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For more than 80 years, the U.S. dollar has been central to the international financial system, in no small part because it is the primary global reserve currency. But as in politics, narratives are incredibly important in understanding stock market moves. The past week has seen the return of stories on the so-called “sell America” trade—the idea that investors are hedging their bets by selling U.S. assets because they are worried about President Donald Trump’s threats to the global economic order.The role of the dollar is unlikely to be diminished in the immediate future, and its status as the global reserve currency is not currently under any serious threat. But the instability of the Trump administration could lead to a slow erosion in trust in the dollar, which in the long term—think years or decades hence—could reshape global monetary infrastructure. “What it typically takes to be a reserve currency is a deep and liquid market—which the U.S. has unquestionably—clear rule of law, and policy predictability. And the latter two are a lot less clear these days,” said Karen Petrou, co-founder and managing partner at Federal Financial Analytics.The “sell America” trade seemed to be booming as recently as last Tuesday, as Trump escalated tensions over his desire to obtain Greenland while at the World Economic Forum in Davos, Switzerland. He compounded this by threatening to apply tariffs on European allies who opposed him; as a result, U.S. bond prices fell, the U.S. Dollar Index dropped relative to other currencies, and American stocks tumbled. By last Wednesday, however, Trump had walked back these tariff threats and announced the existence of a “framework” for a deal on the future of Greenland. The U.S. stock market bounced back, the S&P rallied, Treasury yields eased, and the dollar rebounded. The wild swings of the past week are representative of a now-familiar pattern. The market response to Trump’s threats on tariffs is typically muted; when it seems as if he’s poised to take a significant action, that’s when it’s most likely to respond. At that point, Trump frequently backs down, as he did in Davos. Equilibrium is temporarily restored—but the threat of future tumult creates only a brief respite.“If Trump not only says something, but then does it, you could see significant market turmoil—shock, panic—but so far, adverse market reaction seems to slow him down,” said Petrou. This is sometimes referred to as the “TACO” effect: “Trump Always Chickens Out.”On Monday, gold prices surged, in an indication of investors seeking haven in a safe asset. This comes amid the risk of government shutdown this week, as Democratic senators threatened to block a funding bill including new money for the Department of Homeland Security, after federal agents shot and killed a second U.S. citizen during protests in Minneapolis over the weekend. Trump also on Saturday threatened to impose a 100 percent tariff on goods from Canada if it went through with a trade deal with China.In the long term, continued upheaval in American policymaking has raised the specter of an eventual “de-dollarization,” in which the use of the dollar in global trade and financial transactions would diminish. However, central banks’ decision to diversify their reserves does not equate to a diminishment of the dollar’s role in the global financial system, or indicate that there is currently a viable alternative for a reserve currency.“I think what we’ve been seeing is dollar hedging, or de-risking, but not de-dollarization,” said Stephen Kaplan, associate professor of political science and international affairs at George Washington University. He noted the “cyclical trends” that may have contributed to the relative weakness of the dollar in 2025, such as the U.S. Federal Reserve’s cutting of interest rates beginning in the summer.When there is a threat of disruption to important institutions like the Fed or international alliances such as NATO, that’s when markets can get nervous. The dollar dropped earlier in January when Fed Chair Jerome Powell announced that he was under criminal investigation by the Trump administration, casting the future of the Fed’s autonomy under question. “With each of these events, from a long-term perspective, you’re incentivizing central banks and then investors more broadly to think about diversification, to think about hedging, to think about alternatives,” Kaplan said.That hedging comes after decades of dollar primacy. The currency’s dominance is profound, a truth of international economics that stretches back at least since the end of World War II. Because of the stability and liquidity of U.S. Treasury