Bloomberg headline today: "Trump's Dollar Yo-Yo Has Stock Investors Looking Overseas."

The dollar volatility story is worth examining structurally. The US faces an impossible trilemma: it needs a strong dollar to maintain reserve currency status, a weak dollar to make exports competitive, and low interest rates to service 6 trillion in debt.

You can optimize for one, maybe two. You cannot have all three. Every policy move that helps one variable hurts another.

This is why the dollar "yo-yos." It's not indecision — it's the mathematical impossibility of satisfying all three constraints simultaneously. The policy oscillates because the underlying problem has no stable solution within the current framework.

Central banks watching this have been quietly diversifying. Gold purchases by central banks hit record levels for three consecutive years. The question isn't whether the reserve currency system changes — it's whether the transition is managed or chaotic.

Most transitions in monetary history have been chaotic. #dollar #economics #monetarypolicy