The fall of empire starts with currency
Growing fears around US debt, currency debasement and a potential bond market crisis are raising uncomfortable questions about the long-term stability of the US dollar.
Ever heard of the fall of an empire? Most of them come down to the currency. If you, as a government or a Caesar, abuse your currency, eventually your empire will fall.
The obvious example is Roman soldiers being paid in gold denarii stamped with Caesar’s guarantee that they were worth a certain amount. Over time, Roman rulers started cutting corners – mixing the gold with other metals, diluting the coins. It was effectively the same as printing money. Every time you print money, you take value away from the people holding that currency and hand it back to the government.
Abuse your currency and you abuse your citizens. Eventually the Roman soldiers stop turning up for work and the empire collapses.
The modern version of debasement
The fear today is that the US risks abusing its currency. Since the GFC in 2008 and then again after COVID, the US has printed an enormous amount of dollars. The result has been a significant dilution of the US dollar.
At the same time, asset prices have been inflated, rewarding Wall Street. You can see the rich getting richer while the equivalent of the Roman soldiers get a raw deal through currency debasement.
Recently, the US dollar fell 4% in eight days. After that move, Trump said he was not really concerned about the weakness in the currency – a comment worthy of Caesar himself. They are running risks with the currency.
Generational wealth and the ‘big one’
This may not matter to you. It may not happen for a decade. It may never happen. We will likely get signs on the way.
I was speaking to a family office recently – a group responsible for protecting and growing wealth built over 100 years in Australia. They kept talking about generational wealth. Their concern is not about the next quarter or even the next year. It is about preserving a dynasty.
Their fear is that successive American governments have spent too much, printed too much and lived too well. They worry about a moment – which we almost saw after Liberation Day in April 2025 – where the US loses control of the bond market and confidence evaporates.
America currently needs to issue around $83bn of bonds every month just to pay the interest on $38tn of debt. Jerome Powell has said the current level of debt is sustainable, but the path it is on is not.
If confidence in the US dollar or bond market were lost, America would struggle to finance its debt. The dollar would collapse. Asset markets globally would collapse. Think of the 2008 financial crisis times ten.
Hedging the unthinkable
The comment was: imagine Macquarie going bust. In Australia we are particularly exposed because so many trading accounts, super funds and financial platforms are linked to Macquarie. If that happened, many investors would be wiped out.
The family office does not necessarily think this is likely. But the mere possibility that it could happen – and wipe out 100 years of accumulated wealth – is a risk they cannot ignore.
So they have started hedging. They are buying gold. They are also buying Swiss francs, another traditional safe haven. Switzerland is not in the EU, its government finances are strong and the currency is widely seen as a refuge in times of crisis. Some are even buying property in Switzerland to gain exposure to Swiss franc assets.
Early days, but worth watching
This scenario is unlikely in the near term. We would see signs. The US dollar would fall. Gold would spike. We have seen hints of it in recent months, and quite a bit of it in April last year.
I do not think we need to do anything dramatic about it now. We certainly do not need to panic about Macquarie going bust. But when conversations about the “big one” start circulating among family offices in Melbourne, Sydney, Hong Kong, Singapore, London and New York, it is worth keeping in the back of your mind.
It is early days. But confidence, once lost, can move very quickly.