securities, central banks of foreign countries hold large amounts of American currency in reserves. The dollar accounts for around 57 percent of global foreign exchange reserves, as well as nearly 90 percent of global foreign exchange transactions, and 54 percent of global trade.By comparison, only around 20 percent of global foreign exchange reserves are held in the Euro, and the Chinese renminbi accounts for roughly 2 percent. Investing in the Chinese renminbi is more of a risk than in the dollar, said Petrou, because it has neither the requirements of clear rule of law nor the policy predictability to become a global reserve currency. When the dollar replaced the British pound sterling in the twentieth century, the U.S. economy was ascendant. The same cannot currently be said for Europe or China to the same degree, said Steven Kamin, a senior fellow at the American Enterprise Institute. Although Europe “shares many of the characteristics of the United States in terms of politics and economics,” Kamin explained, it “doesn’t seem to have that economic vibrancy that we had, and in fact, still have.”This primacy has long benefited the American economy. A French official once said that the dollar’s status as the global reserve currency amounted to an “exorbitant privilege” for the United States. At the very least, it comes with some significant perks. Because there is high demand for Treasury assets, the U.S. can borrow money at relatively low rates, helping ensure stability during periods of economic volatility. Lower interest rates for Treasurys extends to lower interest rates in other areas of the economy, such as the rate homebuyers pay for a mortgage. It also means that American sanctions pack a punch: Dollar-based global transactions use American banking infrastructure, so the U.S. government is more easily able to seize assets and freeze activity.If the dollar lost its status as the primary reserve currency, the country could see a reversal of those benefits. Rates on mortgages and car loans, for example, closely track to Treasury yields. When the federal government is paying higher interest rates, that trickles down to the American consumer. “If there is less demand for Treasurys, because there’s less demand for all dollars in general, it raises private borrowing costs for mortgages, for auto loans, for business loans,” said Caleb Quakenbush, associate director of economic policy at the Bipartisan Policy Center. “That, of course, makes things less affordable, and it can slow investment and economic growth over time.”Concerns over whether the U.S. can pay off its debts—a semi-regular question, given frequent political fights over lifting the nation’s borrowing cap—can also threaten the stability of Treasury assets. Since the Great Recession, the share of foreign investors holding U.S. debt has declined; weakening international demand could be damaging to the American economy in the long term.“If there’s less demand for dollars and fewer people abroad are holding dollars, those dollars don’t flow back into the United States, and that can slow foreign investment in the United States,” Quakenbush continued.Again, any pivot away from the dollar would take time, and a readjustment of how the global financial system functions. Kamin noted that the greenback benefits in part from inertia: Everyone uses the dollar because everyone else uses the dollar. American consumers thus do not need to worry about de-dollarization in the immediate future.But concerns over the stability of U.S. Treasury assets in the long term could continue to encourage investors to turn away from the dollar. Although Trump has, over the past year, shown the tendency to back down from his more extravagant threats—thus cooling the markets—the kerfuffle over Greenland is emblematic of the kind of chaotic development that cumulatively could lead to a decline in dollar primacy over several years. That’s where diversification comes in: to mitigate risk, investors may choose to hold more reserves in other currencies. The outright replacement of the dollar as the dominant currency may be a less likely scenario than a global monetary system where multiple currencies hold weight. Although the renminbi only accounts for a small percentage of global financial reserves, for example, it is being increasingly used in trade transactions between China and other parties. Over several years, and if the Chinese currency strengthens, it may become even more prevalent in global transactions overall.“I kind of imagine that the future involves not the replacement of the dollar by some other single hegemon, but rather just a more equally balanced, multipolar world than we’re in right now,” said Kamin.

