The fall of the dollar is a symptom of how close the US is to bankruptcy due to its excessive debt.
In January 2026, the dollar index (DXY) fell to levels near 97-98 points, reflecting a notable depreciation in recent months. This weakness is not an isolated phenomenon nor is it solely due to normal economic cycles: it constitutes a warning sign about the financial sustainability of the United States, burdened by a public debt exceeding $38.4 trillion.
The US national debt has grown explosively. In just over a year, it has increased by more than $2 trillion, with average daily increases of around $8 billion. The debt-to-GDP ratio is already hovering around 124-130%, levels that far exceed those considered healthy (historically below 100%). Organizations such as the Committee for a Responsible Federal Budget warn that, without drastic changes, the debt will continue to grow faster than the economy, approaching a critical point where interest payments consume an unsustainable portion of the federal budget.
This excessive debt is generating global distrust. For decades, the dollar has enjoyed the status of the world's reserve currency thanks to the perception of American solvency and the absence of credible alternatives. However, the accumulation of chronic deficits—fueled by defense spending, social programs, and successive bailouts—is eroding that confidence. Foreign investors, who still hold around 30% of Treasuries, have gradually reduced their exposure as they seek to diversify into gold, euros, or yuan.
The process of de-dollarization is gaining ground. Countries in the BRICS bloc (Brazil, Russia, India, China, South Africa, and new members) have accelerated trade agreements in local currencies, reaching, in some cases, 90% of their bilateral trade without the dollar (especially Russia-China). Initiatives such as BRICS Pay, alternative payment systems to SWIFT, CBDC interoperability, and even settlement units partially backed by gold mark a structural shift. Although the dollar still represents about 59-60% of global reserves, its share is declining year after year, accelerated by geopolitical tensions and sanctions that have spurred the search for alternatives.
The dollar's fall acts as a thermometer: each point the DXY loses reflects lower demand for dollar-denominated assets and greater fear that Washington will resort to inflation or monetization to meet its obligations. If markets perceive that technical bankruptcy (or a selective default through massive devaluation) is imminent, the dollar's exit could become abrupt, triggering soaring interest rates, collapsing the value of Treasury bonds, and causing a global financial crisis.
The United States still retains advantages: its economy is the largest and most liquid, and there is no immediate replacement for the dollar. But the margin for error is shrinking. The combination of record debt and loss of monetary hegemony does not foreshadow an imminent collapse, but rather a progressive deterioration that, without profound fiscal reforms, could culminate in a traumatic correction. The current depreciation of the dollar is not just a currency adjustment: it is the market whispering that the empire of US debt is reaching its limits.
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