“Uneasy lies the head that wears a crown,” Henry IV lamented, per Shakespeare. The same can be said, lately of “King Dollar.” That moniker is a shorthand for the greenback’s role as the world’s leading reserve currency. Yet President Trump’s tariffs are sparking a new wave of doubts over the dollar’s reign. “The mighty dollar,” Marketwatch warns, “is falling apart,” stirring echoes of the “Nixon shock” in 1971 when America left the gold exchange standard.

Cutting the dollar’s ties to gold ushered in “stagflation” and the fiat money era. Yet Nixon’s démarche did not dethrone King Dollar, in part due to America’s strong economy. Nixon’s Treasury secretary, John Connally, told our allies that the dollar is “our currency, but it’s your problem.” Can dollar dominance, though, survive today what the press is calling a “Trump shock”? Would America be better off without the burden of the reserve currency crown?

The urgency of these questions is underscored by analysts like Deutsche Bank’s George Saravelos, who reckons “the market is re-assessing the structural attractiveness of the dollar” as the “global reserve currency.” He speaks of “a process of rapid de-dollarisation.” Bannockburn Global Forex’s Marc Chandler cautions that “What we are going through now is worse than when former President Nixon took us off the gold standard in August 1971.” 

The “biggest damage right now is to the U.S. brand,” Mr. Chandler says, comparing President Trump’s moves on tariffs to the switch in 1985 to “New Coke” from the classic Coca-Cola formula, sparking what Marketwatch calls “consumer backlash.” Mr. Chandler reports that there “is talk of a capital strike against the U.S., with many people suggesting there’s pressure from foreign investors selling American assets.” 

That trend isn’t confined to the world’s regard for the dollar, if reports of uncertainty in the debt markets are any guide. The Times is among those reporting that “turmoil in bond markets” is a marker of the “shaken faith” in the “previously unimpeachable solidity of U.S. government debt.” Yet this ignores how FDR in 1934 defaulted on America’s debt, devaluing the dollar by some 59 percent. “A calculated breach of contract,” the Financial Times said.

That episode is a reminder that questions of debt and money are inseparable. That’s why America’s debt crisis today — signaled by the jitters over America’s creditworthiness — is intertwined with the monetary crisis that Nixon triggered in 1971. And while the dollar’s reserve status has been described as an “exorbitant privilege,” enabling America to consume more than it produces, it has also let Uncle Sam run up an unsustainable national debt.

For this reason, monetary sage James Grant has described the dollar’s reserve currency status as a “poisoned chalice,” with the debasement of the greenback as a symptom of national profligacy. When Nixon abandoned the Bretton Woods system, the dollar was convertible by law into gold at the rate of a 35th of an ounce. Disavowing that pledge sent the dollar’s value plummeting. In today’s trading the dollar fetches less than a 3200th of a gold ounce. 

A Wall Street Journal editorial after the “Nixon shock” decried America’s “failures,” including the “fiscal and monetary excesses” of the 1960s. The Journal wondered if any “one nation should be in a position, through control over a currency that is used as a reserve unit, to put other nations in a bind through mismanagement of that currency.” Today, the dollar’s plunging gold value again belies America’s pretensions to monetary leadership under “King Dollar.”