Vietnam and Qatar are liquidating large portions of their U.S. dollar holdings, according to the Business Intelligence-Middle East (bi-me). Qatar announced that it has chopped its dollar holdings in its sovereign wealth fund from 99 percent to 40 percent, and the State Bank of Vietnam has indicated that, in an attempt to neutralize the appreciation of its currency, it will no longer be purchasing large volumes of dollars.

These announcements spell more trouble for the ailing U.S. dollar and economy. The United States relies on the sale of U.S. treasury bills and U.S. bonds to finance its escalating federal deficit and shore up the federal budget. By kicking the dollar to the curb, Vietnam and Qatar are essentially saying they lack confidence in the American economy.

It is a dangerous precedent, according to bi-me: “Together Asia holds us$3,575 billion of foreign reserves, over 65 percent of the world’s total. China leads with us$1,340 billion, but South Korea, Taiwan, Singapore, and even Thailand all built up massive holdings. The concern is that once one or two members of the region jump ship, it could set off a broader scramble that would inevitably bring in the Middle East holdings” (October 8).

Yes—once the trigger to sell U.S. dollars has been pulled by one too many countries, it will become a simple matter of who will be the last to jump off the ship. No one wants to be the last country left holding worthless dollars.

Though this dollar-dumping frenzy is not happening yet, the very fact that foreign countries are starting to jump ship should serve as a warning about the failing state of the U.S. economy. Along with Vietnam and Qatar, other countries have begun to maneuver their economies and fiscal policies away from U.S. economic dependence. Iran, Kuwait, Saudi Arabia and China have all made fiscal and economic adjustments damaging to long-term U.S. global economic supremacy.

For now, the shift away from the U.S. dollar presents two major scenarios for the economy and the dollar. The first is a slow kill: A growing list of countries abandoning the U.S. dollar or reducing the amount of U.S. treasury bills and U.S. bonds they purchase from the United States. The dollar and economy would be starved of the funds needed to sustain the status quo, which would precipitate severe economic contractions. The second possibility is the quick kill: Major dollar reserve holders dumping the dollar at a furious rate, rendering the U.S. dollar worthless practically overnight. Many Americans would simply wake up paupers because the U.S. dollar and their savings would be worthless.

As more countries like Vietnam and Qatar abandon the dollar or manipulate their fiscal policies away from dependence on the American economy by regionalization or investing in an alternate rising economic star like Europe and the euro, the fall of the U.S. dollar becomes more and more inevitable. How fast the fall is remains to be seen.