Asia Times: Dollar Doomed As China Shifts to Consumption

A changing US-China relationship means a forex correction is the only way to rectify the imbalance

Morgan Stanley’s former Asia Chairman Stephen Roach and Bridgewater founder Ray Dalio, among others, have recently warned that the US dollar may lose a third of its value.

A chronically low savings rate, a large current account deficit and a huge federal financing requirement, Roach argued, will force a sharp devaluation of the US currency.

Declining empires and declining currencies stumble along until something comes along to put them out of their misery.

Post-WW2 Britain is a case in point.

Once the dominant world power, it issued the world’s main reserve currency and ran a chronic current account deficit.

It allowed its industrial base to deteriorate and its skills to stagnate.

The market for British assets eventually cleared as the British pound fell by almost two-thirds between 1967 and 1985.

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Published by Asia Times 


Republished by The 21st Century

The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of 21cir.


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