The Buffett Family Bookend to America’s Monetary Era

Over the weekend, the most important market headline was Warren Buffett’s announcement that he would be stepping down from Berkshire Hathaway, marking the end of a historic chapter in American capitalism. The irony of his decision is that it comes at a time when I keep running into another family member in my research. I’ll return to that irony at the end, but as investors focus on Warren’s departure, I want to turn the spotlight—for now—on his father, Howard Buffett. A Nebraska congressman and staunch advocate for sound money, Howard penned a prescient essay in 1948 titled “Human Freedom Rests on Gold Redeemable Money.” In it, he argued that the true foundation of individual liberty lies in a monetary system backed by something tangible—namely, gold. He warned that if money were no longer redeemable, it would open the door to fiscal recklessness, inflation, and ultimately, social and political chaos.

Given what we’ve endured this year with Liberation Day and the new tariff regime, it’s easy to see why his paper is being referenced again. Although Donald Trump has done exactly what he promised with tariffs before being elected, his implementation has shaken the foundation of global trade. Predictably, it has reignited recession fears among investors. These days, it doesn’t take much to drive markets back into recession obsession. This kind of anxiety has become an annual ritual in the post-COVID era—variants in 2021, aggressive Fed rate hikes and 1970s-style inflation in 2022, the SVB collapse in 2023, and the peculiar rise of yen carry trade fears and the Sahm Rule signal in 2024. Now, in 2025, it’s tariffs. But in my view, the obsession over whether GDP dips below zero for two quarters misses the bigger picture. While most investors are focused on near-term economic data, I believe Howard Buffett’s long-term warning is coming into view: 2025 may mark the unofficial end of the current global monetary system.

I’ve always believed that the mosaic of asset prices tells the story before the headlines do. Since the “Black Monday” low after Liberation Day, equities have rallied sharply—defying persistent bearish sentiment and widespread declarations of a bear market rally. The dollar has fallen and remains near its lows, gold has surged, and 10-year Treasury yields have climbed—despite growing calls for a recession. I see these movements as entirely consistent with a shift in the global monetary regime. The administration appears to have backpedaled on disrupting the stock market because, at 200% of GDP by the end of 2024, the U.S. economy—including Main Street—can’t afford a collapse in equities to reset the trade imbalance. The stock market’s rise isn’t the cause of the problem; it’s a symptom of it. I still believe the administration’s chosen path to rebalance global trade remains intact, but it’s here that an unlikely asset has risen as a signal of volatility to come: the Taiwanese dollar—a subtle but powerful warning and a curious echo of Howard Buffett’s warning—on the same weekend his son stepped away from the stage.

The Taiwanese dollar rallied more in two days than in any comparable stretch going back to the early 1980s, according to Bloomberg data. This surge stands in stark contrast to the broader trend since the 1997 Asian Financial Crisis, during which many Asian currencies steadily weakened—several now hovering near multi-decade lows. I remember those levels well from my time in Brazil during that era of emerging-market turmoil. Even though he has fired shots around the globe, at the root of Trump’s grievances lies a long-standing tension with Asia’s export-driven model—one reinforced after the 1997 crisis. China may get the attention for broader reasons but the crisis forced all Asian countries to defend their currencies by selling dollar reserves. In the aftermath, they never wanted a repeat and fortified those reserves and began recycling surpluses into U.S. Treasuries, helping build the system we’ve relied on for the last 25 years.

This export-recycle loop—where Asian economies sold goods to the U.S. and reinvested the dollars into U.S. assets, especially Treasuries—created the very imbalance the current administration is now trying to unwind. Trump was elected, in part, to challenge this dynamic. But moving away from it comes at a cost. Just weeks ago, we saw what happens when this equilibrium begins to crack: the dollar, stocks, and bonds all declined sharply at the same time. It felt eerily like the kind of financial tremor seen in emerging markets—something I experienced firsthand in the 1990s. Yet investors remain hyper-focused on recession probabilities and stock market levels, while the true systemic risk lies in the unraveling of global trust. This is exactly what Howard Buffett warned about—fiscal overreach and unchecked money creation leading to deeper instability.

Buffett cautioned in 1948 that “without a redeemable currency, the financial restraints on government disappear.” That wasn’t just philosophy—it was a forecast. After abandoning the gold standard, the U.S. built a system dependent on ever-expanding credit, foreign capital inflows, and the assumption that the dollar would always be the global safe haven. But tariffs now threaten those capital flows, and the question of who will fund America’s deficits is no longer academic. When the dollar, stocks, and Treasuries fall in unison, that’s not just volatility—it’s a warning. The boundaries that once defined U.S. fiscal credibility are gone, and the market is starting to wake up to that reality.

The 1971 end of the Bretton Woods system began an unprecedented monetary experiment: the world’s reserve currency would no longer be backed by gold. This untethering gave policymakers room to maneuver, but it also removed the constraints that had long anchored global trust. Over the decades, the U.S. leaned into this advantage—running deficits while others funded them. But today, America seems increasingly unwilling to maintain the responsibilities of global monetary leadership, and the rest of the world seems increasingly unwilling to grant it that trust. From central banks accumulating gold to the rise of alternative payment systems, the signs are multiplying: the fiat-based reserve system is entering its twilight.

What markets should be preparing for now isn’t a standard economic slowdown—it’s the deeper, more systemic risk tied to U.S. debt. My time in Brazil taught me that when trust in sovereign debt begins to waver, the damage can be swift and nonlinear. Regardless of whether it is due to local pressure or a casualty of the trade negotiations, the recent surge in the Taiwanese dollar may mark a turning point—the symbolic end of the dollar recycling loop. And it’s happening just as the U.S. faces a debt-to-GDP ratio above 120%, with much of that debt maturing in the short term. Investors have hesitated to call a bottom in stocks, yet many are eager to call one in the dollar. That eagerness feels premature. Asian currency strength—and whispers of a “Mar-a-Lago Accord” which to me is a debt restructuring—point to what may become the real crisis: a loss of confidence in U.S. debt. Before you read this as an apocalyptic call, it is mutual assured destruction if the world doesn’t come to an agreement on the debt and I fully think that will be the case but if it comes at a time when yields are rising, it will bring another bout of extreme volatility. I expect that to occur before 2025 is done.

Howard Buffett’s voice from 1948 sounds prophetic today. He warned that removing the constraints of redeemable money would eventually lead to an erosion of trust and a rise in instability. The Taiwanese dollar’s rally may be the early-warning signal that his fears are materializing. As the global architecture built on dollar recycling begins to fracture and questions swirl about who will finance America’s deficits in a post-trust world, we are reminded of something crucial: once confidence is lost, it’s almost impossible to recover. Buffett saw the dangers. And now, as public policy and market behavior begin to converge with his warnings, we can no longer afford to dismiss these signals as noise. They are, unmistakably, the tremors before the quake.

The irony, to me, is that Warren Buffett is stepping down just as another long-standing trend may also be ending: U.S. stock market leadership. Since 1970—just one year before the U.S. began the monetary experiment of abandoning a gold-backed dollar that his father warned about—Warren Buffett has served as chairman and the largest shareholder of Berkshire Hathaway, benefiting more than anyone as an investor in this system. Like Michael Jordan, twice (I don’t count the Wizards), maybe he’s choosing to leave on top—before things get tough.