“Not Falling” Why Treasury’s Dollar Spin Signals Structural Fragility, Not Strength
— What Happened:
U.S. Treasury Secretary Scott Bessent just downplayed the recent drop in the U.S. dollar by claiming that “other countries’ currencies are rising” and that the dollar itself is “not falling.” On the surface, it sounds like diplomatic semantics. Underneath, it reveals much deeper stress.
— What He’s Really Doing:
This is not analysis. It’s narrative control. Bessent is trying to anchor sentiment. By reframing the dollar’s weakness as strength elsewhere, he avoids triggering broader market concerns about U.S. fiscal sustainability, inflation credibility, and the erosion of trust in dollar-based assets.
Why? Because the Treasury knows this isn’t just normal currency volatility. It’s a coordinated move out of dollar centric systems:
•Global central banks are increasing their non-dollar reserves.
•CIPS (China’s cross-border payment system) just surpassed SWIFT in volume.
•U.S. Treasury auctions are weakening, with soft foreign demand and rising term premia.
•Safe havens like the Swiss Franc, Yen, and gold are outperforming in dollar terms.
— Reverse the Narrative:
If the U.S. dollar truly isn’t falling, then why are safe-haven assets surging? Why are real yields spiking alongside rising inflation expectations? Why are BRICS nations ramping up FX agreements to avoid USD settlement? The market is signaling a structural re-pricing of dollar credibility. This is not “external strength” it’s internal slippage being masked by messaging.
— Historical Echo:
This tactic has precedent. In 1978, during a major dollar crisis, U.S. officials made similar comments before launching a full-scale rescue plan involving Bundesbank support and IMF gold swaps. Back then, too, the rhetoric was that the dollar wasn’t the problem until markets forced a reckoning.
— Why This Matters:
This isn’t just about FX levels. The dollar is the keystone of global collateral, energy pricing, and trade finance. If confidence cracks quietly or quickly the entire cost of capital reprices globally. And officials know that. Hence the semantic defense: “It’s not falling.”
— Key Takeaway for Followers:
When policymakers start explaining away price signals with spin, they’re not trying to reassure you they’re trying to buy time. The market sees something deeper, and so should we. This isn’t just about a weak dollar. It’s about a strong signal that the global monetary center of gravity is shifting and Washington is struggling to hold the narrative line.
