Trump Moves to End US Dollar Fiat System

From Gold Standard to Fiat: Trump and the End of the Dollar

In 1971, Richard Nixon closed the gold window, ending the gold-backed dollar standard. Now, in 2025, Donald Trump and his elite allies appear determined to dismantle the fiat dollar system, which has allowed the United States to export inflation globally for decades. A widely debated analysis suggests the US faces a critical choice: switch monetary regimes or face collapse through hyperinflation.

The Triffin Dilemma and Monetary Privilege

The core issue is the Triffin dilemma, highlighting the conflict between US national interests and its role as issuer of the world's reserve currency. Without tangible backing—such as redeeming dollars for gold or silver—the global economy relies on trust in the issuer. However, when the US issues debt to cover twin deficits (fiscal and trade), money supply outpaces domestic production, risking an inflationary collapse.

According to this view, global free trade is key. The US exports inflation to the rest of the world, which absorbs it, effectively subsidizing American living standards. Yet, abuse of this privilege—seen in the 2008 and 2020 bailouts—has pushed the system to its limit. Trump and his supporters have reportedly decided to halt the current fiat regime and return to tariff-based protectionism. Without free trade, inflation cannot be exported; without exporting inflation, new bailouts would trigger domestic price spikes.

Fiscal Adjustment and Lethal Contradiction

To compensate, the Trump administration seeks historic fiscal austerity, drastically cutting public spending via Elon Musk’s DOGE initiative. Simultaneously, however, it lowers taxes and demands low interest rates from the Federal Reserve. This creates a lethal contradiction: stopping debt monetization while maintaining an unsustainable lifestyle. Without tangible backing, trust in the US and the dollar evaporates. Under fiat, appearances matter, but future compliance remains uncertain.

Return to Gold or Leap to Bitcoin?

What replaces the current system? Returning to the gold-backed dollar, reminiscent of the golden age of US labor, seems unlikely. The analysis dismisses this option, arguing the US must close its twin deficits through severe adjustment, similar to post-WWII demobilization. Extreme fiscal discipline is required, yet crises will tempt leaders to abuse monetary privileges again.

Could Bitcoin serve as the standard? Some elites supporting Trump may favor this path, recognizing that fiat leads to inflationary collapse due to excessive bailouts. They aim to break this dangerous addiction but remain undecided on the replacement. Creditors need tangible proof of fiscal discipline, not just promises. A Bitcoin standard offers stricter discipline than gold. Its advantage over gold lies in real-time auditability, appealing to politicians wary of being caught manipulating the money supply.

Global Partition and Mixed Standards

Trump might offer China and Russia a division of global influence under a mixed standard—combining fiat, gold, and Bitcoin—to satisfy all parties. Such hybrid systems often fail, potentially extending US leadership by only a couple of decades. This mirrors 1971, when Nixon temporarily abandoned the gold standard without a clear successor. Initially near collapse, stability was restored only after imposing the petrodollar agreement with Saudi Arabia.

We face uncertainty until a new standard emerges. Trump, with his blunt style, has decided like Nixon to disrupt the established order. The US acknowledges de facto bankruptcy, much as in 1971. Whether Trump can navigate this crisis remains unknown.

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Debate: Collapse Versus Infinite Confidence

Opinions are divided. Some argue Bitcoin cannot serve as a reference standard because the US must control abundant assets, refusing to cede power to small investors. Others counter that elites already hold vast Bitcoin reserves, created via intelligence agencies during its early cyberpunk phase. While adoption isn't guaranteed, ownership is certain.

Skeptics note that the real economy of resources differs from the financial economy of speculation. The 'vampire dance' ends soon. Conversely, critics argue no substitute exists because Bitcoin, like gold, is inherently deflationary, disrupting the debt-driven capitalist reinvestment cycle. Without reinvestment, the system breaks. The US cannot simultaneously export inflation and maintain robust industry. Trump’s goal presents a dead end: choose either manufacturing capacity or money printing, not both.

Others defend the dollar’s status quo, citing confidence as the sole requirement. Amid uncertainty, global actors still flee to the dollar. Maintaining relative trust allows continued printing and borrowing indefinitely. As long as the dollar appears slightly more reliable than alternatives, limits do not exist. In a globalized world, everyone shares the same risks.

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Global Impact and Alternatives

The analysis examines consequences for the rest of the world. The European Union may eventually confront the US to survive, with trade wars serving as preludes to armed conflicts. Critics suggest China and Russia lack incentives to negotiate if the US abandons gold amid military retreat and ally alienation. Soviet-era threats now seem trivial.

Alternatives include Central Bank Digital Currencies (CBDCs) and XRP, which meets ISO20022 standards and enables fast, low-cost large transactions used internally by some banks. As Ripple Inc. is US-based, Washington could exert de facto network control. Other proposals involve commodity basket standards, akin to BRICS banking models, or elevating the euro as the new global reserve currency.

Ultimately, the debate reflects deep uncertainty about the international monetary system’s future. Like 1971, nobody knows what will replace the current standard, only that change is inevitable.