent into context with a humorous anecdote.
Mike notes that even the Swiss bank UBS thinks the dollar is garbage.
<blockquote>
"I mean, they didn’t put it that way, but that was the implication. 'Unattractive' is the word they used. In a recent note, the Swiss investment bank said it is time to 'reduce and hedge exposure to USD before further dollar declines.'"
</blockquote>
Mike highlights the dollar's dismal performance through the first half of 2025, noting that it was the worst first half of a year since 1973.
<blockquote>
"Think about that! That was just two years after Nixon severed the last tie between the dollar and gold. So, we’re seeing the dollar devalue almost as quickly as it did just after it was untethered from gold."
</blockquote>
Mike said this dollar weakness is even more interesting considering the timing. 
<blockquote>
"Think of all of the geopolitical tension we’ve had. The dollar is supposed to be a safe haven, but it hasn’t gotten that bid at all. On top of that, most analysts predicted the aggressive tariff regime would strengthen the dollar. And then on top of that, the Fed’s decision to keep rates higher should also put some support under the greenback. So, we’ve seen this significant dollar weakness during a time when you would expect strength. Imagine how things will look when the Fed starts cutting rates, a move that will put further downward pressure on the currency."
</blockquote>
So, what is usurping the dollar? Gold.
<blockquote>
"In fact, gold recently moved ahead of the euro as the second-largest reserve asset. But it’s not so much that central banks are trading in gold for euros. The EU currency’s share of global reserves has remained relatively steady. They’re swapping dollars for gold."
</blockquote>
Mike emphasizes the point with some recent data highlighting the decrease in dollars and the expansion of central bank gold holdings.
So, what does all this mean for investors?
Mike highlights comments made by Frank Holmes. 
<blockquote>
"'They should think carefully about how exposed their portfolios are to a single currency.'
"'Just as central banks are hedging their dollar exposure with gold and foreign assets, individuals and households may want to do the same.'
"He’s right. Even a modest de-dollarization of the global economy could be a disaster for the United States."
</blockquote>
Mike explains the potential impact of a declining global demand for dollars. 
<blockquote>
"The U.S. depends on this global demand for dollars supported by its reserve status to underpin its massive government. The only reason Uncle Sam can borrow, spend, and run massive budget deficits to the extent that it does is the dollar’s role as the world's reserve currency. It creates a built-in global demand for dollars and dollar-denominated assets. This absorbs the Federal Reserve’s money creation and helps maintain dollar strength despite the Federal Reserve’s inflationary policies."
</blockquote>
Mike also notes that the Federal Reserve is set to create even more inflation. 
<blockquote>
"So, if the world no longer needs dollars, and the Fed is gonna keep printing them, who will absorb the inflation? American consumers."
</blockquote>
In fact, Americans are already being hammered by the impact of the declining dollar. 
<blockquote>
"Of course, you probably know that because, well, you shop. You know how it feels to spend more and more money every month but get less and less for it. As talking heads on mainstream financial networks point to ever-increasing retail sales (May data notwithstanding) and gush about the 'health of the American consumer,' Joe Main Street is spending hand over fist to keep up with rising prices. In fact, we can account for virtually the entire increase in retail sales in the United States since April 2021 by price inflation."
</blockquote>
Mike untangles the misconception that rising retail sales mean people are buying more stuff, explaining that it also reflects inflation. When you look at inflation-adjusted retail sales, they have been flat for several years. 
<blockquote>
"Talking heads on CNBC would gush about how well consumers are doing. But in reality, consumers did a lot worse. They paid more and bought less. American consumers have faced this ugly reality for nearly four years now."
</blockquote>
This underscores the pernicious effects of inflation.
<blockquote>
"It steals your purchasing power. Thanks to the ever-devaluing dollar, you have to work harder and harder just to maintain your standard of living. This is precisely why so many people find it impossible to get ahead."
</blockquote>
That leads to a call to action. Mike reminds listeners that they want to have real money in times like these. Now is the perfect time to call 800-800-1865 and talk to a Money Metals precious metals specialist.
<h2>Articles Mentioned in the Show</h2>
<a href="https://www.moneymetals.com/news/2025/06/30/money-supply-expansion-this-is-inflation-004158" rel="noreferrer">Money Supply Expansion: This Is Inflation</a>
<a href="https://www.moneymetals.com/news/2025/06/13/gold-overtakes-euro-as-second-largest-global-reserve-asset-004124" rel="noreferrer">Gold Overtakes Euro as Second-Largest Global Reserve Asset</a>
<img src="https://www.moneymetals.com/uploads/content/real-retail-sales-May-25.JPG" width="700" height="583" alt="" />

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