It doesn’t reflect well on a treasury secretary when the price of gold goes through the roof. As I explained in October (“Gold Is Booming and That’s Really Bad News”), it means people expect higher inflation and are losing faith in the stock market along with the overall health of the economy. In such moments, Wall Street longs for a steady hand at the helm. Instead, they get Treasury Secretary Scott Bessent hurling insults in every direction and giving every impression that he’s about to have a nervous breakdown.Bessent previously enjoyed a reputation as the sole grown-up in Trump’s Cabinet. But at Davos last week, Bessent engaged in a frantic sort of MAGA minstrelsy, or possibly he converted under duress into a true-believing thug. I’m not sure it matters. But the more Bessent shoots his trash-talking mouth off, the more the dollar’s value falls and the higher the price of gold rises. Probably the best thing Bessent could do right now—for himself, for the dollar, and for your 401(k)—is to shut the fuck up.I predicted in late October that a stock market crash was imminent. It didn’t happen, and as I write this the S&P 500 is rising. But a lot of experts still say some sort of correction is coming. Rising gold prices reflect that belief. Wall Street refers to the gold market as a “debasement trade”—the debased object being the dollar.An ounce of gold rose in price Monday morning to $5,100 per ounce, up from $4,000 per ounce three months earlier. For comparison’s sake, when gold was discovered at Sutter’s Mill in 1848, an ounce was priced at $20.67, or about $850 after inflation. That was enough to hurry California into statehood two years later and to triple its population by 1860. Today, an ounce of gold sells for six times that amount, and amateur California prospectors are panning once again for gold. But a much easier path is to invest in gold while the Trump administration trashes the rules-based international order. “Scott Bessent Is In Denial” was the headline last week on a Project Syndicate op-ed by Desmond Lachman, a former deputy director of the International Monetary Fund’s Policy Development and Review Department now at the conservative American Enterprise Institute. “As Treasury secretary,” Lachman wrote, “Bessent is supporting a grossly irresponsible budget and foreign policy, which is putting the United States on a path to economic ruin.”The deficit, which was $1.8 trillion when Trump entered office, is projected, Lachman noted, to (nearly) double by the end of this decade to $3.4 trillion. The dollar has lost 10 percent of its value over the past year, and over the past 16 months the 10-year Treasury yield has risen 50 basis points. (That’s bad because it means investors aren’t buying Treasury bonds.) Instead of “continuing to back Trump’s reckless policies”—polymorphous tariffs, tax cuts we can’t afford, an insane threat to conquer Greenland, etc.—Bessent should “be highlighting the danger of undermining foreign investors’ confidence in the U.S.” But Lachman understated the problem. At Davos, Bessent transitioned from merely backing Trump’s policies to egging them on—madly and belligerently. After Trump threatened Western Europe with tariffs to punish it for opposing his proposed conquest of Greenland, Bessent publicly insulted these countries at Davos by saying their angry reaction was “the same kind of hysteria that we heard on April 2,” when Trump announced a 10 percent tariff on all imports and higher ones on countries that didn’t import from the United States as much as they exported. “What I’m urging everyone there to do,” Bessent said condescendingly, “is sit back, take a deep breath, and let things play out.… The worst thing countries can do is escalate against the United States.”As it happens, escalating turned out to be the very best option. Ignoring Bessent, the Europeans punched back hard with a threatened $93 billion in retaliatory measures. That spooked the stock market, which in turn persuaded Trump to back down.At the same Davos appearance, Bessent was asked whether he was concerned that institutional investors such as pension funds in Denmark were pulling out of Treasurys. The correct answer would have been some unmemorable variation on “All will be well.” Instead, Bessent seized another opportunity to insult Western Europe: “Denmark’s investment in the U.S. ​Treasury bonds, like Denmark itself, is irrelevant.”California Governor Gavin Newsom whacked Bessent on social media (“Could this smug man be more out of touch?”) for suggesting at Davos that Trump’s proposed ban on institutional investing in single-family houses exempt “mom and pop” investors who buy “five, 10, 12 homes” to produce an income stream for their retirement. Bessent’s comment was indeed smug and out of touch. It was also a rare instance of the treasury secretary doing the opposite of egging Trump on gratuitously. Instead, Bessent was trying to pull Trump back on a policy proposal that actually shows some potential.Bessent