Five global reserve currencies have collapsed over the last 575 years. All following an identical eight-stage pattern. The Portuguese Real (1450-1530). The Spanish Dollar (1530-1640). The Dutch Guilder (1640-1720). The British Pound Sterling (1720-1944). And the US Dollar (1944-2025) is currently at Stage 6 of 8.
THE 8-STAGE RESERVE CURRENCY DEATH PATTERN:
Stage 1: DOMINANCE – Currency achieves global reserve status through economic/military superiority
Stage 2: OVEREXTENSION – Nation maintains global commitments exceeding what economy can support
Stage 3: DEFICIT SPENDING – Expenses permanently exceed revenue, borrowing becomes structural
Stage 4: MONEY PRINTING – Government expands money supply to cover deficits
Stage 5: INFLATION – Purchasing power erodes, prices rise, currency weakens
Stage 6: LOSS OF CONFIDENCE – Other nations seek alternatives, reduce holdings
Stage 7: ALTERNATIVES EMERGE – Competing currencies/systems gain adoption
Stage 8: COLLAPSE – Reserve status lost, monetary privilege ends
PORTUGUESE REAL (1450-1530): 80 years of dominance. Portugal built first global empire through exploration. Controlled spice trade, gold from Africa, routes to Asia. Stage 1-2: Overextended maintaining empire across four continents with 1.5M population. Stage 3-4: Deficit spending, currency debasement (mixing copper into gold coins). Stage 5-6: Inflation, merchants lost confidence. Stage 7-8: Spanish silver offered alternative. Portugal lost reserve status by 1530.
SPANISH DOLLAR (1530-1640): 110 years of dominance. Spain discovered richest silver mines in history (Potosí, Zacatecas). Produced half the world’s silver. Pieces of eight used globally. Stage 1-2: Overextended fighting wars on four continents simultaneously. Stage 3-4: Deficit spending despite 200 tons of silver annually. Debased coinage (mixing copper into silver). Stage 5-6: Severe inflation by 1600. Four sovereign bankruptcies (1557-1647). Confidence died. Stage 7-8: Dutch Guilder emerged as alternative. Spain lost reserve status by 1640.
DUTCH GUILDER (1640-1720): 80 years of dominance. Dutch built world’s most sophisticated financial system. Amsterdam Stock Exchange (1602), Bank of Amsterdam (1609). Trading empire connecting all continents. Stage 1-2: Overextended with 2M population trying to maintain global trade posts. Stage 3-4: Wars with England and France. Deficit spending, credit expansion beyond reserves. Stage 5-6: Inflation by 1700. Britain rising as dominant power. Stage 7-8: British Pound Sterling offered alternative. Dutch lost reserve status by 1720.
BRITISH POUND STERLING (1720-1944): 224 years of dominance – longest reign. Britain built largest empire in history (25% of Earth’s land/population). Industrial Revolution leader. Royal Navy dominated seas. Pound denominated global trade for two centuries. Stage 1-2: Overextended maintaining vast empire. Stage 3-4: WWI cost 50B pounds. Went off gold standard, borrowed massively from US. WWII even more expensive. Stage 5-6: Inflation accelerated. Bretton Woods 1944 – US had 60% of global gold, Britain effectively bankrupt. Stage 7-8: US Dollar officially replaced Pound as reserve currency. Britain devalued 1949, 1967. Lost reserve status completely by 1970.
Credit to : HistoFund