The downward slide of the US dollar could presage the collapse of other countries

By RN Bhaskar and Sakeena Bari Sayyed

The US dollar is under siege. Linked to it are the fortunes of the US, Israel and Ukraine. Even the entire world.

The global financial markets began manning crisis-stations on 15 October 2025. That was when some key countries including Saudi Arabia, India and Russia agreed to conduct oil trades in the Chinese currency, RMB. While Russia may have had a private deal with China for their oil trade for the past two years, the markets were shocked when Saudi Arabia also followed suit. Suddenly, the RMB became stronger.

Saudi Arabia is the largest player in the oil market. It was a key player along with the US in creating the petrodollar in 1974. While the petrodollar deal expired in 2024, the formal agreement to denote oil purchases in RMB was a clear definitive step away from the US dollar. Equally shocking was India’s move.

Because relations between China and India have not been particularly warm – they have been thawing lately – nobody expected India to agree to pay for Russian oil in RMB. Though it will continue paying for this oil in Rubles as well (https://www.taxtmi.com/news?id=58968).

Overnight, the demand for the RMB soared. Almost immediately, the demand for the US Dollar crashed. Expect more minor shocks in the coming months. What is strange is that India still continues to cling to US dollars in its reserve currency chest.

US debt

The switch over from the US dollar to the RMB would not have been cataclysmic had it not been for another factor – US debt.

It has already climbed to almost 38 trillion and continues to climb (see the main image above). This is almost one third of the entire global debt. Worse, its deficit keeps mounting. Current estimates show that the additional $3 trillion fiscal deficit will get added to the national debt pushing it above the $40 trillion mark.

The only way the fiscal deficit can be brought down is by exporting more. And its most profitable exports are oil and gas, and military hardware.  The latter encourages the US to start more wars.

The desire to sell oil and gas explains Trump’s desperate need to push India to purchase its oil. But India gets its oil cheaper from Russia. Should it protect America’s interest or its own? His other plan of persuading the EU to purchase US gas has also not worked.

It also explains his desperate need to raise funds through tariffs. But that strategy is boomeranging. Similarly, the ban on immigrants is now beginning to hurt America (https://asiaconverge.com/2025/03/trump-tariffs-trouble/) .  The little manufacturing that remains in the US has begun facing higher costs. Thanks to the immigration ban and tariffs (many components and intermediates come from China and India).

The US deficit is likely to continue growing.

Compounding all this is that almost $9.2 trillion is due for refinancing this year itself (https://marketadvisorygroup.com/finances/9-2-trillion-in-u-s-treasury-debt-set-to-mature-this-year-what-retirees-need-to-know/). In the past, such refinancing, or rollovers, would have been automatic. No questions asked. The dollar was after-all the lynchpin on which global finances moved. Not anymore. The dollar is taking a pummelling, and the US is getting a taste of what it means to wage wars, kill people, and even abet genocide. US weaponry has been outmatched by technologies from Russia, China and even Iran.

So, what does the US do if it cannot pay back the $9.2 trillion in time? Most fund managers are reluctant to add dollars to the debt burden. Expect them to demand significantly higher coupon rates. Or the US could print nore notes and add to its debt burden.  Either way, these moves will trigger inflation to levels that will singe businesses and commerce dependent on the US dollar. It is reminiscent of what happened in Germany prior to 1939.

The only alternative is to renege on debt — the way some third-world countries have done. If that happens, all US debt instruments including its treasury bills may crash. It would not be unsimilar to what happened to the Deutschmark just before the World War II.

Expectedly, the financial fragility has begun telling on corporate loans.  The first default has taken place. Around $1.7 trillion is likely to be involved. Jamie Dimon, head of JP Morgan, has aptly described it as a ‘cockroach’.  Wherever even one cockroach is discovered, you can be sure that there will be many more.  The scenario of cascading corporate defaults could be just unfolding.

