De-Fiatization Not Dedollarization Trend

Gold Is Rising Because Fiat Is Failing—Not Just the Dollar

Bill Brocius Jan 28, 26

The Narrative Is Misleading—This Isn’t Dedollarization, It’s De-Fiatization

For years, the media and financial institutions have echoed warnings about “dedollarization”—suggesting that countries are dumping the U.S. dollar in favor of alternative fiat currencies like the yuan or the euro. But according to Daniel Lacalle, economist and Mises Institute contributor, this interpretation is dangerously shallow. The real trend underway is not a pivot away from the dollar toward another fiat, but a broader abandonment of fiat currencies altogether. This De-Fiatization Not Dedollarization Trend signals a deeper global shift away from paper money itself, not just away from the dollar.

The implications are enormous: this is not a reshuffling of reserve currency chairs. This is a rejection of fiat itself—a quiet but forceful vote of no confidence in sovereign debt, central bank credibility, and the long-term stability of paper money.

Why Gold Is Soaring—and What Central Banks Aren’t Saying

Central banks are buying gold at a record pace, accumulating roughly 80 metric tons per month since 2021. This isn't about chasing price speculation. It’s a strategic shift in reserves from paper assets to real, no-counterparty stores of value. The move comes amid:

Peacetime record debt levels in the U.S., EU, UK, and Japan.
Fiscal irresponsibility and unrestrained spending.
Persistent inflation and declining real yields.
Growing geopolitical risk, including sanctions weaponization.

Even more telling is how much of this gold buying is happening in stealth. Large, unreported flows through hubs like Switzerland reveal a shadow migration into hard assets—signaling institutional fear of fiat fragility.

Fiat Limits: Why the Game Is Over for Monetary Sovereignty

Lacalle dismantles the flawed assumptions of Modern Monetary Theory (MMT)—the idea that governments can print endlessly without consequence. In reality, monetary sovereignty is bounded by three hard limits:

Economic Limit – When debt burdens suppress productivity and growth.
Fiscal Limit – When rising interest costs overwhelm tax revenues and budget balance.
Inflationary Limit – When fiat currencies lose real purchasing power and destroy living standards.

All three limits are being crossed right now by developed nations. Central banks are no longer able to hide behind rate cuts and balance sheet tricks. The illusion of solvency has cracked.

Why No Other Fiat Currency Can Replace the Dollar

Despite its flaws, the U.S. dollar remains the strongest weak currency. It maintains:

59.6% of global FX reserves (IMF data).
Nearly 90% of FX market turnover (BIS data).
Roughly half of SWIFT transactions.

There is no scalable alternative in the fiat world. The euro is too politically fragmented. The yuan is capital-controlled and state-rigged. The yen and pound are in long-term decline.

So while central banks are fleeing fiat, they’re not moving to another currency—they’re moving into gold.

Why This Matters for You: The Weaponization of Fiat

The freezing of Russian reserves in 2022 shattered the illusion of fiat neutrality. Any government holding U.S. or G7-denominated debt now faces potential political confiscation. Central banks aren’t just worried about inflation—they’re worried about sovereign exposure to Western legal systems.

This development is directly tied to the rise of CBDCs (central bank digital currencies) and platforms like FedNow, which enable granular transaction surveillance and programmable spending controls.

Gold doesn’t come with a kill switch. Fiat does.

What the Data Really Shows: Gold Is Winning, Fiat Is Dying

The claim that dedollarization is real falls apart under scrutiny:

No major fiat currency is gaining share in reserves.
U.S. dollar dominance in trade, payments, and FX remains largely intact.
Gold and select real assets are the only clear beneficiaries of the shift.

This isn’t a new fiat order. It’s a quiet revolution back to sound money.

The Implications for Financial Freedom Are Urgent

If global reserve managers no longer trust government-issued paper, what does that mean for average citizens? For savers? For retirees holding pensions denominated in devaluing currencies?

It means the financial reset is already underway.

We are entering an era where programmable money will be sold as “convenient” but used to enforce fiscal repression. FedNow and CBDCs will replace your bank account with a surveillance ledger. And when the next crisis hits, they’ll call it innovation while they digitally fence your assets.