This Isn’t De-Dollarization. It’s De-Fiatization

The dollar is in free fall as gold and silver continue climbing to new records. As the global economy loses confidence in its main reserve asset, it’s simultaneously losing confidence in fiat currencies and the central banks that manage them.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

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.

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.