There is a possible third scenario. Caveat: this could be considered as being speculative.  Since the US has unleashed two wars (if not more – we are not counting China, Iran and Venezuela as yet), it could possibly choose to freeze debt repayment under its war emergency provisions. Trump could become a war time president allowing him to remain in office for yet another term. Sounds far-fetched, true. But these are not normal times. Moreover, Trump is no normal person.

What the wars did?

There was a time when the US could have pulled itself up and prevented a slide to the brink of disaster. But then greed and power sucked it into provoking a war in Ukraine. Call it the US hubris.

Some reports suggest that the US had begun eyeing land assets rich in minerals and agriculture in Ukraine. There are hints that the sons of many US Congressman were involved in purchasing large swathes of lands. They possibly hoped that they would get hold of not only Ukraine lands but chunks of Russian territory once it was defeated in its fight against Ukraine/NATO.

The fight began poorly for Russia; but it quickly reorganized itself and soon reversed the fortunes of war (https://asiaconverge.com/2022/05/the-roubles-getting-stronger/). Far from being broken, Russia began acquiring territory in east Ukraine. Its ruble too became stronger as did its economy. Unfortunately, the territories Russia occupied are the same that the West had eyed earlier.  The first US-Ukraine discussions involved the transfer of mineral deposits to the US, till it was discovered that these lands were now occupied by Russia.

The West is now spooked by the reversal in war fortunes and the relentless decimation of Ukraine troops. The number of deaths has been so large, that it has resulted in large-scale desertions from the army (https://www.eurasiantimes.com/ukraines-alarming-desertion-crisis-576-soldiers/).

Ukraine has already lost 5 oblasts, which Russia refuses to return (Watch timeline 6:10 to 6:30 at https://www.youtube.com/watch?v=LLvMJIqLPSM). Many of the land ownership titles are believed to have been mortgaged with BlackRock, which has become the largest holder of territory in Ukraine. This also explains the West’s desire to continue waging war against Russia.

BlackRock panics

By mid-2025 BlackRock had huge investments in Ukraine, though fact checkers claim that stories about its owning farmland in Ukraine are not true.

BlackRock sought to create a Ukraine fund of $15 billion. By August 2025, BlackRock was compelled to cancel the fund (https://www.youtube.com/watch?v=3kdN70qHllI). It was time to write off these investments as an investment gamble that has gone sour. There are indications that this fund could have swelled to $100 billion (https://successfulsocieties.princeton.edu/sites/g/files/toruqf5601/files/BlackRock.pdf).

When investment bankers scuttle deals, you know there is little hope for salvaging anything.

The other war

The next crisis began on October 7, 2023. Hamas is said to have attacked Isreal, killed many and indulged in rape (https://www.bbc.com/news/world-middle-east-67629181). But responsible commentators on social media have suggested that only a full-fledged investigation into October 7 could reveal a different picture. They say that it is inconceivable that Israeli intelligence did not know about the impending Hamas attack. There are others who point to the Hannibal doctrine (https://www.aljazeera.com/news/2024/7/9/why-did-israel-deploy-hannibal-directive-allowing-killing-of-own-citizens) in Israel which authorises the army to kill its own civilians rather than let them be taken hostage. Moreover, there is enough documentation of the ways in which rape cases get fabricated to engineer a sense of disgust and distaste, strong enough to justify retribution against Gaza.  Finally, analysts like John Mearsheimer refuse to call this a terrorist attack.  They say that Israel had already made Gaza an open-air prison, and the retaliation was akin to a jail break.  Obviously, the last word on the October 7 massacre has yet to be said.

It is worth noting that unlike Israel and the US which have not winced when civilians and children were massacred, Russia and Iran have been careful not to attack civilian targets as far as possible.

Whatever the truth, there is now enough documentation both on social media and before the international criminal courts (ICC) to show that Israel is guilty of genocide, ethnic cleansing and the mass slaughter of children. Similarly, the stoppage of food and medicines, denial of entry to humanitarian aid, and the forcible arrest in international waters of the crew of Flotillas seeking to provide food and medicines to the starving Gazans made many people retch.

