Shadows Over the Dollar: Why Fiscal Indulgence, Crypto Chaos, and AI’s Insatiable Appetite Signal a New Monetary Dawn

By John Ian Lau

Contributing Editor, Solomon Grey Capital

November 22, 2025 – As U.S. equities dance at record highs, the fiscal foundations beneath them are crumbling under deficits that would make even the most spendthrift emperor blush. We’re staring down a structural chasm: $1.8 trillion in red ink for fiscal year 2025, equating to 6.2% of GDP, per the Congressional Budget Office. And that’s not some temporary blip – projections hold steady above 5% through 2027, courtesy of the Bipartisan Policy Center, even as tax revenues inch higher on buoyant markets. In my view, this isn’t just math; it’s a manifesto for perpetual quantitative easing. Policymakers, hamstrung by voracious infrastructure appetites, sky-high interest rates, and the electoral vise of partisan gridlock, will reach for the printing press far before they muster the spine for real restraint.

I’ve long argued that Washington’s addiction to easy money isn’t a bug – it’s the feature of a system allergic to hard choices. At a recent investor forum, I laid it bare: With investment needs piling up like unpaid bills and rates refusing to budge, the Fed’s balance sheet expansion feels less like a contingency and more like destiny. It’s the post-2008 script on steroids, but with deficits this entrenched, the endgame could rewrite global finance.

This fiscal feast is already nibbling at the dollar’s crown jewels. Sure, the DXY index looks steady as she goes, but don’t be fooled – the greenback’s slice of global reserves has slipped to 58% in 2024, with Federal Reserve tallies hinting at further erosion into 2025 amid whispers of de-dollarization. Gold, that canny contrarian, tells the real story: Central banks now stash it at 11.5% of reserves, a leap from sub-10% a decade back, per the World Gold Council. Spot prices? A dazzling $4,082 per ounce as of November 20, fueled by safe-haven bids from Beijing to Brasília. The USD’s grip is loosening not in a dramatic revolt, but through this insidious drip – a slow erosion I’ve tracked for years.

Contrast the U.S., Japan, and Europe’s debt spirals with China’s pivot toward deleveraging, and the political calculus sharpens into focus. Beijing’s reined in local government borrowing through iron-fisted reforms, accepting the upfront sting for long-term solvency. But here? Across the Pacific and Atlantic, leaders eye the ballot box over the balance sheet. Do they – do we – have the will to embrace the agony of austerity? History suggests otherwise, and the markets are pricing in the peril.

Enter the wild cards: crypto’s bloodbath and AI’s electric frenzy, both harbingers of a fracturing order. Cryptocurrencies, my perennial fascination as digital gold’s unruly cousin, have cratered this month in a spectacle of self-inflicted wounds. Bitcoin nosedived below $90,000 – its lowest in seven months – before clawing back to $80,553, vaporizing over $1 trillion in market cap across six harrowing weeks. The culprits? A cocktail of tariff saber-rattling, Fed stubbornness on rates, and overleveraged speculators folding like cheap suits. As Alex Thorn, head of research at Galaxy Digital, put it: “The crypto market capitalisation has fallen by more than 6% over the last day to $3.26 trillion, its lowest level since early July.” Bloomberg’s Mike McGlone ups the ante, forecasting a plunge to $10,000 if macro storms rage into 2026. The Economist nailed the irony: With regulatory nods like U.S. ETF greenlights, crypto’s “victories” now amplify the pain – crashes ripple wider than ever before.

Yet in this digital detritus, AI volatility has staged a phoenix act, with Nvidia as the fiery vanguard. The chip behemoth’s Q3 2025 blowout – revenue up 94% year-over-year on GPU mania – propelled shares 8% higher in after-hours, staunching broader tech bleed. Seeking Alpha’s take? “Nvidia remains the AI sector leader,” but with 40% YTD gains, bubble whispers grow louder. Reuters chronicled the swings: AI hype’s “cracks” – from frothy valuations to supply snarls – have ignited the wildest U.S. stock gyrations in months.

But here’s the rub, and one I’ve hammered in my dispatches: The AI gold rush is devouring resources at a pace that mocks our preparations. Chips? There’s a famine brewing. Deloitte eyes 20% global semiconductor sales growth this year, all AI-propelled, yet high-bandwidth memory backlogs stretch months deep, per the Semiconductor Industry Association. Mature-node shipments for autos and industrials are up 15%, but the bleeding edge? Starved. We’re not just consuming compute; we’re inhaling it. Training one large language model torches 1,000 megawatt-hours – enough to light a hamlet for a year.

And energy? The real choke point. U.S. data centers slurped 4% of national power in 2024 – 200 terawatt-hours – with Pew Research projecting a double by 2030 as Google and Microsoft unleash gigawatt behemoths. CNET’s warning rings true: “AI data centers are coming for your land, water, and power,” straining Texas grids and Virginia wells alike. The International Energy Agency clocks global data center draw at 415 TWh last year – 1.5% of world demand – but hyperscalers’ 15-gigawatt pleas to utilities like Dominion could dwarf state appetites. Is America wired for this “priced-in” AI apotheosis? Without trillions in grid overhauls, the answer’s a resounding no – blackouts beckon.

In this cauldron of currency creaks and tech thirst, I’ve doubled down on a timeless tenet: Diversify beyond fiat’s frail embrace. Echoing chats with peers like Andre Lajeunesse, managing director at TGG Group, the playbook is clear. “Rather than trap wealth in fiat and a single geography,” he shared with me recently, “I prefer assets with inherent scarcity – gold, prime real estate, or battle-tested cryptos post-purge – spread across borders to hedge the next monetary order.” It’s pragmatic poetry for a multipolar maze, where dollar dusk meets AI dawn.

The verdict? Innovation alone won’t suffice; we need reckoning. As deficits distend and silicon starves, the old regime’s not if, but when – and what phoenix rises from the fiscal pyre. Investors, take note: The printing press hums, but true scarcity endures.