hit Newsom back in a Politico interview. “Newsom was in over his hairdo,” he said, and has “a brain the size of a walnut,” and, most creatively, Newsom is “Patrick Bateman meets Sparkle Beach Ken.” This last insult was so elaborately crafted that it sent me to Google. Patrick Bateman is the serial killer in American Psycho; Sparkle Beach Ken is a Ken doll manufactured in 1995 that wears sparkly swimming trunks to go with Sparkle Beach Barbie’s sparkly bikini. It’s doubtful Bessent constructs such put-downs himself; more likely, he has someone on the payroll who writes them. Newsom’s press office next hit back at Bessent with a homophobic tweet that I won’t repeat here, for which Newsom should apologize. But I hardly call that a victory for Bessent, and it doesn’t make me feel any better about the dollar.Perhaps we need a new economic indicator: the Bessent. It would track daily the number of gratuitously hostile things Bessent says. The more he shoots his mouth off, the more likely a recession or perhaps even global depression is imminent. I’m tempted to exclude Bessent’s threats to beat up people who deserve it, such as Elon Musk, Federal Housing Finance Agency Director Bill Pulte, or Commerce Secretary Howard Lutnick. But on reflection I won’t, because these weren’t a sign of terrific mental health either. The more Bessent makes himself sound like Kristi Noem or Kash Patel, the less confident I will feel about my stock holdings and my job security. Mr. Treasury Secretary, I beg you: Put a sock in it.

Dr. Misty Heggeness, a professor at the University of Kansas and former Census Bureau economist, released an analysis last year showing that mothers with young children were leaving the workforce after pandemic-era gains. It was a wake-up call that women with young children had benefited from the remote work–friendly policies and that some of the changes made by the Trump administration, like sweeping federal layoffs, had hit women hardest.Heggeness had used long-available data from the Current Population Survey for her analysis, but took a unique perspective to understand what was happening to women in particular. Now she’s published a book that does the same. In Swiftynomics: How Women Mastermind and Redefine Our Economy, she replaces the economics discipline’s idea of a rational “Economic Man” with a rational “Economic Woman” to show how our economy is impacted by the care that women provide, the choices they make for their families, and their perseverance despite sexism and discrimination. And yes, her muse on this journey is Taylor Swift. I spoke with Heggeness about why ideas presented with a girly aesthetic—the book’s cover is purple, and the title is presented as a friendship bracelet—can and should be taken seriously, as well as how to get more women into economics and why the backlash to women’s progress actually makes her hopeful.Monica Potts: The book has a purple cover, and I think you even talk about Taylor Swift being a woman who likes cats and glitter. I wondered why it was important to you to write a serious economics book embracing this kind of girly aesthetic.Misty Heggeness:  I’m in a profession that is just so dominated by white-men-in-brown-loafer perspectives. If you go to the econ meetings, it’s just a sea of white men with khakis and brown loafers. There’s such a tradition in my profession to not want to stick out, to really fit within the mold that exists. And if you want to be taken seriously, that’s what you need to do. And I’ll tell you, just generally, I do feel like some of the reaction I get out in the public, and within my academic networks and circles, is people taking me a little bit less seriously because of this book. For me, that’s one of the critiques of the profession—that in order to be taken seriously and to really be able to have a prominent voice within this field, you have to basically act like a man in the traditional sense.… One of the things that I love about Taylor is [that] she does very much act like a man in many instances. She’s very savvy with business. She’s totally willing to go in and think about revenge and how you can get back at somebody who’s wronged you. But she loves delicate, flowery things. So she loves glitter and sparkle. She loves pink and pastel colors. She has cats.… She doesn’t shy away from any of it—the stuff that makes her who she is and the stuff that makes her authentically her.… And I really just leaned into all of it because I want to change the larger environment. M.P.: I also am wondering if you are hoping that some people who might not otherwise be drawn—especially some women—to a book about economics are brought in by the Taylor Swift connection. And if so, what do you hope it does for them?M.H.: One hundred percent. One of my goals in my career and in my lifetime is to get more women into the field of economics. And so I gifted the book to my daughter’s high school girlfriends.