'No one seems to notice' Trump’s inflicting 'catastrophic damage' on dollar: conservative

U.S. President Donald Trump with French President Emmanuel Macron in New York City, U.S., September 23, 2025. REUTERS/Al Drago/File Photo

Although liberal economist Paul Krugman and Never Trump conservative Jonathan V. Last are on different parts of the United States' political spectrum, Last opens his February 12 column for The Bulwark by noting a concept he learned from Krugman: Dornbusch's Law. The idea comes from the late German economist Rudi Dornbusch, who warned that when it comes to the economy, a "crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought."

The economic boom of the Roaring 1920s, for example, didn't collapse until 1929. But when the Great Depression got bad, it got bad in a hurry.

Last, in his column, applies that concept to President Donald Trump's economic policies — which, he warns, are leading to problems with the value of the U.S. dollar. Last zeros in on two interconnected stories that, he warns, spell trouble for the United States' economic standing: "Story #1: The EU Wants to Cut Off Visa and Mastercard" and "Story #2: China will take its shot at displacing the dollar."

"(Dornbusch's Law) seems like a perfect description of how Donald Trump is doing catastrophic damage to America's economic position, yet no one seems to notice," Last explains. "Today, I want to talk about two news stories that will seem — OK, that are—incredibly boring. But they're important. They explain why the crisis will take longer to arrive than you think, while making clear that a crisis is coming…. Visa and Mastercard are American companies. Europe now believes that it cannot rely on American companies to handle payment processing because: (a) Europe does not want to allow companies from the United States, a strategic competitor, to have access to all of that data; but also, (b) the United States is a potential adversary and in a future conflict the EU does not want America to have the ability to cut off access to payment processing."

Last notes that Europe "did not prioritize displacing 'non-European solutions' before Donald Trump" but is "shifting those priorities now."

Meanwhile, according to Last, the Chinese government in Beijing has "directed banks to cut their holdings of U.S. treasuries."

"Here's the state of play, per the IMF (International Monetary Fund): The dollar comprises 57 percent of all foreign exchange reserves, which is what makes it the global currency," Last observes. "The euro represents 20 percent; the renminbi, 2 percent. That's a big lead for the dollar. But not an insurmountable one. And as America finds itself alone — sorry, I meant dominating our hemisphere, f—— yeah! — and unpredictable, pretty much every country will be incentivized to hedge the dollar."

Last continues, "What happens when the percentage of dollar foreign reserves starts moving backward at the same time that the European Union and China are intentionally setting themselves up to compete on that territory? How soon would Americans start to feel the effects of that shift? Slower than you think. But then faster than you can imagine."

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