Bubble Dollar Danger

The trick for investors and savers is to avoid the rush. The doors welcoming you into the bubble country may be wide. But the door out the back squeezes tight as soon as you try to get out.

A 100 million Hungarian Pengo note from 1946. The final months of Hungary’s hyperinflation from May to July were so chaotic that the Hungarian National Bank no longer bothered putting serial numbers on new notes.

Friday, January 23rd, 2026

Bill Bonner, from Rancho Santana, Nicaragua

All that sturm and drang...the roar of the greasepaint...the smell of the crowd — for nothing!

No military takeover of Greenland. No extra tariffs on Europe. Greenland stays where it was, as it was...where, thanks to a 1951 treaty, the US can build bases as necessary. The US gets nothing new out of it. Bloomberg:

Rutte says Trump Greenland plan involved no sovereignty talk

But that was the point, wasn’t it? Sturm and drang for its own sake — to show the US as a bellicose, unreliable partner and drive away allies.

America is ‘fastened to a dying animal’...or maybe to a whole herd of them. A president who will be 82 years old when he leaves office (and may be a little off his rocker already)...a constitution that is 239 years old...and a bubble dollar that is 55 years old; that’s already twice as long as the typical ‘fiat’ money system. The ‘paper’ German mark, for example, only lasted two years. The Hungarian Pengo lasted only one year. And the Zimbabwe dollar held on for three years, with an inflation rate of 230 million percent.

Each time, savers — especially foreigners — begin to worry about their money as a ‘store of value.’ They dump the currency, prices soar, and the money becomes useless. Dead. Mort. Tot. With its toes up.

The trick for investors and savers is to avoid the rush. The doors welcoming you into the bubble country may be wide. But the door out the back squeezes tight as soon as you try to get out.

And it looks like the smart money is already headed for the exits. Reuters reports on the ‘Sell America’ trade:

Just hours before President Donald Trump was set to speak in Davos, Switzerland, one of Sweden’s top pension funds, Alecta, cut its investments in U.S. Treasuries.

“Since the beginning of 2025, we have reduced our holdings in U.S. government bonds in several rounds, and together the reductions account for the majority of our holdings,” Alecta’s Chief Investment Officer Pablo Bernengo told Reuters.

For the international stock market, too, last year saw a reversal of the trend of the last 22 years. Year after year, US stocks outperformed.

But not last year. US stocks rose 17%. But European stocks went up twice as much — at 36%. Emerging market stocks did almost as well, at 34%. And that trend continues. So far this year, America’s bubbly Mag 7 are down 4.6%. Emerging market stocks, meanwhile, are up 4.6%.

Back in America, the all-time champion for buying solid US companies is Warren Buffett. A single dollar invested in Berkshire in 1964 is now worth more than $60,000. “Never sell America,” he said. But over the last year, he’s had trouble finding US stocks he wanted to own. The ‘values’ just aren’t there, he explained.

In effect, he ‘sold’ America’s premier capital industries...and his investment firm, Berkshire, was left with the biggest cash hoard ever seen — at $382 billion.

Another feature of the Sell America trade is that the most bubbly assets, like a glass of champagne left on the table overnight, are now going flat. Nvidia lost 17% of its value last year. MicroStrategy lost 71%. Fartcoin lost a lot of gas too — down 89%. The only things to lose more than Fartcoin were the Trump Coin and the Melania Coin, down 94% and 99% respectively.

Probably the most telling form of the Sell America trade, though, comes from China. It began ‘de-dollarizing’ back in 2013. Now, it has about half the dollar assets it used to have. Barron’s:

Others have followed suit. The share of U.S. Treasury debt held by non-U.S. investors has fallen from around 50% during the global financial crisis of 2008-09 to around 30% today, according to J.P. Morgan.

That’s a massive shift, particularly when you consider that overall U.S. Treasury issuance has increased by more than $20 trillion since China began its de-dollarization strategy.

That is the trap that Mr. Saravelos sees coming. And we, way ahead of our time, wrote about it in our now-forgotten ‘Empire of Debt,’ book. The unique thing about the rich US empire, we wrote, was that it was financed by borrowing money from poorer countries.

And now, the US needs to borrow even more — to pay for a huge increase in the ‘war’ budget, warrior dividends, tariff dividends, ICE...not to mention sending a whole team of jackasses over to Davos, where they seem to have made a big fuss over nothing.

But while the US needs to borrow more, the world seems to want to lend less.

Serious people all over the world are working out their own de-dollarization’ strategies.

More to come...

Regards,

Bill Bonner

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