… I also want as many men as possible to read this book, but it’s really important to me that young girls see themselves represented in my profession, and that they find hooks that attract them to the profession. And going into an Econ 101 class and talking about widgets is not an exciting concept for many. M.P.: One of the things you do in the book is you outline the policy changes that have happened that have allowed people like Taylor Swift to rise to the top, but all the work that still needs to be done, policy-wise, to help support more women. And I’m wondering what you make of the policy moment and political moment we’re in now?MH: I’ll say first that I think that the rise of the Trump administration and all of these chest-pounding, really loud men: It obviously has negative implications because of the level of incompetency that is being put into leadership positions today. But I also am not surprised that it happened. I think that the reason why it happened is because there is seismic shifting happening in terms of women’s power and women’s ability to inform and be in leadership positions and ascend. I think that this is a reaction to the fact that we were no longer staying in in the status quo. M.P.: And that’s also part of the reason you shift from thinking of Economic Man to Economic Woman, right? To kind of internalize these things as rational policy choices, not just extra women’s issues.M.H.: And also because I think in the field of economics, we’ve focused so heavily in modern economics on efficiency, and we really have done a disservice in terms of helping the larger society understand issues of initial endowments. And you know, if you’re born into a family in poverty, it’s not going to be as easy for you to pick yourself up by your bootstraps as it might be if you were born into a wealthy family. I think that women get this so much more than men because we’ve been ignored for so long within our economic statistics and economic foundations, so much of our labor isn’t accounted for. M.P.: Speaking of that, Vice President JD Vance has talked about how he wants to see more babies in America. And at the same time, the Trump policies all make it harder for women to have careers and for people to have economic stability. What do you as an economist make of these kinds of contradictions? MH: The JD Vances of the world, and the Trumps of the world, they really struggle with something that I call care privilege. Care privilege is: You are an able-bodied adult, but yet you have your care needs being met by other people. So somebody’s washing and ironing your clothes, somebody’s cooking your meals, somebody’s taking care of your children. And there’s a lot of folks with big amounts of care privilege on the Hill, as well. I think that they really struggle to understand the realities of the people who provide care in this society and in this world. When you are somebody who has lots of care privilege, and you don’t have to think about the hit you might have to take to your income for having children, or the hit you might have to take to your sleep, or your ability to have some leisure time … when you have lots of care privilege, you don’t think about those things and you don’t understand them. And so when you speak about things that are related to caregiving, like raising the next generation and having children, oftentimes what you’re saying misses the boat, because it’s very off-kilter from the realities of people who are actually providing care in society. M.P.: Some of the things that you talk about as the things women need, or caregivers and mothers and women in general need, are things like universal childcare and paid family leave, and these are all things that I think people have been talking about for a long time. What gives you hope that these things will finally come to fruition?M.H.: I’ll be really contrarian in saying this, but what gives me hope is that we live in a society that actually voted in Donald Trump for a second term in office. Because again, as I mentioned earlier, what that means to me is that something is happening with women in society today and around issues of equity and equality that is poking at the bear, enough that people who have traditionally had certain power structures behind them are now to the point where they’re uncomfortable enough that they’re trying to push back. Claudia Golden [Nobel Prize–winning economist at Harvard University] put out this paper the day that she won the Nobel Prize; she published a working paper called “Why Women Won.” It was 2023, and it really didn’t feel like women had won. We’re having setbacks in reproductive rights, all this stuff, and now with all of the attacks on DEI and all these things, it doesn’t often today feel like women are winning. It feels like we’re moving backwards. But a lot of times, in order to move even further forwards, you need to take a tiny step back. And so I’m actually really hopeful. This interview was lightly edited for clarity.

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