The US Dollar Will Be the Last Reserve Currency

The race is between the Treasury's printing press and Silicon Valley's GPUs. If tech wins, the US doesn't just keep the crown; it retires the game.

Inspiration: Reading Ray Dalio’s The Changing World Order and realizing that his historical data, while accurate, fails to account for the singularity of Artificial Intelligence.

What is a Reserve Currency? It is the operating system of global trade. It is the currency that other nations hold to pay off debts and buy oil. It requires two things: Trust and Military Power.

History tells us this is a cycle.

• The Dutch Guilder: Dominant in the 17th century.
• The British Pound: Dominant in the 19th century.
• The US Dollar: Dominant since 1944 (Bretton Woods).

The average lifespan of a reserve currency is about 94 years. The Dollar is at year 80. By historical standards, we are in the "sunset" phase.

The Standard Bear Theory: Fiscal Suicide

The bear case for the US is obvious: Debt. The US is $35 Trillion in debt. We are adding $1 Trillion every 100 days.

Historically, empires fall when interest payments on debt exceed defense spending (which happened to the US this year). The classic playbook says the US must inflate its currency away, leading to a loss of trust and the rise of a challenger (China/Yuan).

The Bull Theory: Technology is Deflationary

But historical empires didn't have Software.

Technology is the ultimate deflationary force. It allows you to do more with less.

• Supremacy: Every major empire won because they had superior tech. The British had ships/steam. The Americans had nukes/internet.
• Current State: Look at the leaderboard. Nvidia, Microsoft, Google, OpenAI, SpaceX, Palantir, Amazon.
• The Gap: Where is the European Google? Where is the Chinese OpenAI? (China is close, but chip sanctions are a chokehold).

The US has a monopoly on the Future.

Growing Out of Debt (The AI Multiplier)

There are two ways to solve debt: Austerity (painful) or Growth (innovation).

If the US achieves AGI (Artificial General Intelligence) first, the productivity gains won't be 2% or 3%. They could be 10% or 20% GDP growth annually.

If AI automates knowledge work, solves material science (cheaper energy), and optimizes logistics, the GDP denominator explodes. $35 Trillion in debt looks manageable if your GDP jumps to $50 Trillion in a decade.

The Thesis: The US plans to "grow" out of its debt by inventing a new economy.

Why It Might Be the "Last" Reserve Currency

Historically, when one empire fell, another caught up technologically. But AI introduces Winner-Take-All dynamics.

If the US achieves AGI first, the gap between the US and the rest of the world doesn't just widen; it becomes unbridgeable. The intelligence advantage compounds at an exponential rate.

In that scenario, no other currency can compete. The Yuan cannot displace the Dollar if the Dollar controls the "Silicon Brain" of the global economy. The Dollar becomes the Universal Ledger for compute and intelligence.

The Blind Spots: Hard Risks

Of course, this assumes we survive the transition.

1. The Nuclear Stalemate: Technology doesn't matter if the board gets flipped. China and Russia cannot out-code the US, but they can nuke the US. The "Thucydides Trap" suggests that a rising power (China) and a ruling power (US) often go to war. Nuclear weapons are the only reason this hasn't happened yet. This risk is non-zero.

2. Internal Collapse: Sarah Paine warns that maritime powers die by suicide, not murder. If the US social fabric tears apart (culture wars, inequality) before AGI arrives, the technical advantage is irrelevant.

Conclusion: The GPU vs. The Printer

The next 10 years is a race. It is a race between the Treasury (devaluing the dollar via debt) and Silicon Valley (increasing value via innovation).

My Prediction: The US will be the last reserve currency. Not because it is fiscally responsible, but because it holds the keys to the next stage of human evolution. You don't bet against the guy with the printing press and the supercomputer.