THE END IS NEAR: Debt, De-Dollarization, and the AI Gamble
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- By | July 13, 2026
For over seventy years, the world’s monetary framework has revolved around the U.S. dollar. Currently, the United States owes more than $38.3 trillion, the biggest national debt in nominal terms. A large portion of this obligation is covered by U.S. Treasury bonds, bought by foreign governments, institutions and investors and considered one of the safest assets.
The mechanics of this arrangement are almost poetically circular: the United States takes on new debt merely to service interest on earlier borrowing, continuously rolling the liability forward. The petrodollar pact established in 1974, which mandates that oil be traded and priced in dollars worldwide, sustains this cycle by guaranteeing steady global demand for the U.S. currency.
Saudi Arabia’s choice to let the petrodollar agreement lapse marks a historic shift, enabling the kingdom to price its oil in a basket of currencies including the yuan, euro and yen, thereby ending the long‑standing custom of selling crude solely for dollars.
This shift is gaining traction. In 2023 India bought its first barrel of UAE oil paying in rupees, and Brazil and China have dropped the dollar from their trade, settling instead in yuan and real. Indian refiners now pay for Russian oil in yuan and dirhams, sidestepping the dollar altogether. The BRICS nations are steadily constructing a trade network that operates without the dollar, one deal at a time.
Nevertheless, recent signals indicate that trust in the framework may be eroding. Yields on U.S. Treasuries have climbed markedly in recent years, occasionally hovering near 5%, a sign that investors are worried about inflation, budget gaps, long‑term debt viability and a growing lack of confidence in the U.S. government.
At the same time, other financial setups are taking shape. BRICS members are looking for ways to lessen their dollar reliance, and the UAE has struck energy deals that bypass the conventional dollar system. The main obstacle is India’s refusal to join a proposed common BRICS currency. New Delhi wants to keep full control of its monetary policy and avoids a bloc it believes would be steered by China. This reluctance opens the door for China to push forward a petro‑yuan system that mirrors the way the United States funds its debt.
Analysts point to shifts in global capital flows as evidence that investors are re‑evaluating their holdings in foreign markets and U.S. debt. Meanwhile, the United States is betting heavily on artificial intelligence to drive future growth. However, doubts linger about whether many AI firms can earn enough to support their high prices. The sector’s average revenue multiple sits around 23.4×, well above historic norms, and numerous startups remain unprofitable despite valuations that far exceed their actual sales. In essence, there is a sizable wager on AI.
The gap between money poured in and revenue generated echoes the dot‑com boom, when funding far outstripped actual business results. If the AI bubble were to pop, the resulting sell‑off would spill over into international investments and undermine the remaining confidence in America’s financial stewardship.
A United States weighed down by self‑reinforcing debt, a fading petrodollar system, and a speculative technology sector confronts a cluster of risks that is unprecedented in its fiscal past.
Article researched and written by Mayank Sati
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