Please see below, an article from EPIC Investment Partners which discusses the fall in the value of the US Dollar over the past year. Received today – 30/01/2026
Eight billion dollars a day is the cost of US borrowing. That was the pace at which federal debt was rising when it passed the $38.5tn milestone earlier this month. Interest payments have already overtaken defence spending and are on track to exceed $1tn this year, absorbing an ever-larger share of fiscal capacity. At this rate, the durability of the dollar depends less on the size of the American economy than on the credibility of the institutions that manage its liabilities.
When governments borrow at this scale, reserve-currency status becomes a matter of trust rather than output. Investors must believe that monetary policy remains insulated from political pressure and that central banks act independently when fiscal strains intensify. Once that assumption weakens, risk premia rise incrementally rather than dramatically, through quiet reallocations rather than sudden flight.
History offers clear precedents. Spain’s silver-backed real faltered not because silver disappeared, but because repeated defaults revealed a state willing to treat money as an extension of war finance. The Dutch guilder followed a subtler path. In the late eighteenth century, the Bank of Amsterdam relaxed its rigid metallic discipline to support favoured borrowers, including the Dutch East India Company and struggling municipalities. When that became apparent, confidence in bank money evaporated and did not recover.
The United States now faces a comparable test on a far larger scale. The pressure is not inflation in the narrow sense, but institutional. The issuing of grand jury subpoenas to Federal Reserve chair Jerome Powell, after months of political attacks linked to the cost of servicing federal debt, marked a break with conventions markets had long treated as settled. The legal merits matter less than the precedent. If the independence of the central bank can be challenged in this way, monetary policy no longer appears neutral. It begins to look constrained by the state’s borrowing requirements.
That backdrop lends financial relevance to a dispute far from Washington. Greenland’s strategic value has long been managed through alliance structures that separated military access from political ownership. By reframing the issue as one of control, and by briefly threatening tariffs against European partners, Washington turned a peripheral security question into a broader test of restraint. Investors were less concerned with the Arctic itself than with the willingness to deploy economic pressure in ways that cut across long-standing norms.
Markets responded predictably. The dollar has fallen roughly 10 per cent over the past year and slid to a four-year low this week. More telling has been the behaviour of long-term institutions. Denmark’s AkademikerPension has reduced its holdings of US Treasuries, citing concerns over public finances and the independence of the Federal Reserve.
In numerical terms, the move is modest. As a signal, it is not. When investors that have long treated US government debt as the world’s risk-free benchmark begin to price in political risk, the foundations of reserve status begin to shift. The dollar continues to function, but it loses something more subtle: its presumption of neutrality.
None of this points to an imminent end to dollar dominance. Liquidity, scale and legal infrastructure still matter, and no alternative offers a comparable combination of depth and reach. But reserve currencies rarely fail abruptly. They erode through higher term premia, gradual diversification and declining assumptions of institutional restraint.
The Arctic dispute, then, is not about ice or islands. It is a stress test of credibility at a moment when the fiscal arithmetic has become unforgiving. History suggests that once trust is traded for convenience, even briefly, it is difficult to reclaim. Confidence rarely collapses in public. It erodes quietly, over time.
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Alex Kitteringham
30th January 2026