America’s refusal to restrain Israel by casting its veto against any resolution condemning Israeli actions at the United Nations, has made the US complicit in these war crimes. Its determination to continue supplying Israel with arms and weapons of mass destruction has made its role even more horrifying. Eventually, this too affects the US dollar.

The US has gone to the extent of arresting students protesting against the massacres in Gaza, even dismissing presidents of universities which had allowed the students to protest. America has suddenly become a land which does not like free speech or immigrants. According to some observers, the Israel lobby has now begun panicking to the point that it has begun purchasing even media organisations critical of Israel’s actions (see timeline 2:27 to 2:50 at https://www.youtube.com/watch?v=La7dSCZCGmo).

Financial cost

Crippling America further is the financial cost involved in promoting, supporting and abetting these wars in Israel and Ukraine. If America is bleeding because of these war expenses (see charts below), the damage to Ukraine and Israel is even more severe.

Israel Bleeds

Israel is near bankruptcy. No more US economic aid is possible because many businesses are dead. According to John Mearsheimer(during his talk in Australia on 17 May 2024(at timeline 1:27:34 at https://www.youtube.com/watch?v=kAfIYtpcBxo) over 500,000 Israelis had already left Israel.  Today, the number is estimated at 1.5 million.  Many more Jews are believed to be keen on leaving in disgust once the Israeli government reopens its borders. Many of them are key workers and entrepreneurs. Many businesses are closing down because its employees have been called to war duty as reservists. Israel is no longer an economically viable state without US support. Today, Israel is totally dependent on the US.  Its former ability to stand on its own has been decimated (Watch timeline 6:10 to 7:20 at https://www.youtube.com/watch?v=La7dSCZCGmo).

But what makes Israel the biggest loser in the world is its loss of goodwill and the high moral ground it used to occupy. The public relations strategies that created this profile are in tatters. It is no longer viewed as a victim or a survivor in this world. It is now a mass murderer, an assassin.  It is the Gazans who are increasingly being perceived as being victims and survivors.

Israel has failed to defeat Hamas or to disarm it. Yet, it is unwilling to stop the war – the treaty may just not work  (Watch 7:33 to 8:00 at https://www.youtube.com/watch?v=l2QOyxuqXcQ). That means more pain for Israel, and more sympathy for Hamas. That also means more bleeding for the US which “is joined at the hip” to Israel.

Hamas already occupies the high moral ground now. So do the Houthis of Yemen (it is the only country that fought for the rights of a victimized Gazan population). Ditto with South Africa which compiled the document which was submitted to the ICC, which later declared Netanyahu and his defence minister as war criminals. The missiles from Iran and the Houthis have already destroyed much of Israel’s infrastructure and it is a shadow of what it used to be.

Even Ukraine has been mauled. It has lost almost 1.5 million soldiers. A similar number of Ukrainians have fled to become refugees to other countries. Even if it gets US arms, it does not have the manpower to challenge Russia. Its cities are being bombed, its critical infrastructure pounded, and it has lost almost a third of its territory. If it does not sue for peace immediately, it could lose more territory and people. It will get reduced to ‘a rump state’ (a phrase used by John MearShimer, global geopolitical expert). It will be left with little enterprise and a huge war restoration bill.

Conclusion

The US penchant for wars has left it broke. Its allies have suffered the worst casualties. The UK, Germany, and France are today the sick men of Europe. Ukraine is in shambles.

The only countries talking of peace in a meaningful way are Russia, Iran and China. The US is no longer the defender of justice or the protector of human lives and values.

The debt clock ticks on. The US dollar strains to get off the ground. Earlier, it could have had many supporters to prop it up and nurse it back to health. But the US has lost friends as well. The eventual casualty will be human values and a vanquished dollar.

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Do view my latest podcast on the need for India to look beyond GDP.  Other indicators are flashing red. You can find it at https://youtu.be/BZlfqSmqqKE

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And do watch our weekly “News Behind the News” podcasts, streamed ‘live’ every Saturday morning, at 8:15 am IST. The latest can be found at https://www.youtube.com/live/0SqypPohBgc?si=vPWqXpFlHVadlBtA

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