Scott Galloway sends major message on U.S. dollar, economy | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

The U.S. dollar has experienced a notable decrease in value since January, raising concerns for economists, investors and everyday Americans.

As the currency weakens, imported goods cost more, fueling higher prices on essentials. For households already dealing with financial stress, this creates added pressure on budgets and living costs.

Popular podcaster and New York University professor Scott Galloway argues that the U.S. dollar’s decline — down more than 10% against major currencies and recently touching a three-year low — signals deeper concerns among investors.

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This isn’t just routine market noise, Galloway explained in his Prof G Markets newsletter on June 23. He says it reflects how policy moves such as tariffs, aggressive tax cuts, and mounting political interference with the Federal Reserve are shaking faith in the dollar’s status as the global reserve currency.

He points out an unusual divergence in financial indicators: Treasury yields are rising while the dollar drops.

Typically, higher yields attract global capital and lift the dollar, but that relationship has broken down. Galloway clarifies his view that fears over inflation and protectionist trade policies are driving yields up while simultaneously prompting investors to shift their money abroad.

Galloway cites Bank of America findings that global fund managers now hold fewer dollars than at any time in 20 years, favoring safer assets such as the Swiss franc, yen, and gold — now the second-largest reserve asset after surpassing the euro.

A central bank survey shows 95% of respondents expect gold reserves to grow, and nearly 75% foresee shrinking U.S. dollar holdings in the next five years. Galloway views this as an immediate, not distant, concern.

The implications stretch beyond Wall Street. Galloway warns that the consequences of an eroding global demand for the dollar would be significant.

The falling value of the U.S. dollar is depicted in a photo illustration. New York University professor and popular podcaster Scott Galloway explains the implications of the declining value of the U.S. dollar on the economy.

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Scott Galloway warns Americans on economy, weakening dollar

In the newsletter, Galloway describes potential economic outcomes that could result from the declining value of the U.S. dollar.

“Foreign investors hold about 30% of U.S. debt. When the dollar weakens, these investors lose more when converting their Treasury holdings back to their own currency. If the dollar keeps falling, these investors could sell their Treasurys to avoid further losses,” Galloway wrote.

“This would force the U.S. to raise interest rates — making borrowing more expensive for households, businesses, and the government,” he continued. “And if more of the budget goes to debt service, less is left for public investment or tax relief. One estimate suggests the dollar’s reserve status allows the U.S. to carry 22% more debt than it otherwise could.”

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This would eventually lead to lower returns for investors, Galloway wrote. Citing JPMorgan as the source, he added this:

“De-dollarization (a reduction in the use of dollars) would likely mean U.S. assets underperform global peers, raising the cost of capital and reducing long-term equity returns.”

Scott Galloway shares thoughts on U.S. dollar as world’s reserve currency

Galloway emphasizes the fact that the U.S. dollar has served as the dominant global reserve currency since World War II.

As a result, nations around the world have accumulated large stores of dollars, both in physical form and through investments in U.S. Treasurys.

Galloway explains the dollar’s continued reserve status hinges on four pillars: liquidity, perceived safety, institutional trust, and the economic strength of the U.S.

At its height, the dollar made up roughly 73% of global currency reserves, though that figure has slipped to about 58%.

While global dollar demand brings major benefits — such as lower borrowing costs, crisis resilience, and geopolitical clout — it also comes at a price, Galloway says.

“Strong demand for Treasury bonds drives up the value of the U.S. dollar, which makes U.S. exports more expensive abroad,” he explained. “A stronger dollar makes it harder for U.S. industry to compete with cheap products from countries like China.”

Galloway adds one more caution.

“Easy access to cheap borrowing can encourage overspending by the U.S. government,” he wrote.