Is the US exorbitant privilege eroding?

TL;DR: Brookings published a commentary on November 5, 2026 asking whether the U.S. exorbitant privilege is eroding. Its author, Brookings senior fellow Robin Brooks, argues that with U.S. public debt projected to rise out of control, markets have begun to charge a risk premium relative to the rest of the G10.

What is the exorbitant privilege?

It is the ability to finance deficits in your own currency at unusually low interest rates. Meketa Investment Group describes it as the ability to finance persistent external and fiscal deficits in its own currency at unusually favorable rates, a privilege that derives from the dollar's role as the pre-eminent global reserve asset, invoicing unit and settlement medium.

Treasury yields sit under almost every other price. Mortgage rates, private credit spreads and the discount rates used to value private companies all start there. That is why you should care.

What did Brookings actually measure?

Brooks compares the 10-year Treasury yield with a trade-weighted average of 10-year government bond yields in Germany, Japan, the UK, Canada, Switzerland, Sweden and Australia. The foreign yields are hedged into dollars with currency forwards, so the comparison strips out exchange-rate risk. According to Brookings, the resulting gap is "a good proxy for how 'special' markets think Treasury debt is compared to the rest of the G10."

Piece of the measure	What Brookings uses
U.S. leg	10-year Treasury yield
Comparison group	Trade-weighted 10-year yields: Germany, Japan, UK, Canada, Switzerland, Sweden, Australia
Currency risk	Removed with 10-year currency forwards
What it proxies	How special markets think Treasuries are versus peers

This piece does not quote a current reading of that gap. The Brookings page is the place to check the figure and the chart.

Is the dollar losing its reserve role?

The evidence cited here says the stronger story is about price, not status. Analyst Leon Liao argues on Substack that the dollar "does not need to lose its reserve-currency status for America's exorbitant privilege to weaken." His more plausible scenario is a world where the U.S. must offer 4.5%, 5% or even higher Treasury yields to attract enough capital to absorb its expanding debt supply. That is one analyst's scenario, not a forecast from Brookings.

The two pieces point the same way. The privilege can fade through a higher cost of borrowing while the dollar stays dominant.

Why does this matter to accredited investors?

A higher risk-free rate raises the bar for every illiquid asset. Simple. If Treasuries pay more, a private fund has to offer more before a multi-year lockup, with no way to sell when you need the cash, makes sense for you.

It also changes how you read sponsor projections. A target return that looked generous against a lower Treasury yield can look thin against a higher one, once fees and lockup are counted.

What should you watch next?

Politics is the nearest catalyst. The Atlantic Council wrote on November 4, 2026 that the Democrats' victory in the midterm elections "sets the stage for major showdowns on the federal budget and the debt ceiling." Budget fights are where the debt-supply question Brooks raises gets tested in public.

The second thing to watch is the gap Brookings tracks. If it keeps widening, borrowing costs for the government, and for everyone priced off it, drift up.

Common mistakes

The first mistake is treating a risk premium as a collapse. Brookings describes a premium relative to peers, and nothing in the sources cited here says Treasuries have stopped being the world's main safe asset.

The second is buying a hedge because of one headline. Gold, crypto and foreign assets each carry their own risks, and a reason to own them should be one you can explain in a sentence. For a related look at how tokenized money could change the plumbing without displacing the currency, see tokenized payments and the dollar.

The third is ignoring the rate when you price private deals. Compare any projected return with the current Treasury yield first, then subtract fees. Our piece on hedge fund replication ETFs shows how cost shapes what you keep.

FAQ

Has the U.S. dollar lost value since Trump? The sources cited here do not measure that, so we won't give a number. Brookings addresses Treasury borrowing costs against the G10, not the dollar's exchange rate. Check a dated exchange-rate series before relying on any claim.

Is the US in danger of an economic collapse? None of the cited sources says so. Brookings describes a risk premium on Treasury debt, which is a higher borrowing cost, and Liao describes a scenario of yields at 4.5% or above. Neither is a collapse forecast.

What does Warren Buffett say about the U.S. dollar? No source in our research covers Buffett's comments, so we leave them out. A claim about his view needs his own words, linked.

What to own when the dollar collapses? The cited sources do not describe a collapse, and this site does not make buy recommendations. If you hold alternatives for diversification, write down the reason in one sentence, and ask a qualified adviser.

What to do today

Look up the current 10-year Treasury yield, then write it beside the projected return on each private fund or deal you hold or are considering. If the gap no longer pays you for the lockup, that is a question for the sponsor.

Educational content only. Not investment, tax, or legal advice. Not an offer or solicitation to buy or sell securities. Past performance does not guarantee future results. Private-market investments are illiquid and involve risk of loss, including total loss of capital. Consult qualified advisers. Angel Investors Network is not a broker-dealer or investment adviser.