Is America Trying To Ditch Its Own Reserve Currency Status?

Reserve currency status gives the U.S. control over the global banking system, including the ability to sanction adversaries through SWIFT

US struggling to find buyers for its growing debt, leading to bond buybacks.
Tariffs and trade deficits reducing foreign countries' ability to invest in US debt.
Debate over whether US should remain the world's reserve currency, with concerns over manufacturing impact.

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Is America Trying To Ditch Its Own Reserve Currency Status?

Tony Katz isn’t buying the idea that the Treasury Department just made a routine technical move — and he’s not buying JD Vance’s reserve-currency theory either. “Sometimes the Treasury Secretary does things I don’t understand,” Katz said on Tony Katz Today, before digging into a bond buyback announcement that sent markets jumping and reopened a simmering fight inside the Trump administration over trade, tariffs, and the dollar’s place in the world.

The news: the Treasury announced Tuesday it will more than double its long-term bond buybacks, from $2 billion to $4 billion a week, totaling roughly $38 billion in repurchases this quarter. Markets reacted instantly — the Dow jumped 280 points and the Nasdaq spiked before the opening bell.

Katz brought in Dr. Matt Will, economist at the University of Indianapolis, to explain what’s really going on, and the answer wasn’t reassuring. Translation: the world doesn’t want to lend America money anymore, at least not at the volume Washington needs. “No one is lending money to the United States, and we’re borrowing so much money that we need people to borrow our money,” Will said, pointing to sliding demand for U.S. long-term treasuries from major buyers like Japan.

Why aren’t they buying? Tariffs, according to Will — countries like Japan have fewer dollars on hand to reinvest in U.S. debt because trade deficits are shrinking. Katz connected that directly to the louder, more explosive argument bubbling up from Vice President JD Vance, who has said the U.S. shouldn’t be the world’s reserve currency at all, arguing it enables cheap imports that gut American manufacturing.

Katz wasn’t having it. “I do not agree with the Vice President on this reserve currency thing,” he said flatly, calling Vance’s position rooted in an “isolationist philosophy” that treats trade as a zero-sum game. Will backed him up with data: U.S. manufacturing output has grown from $750 billion to $2.6 trillion since 1960, adjusted for inflation — not exactly the picture of a gutted industrial base. “He’s wrong to say that we’re losing manufacturing,” Will said. “We are getting more manufacturing.”

The bigger stakes, per Will: reserve currency status gives the U.S. control over the global banking system, including the ability to sanction adversaries through SWIFT. “Does the Vice President want to give up the control of the world’s banking and financial systems?” Will asked. “That is silliness.”

Katz’s bottom line: America doesn’t have to choose between making underwear and building AI data centers. It’s not an all-or-nothing economy — no matter how the Vice President frames it.