US Losing Ability To 'Tax The World' To Fund Deficits, Warns Thomas Massie Amid Diminishing Dollar Dominance

Rep. Thomas Massie (R-Ky.) issued a stark economic warning on Saturday, cautioning that the United States is losing its unique ability to export inflation to other nations. As the U.S. dollar's status as the global reserve currency diminishes, Massie argues that Americans will soon face the "full inflation tax" necessary to service the nation's soaring debt.

The End Of ‘Exorbitant Privilege'

Massie's comments highlight a critical, often overlooked mechanism of the American economy: the ability to print money without immediate hyperinflation because global demand for dollars absorbs the excess supply.

“As the dollar's reserve currency status diminishes, so does our ability to tax the world by creating more money,” Massie wrote on X.

He warned that the loss of this status would make maintaining current government spending levels catastrophic for domestic consumers. “When reserve status is lost… servicing the debt will be even more painful for Americans who will bear the full inflation tax,” he added.

Debunking The Subsidy Narrative

Massie's remarks were in response to economist Peter Schiff, who challenged President Donald Trump's recent assertion that the U.S. subsidizes global trade.

Schiff argued the dynamic is actually the reverse: the world subsidizes the U.S. by holding dollars, allowing the nation to live beyond its means.

“The dollar's reserve-currency status allows us to live beyond our means,” Schiff noted, adding that soaring debt, tariffs, and military threats are jeopardizing that status.

“When it's lost, economic collapse will follow.” The exchange also received a nod from Nassim Nicholas Taleb, author of The Black Swan.

Structural Decline

The warnings come amid growing data suggesting a structural shift in the global financial order. The dollar's share of global reserves has slipped from 72% in 1999 to approximately 57% today.

With the “controlled decline” of the greenback predicted by analysts at TD Cowen and the rise of digital assets, the fiscal cushion that has allowed the U.S. to run massive deficits for decades appears to be deflating.

As 2026 unfolds, the convergence of high deficits and waning foreign demand for U.S. Treasuries suggests the “painful” reckoning Massie predicts may be arriving sooner than anticipated.

Here’s a list of a few dollar-tracking ETFs for investors to consider.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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