Government to Devalue Currency? – Expert Warns U.S. Dollar Could Lose Power
Balaji Srinivasan, former Coinbase chief technology officer, and angel investor, believes the U.S. government will devalue the U.S. dollar like never before.
He tweeted to his 895,200 followers that the U.S. is facing both a “fiat” and a financial crisis. Srinivasan suggests that everything from banks and commercial real estate to blue states is “bust” and that there are rumblings around insurance.
Everything is bust.
Banks, commercial real estate, blue states.
Hearing rumblings around insurance too.
The printing will be on a historical scale.
As will the desire to exit the printing.https://t.co/1CYulSV5PN https://t.co/ZQADD0jUZZ
— Balaji (@balajis) April 3, 2023
He anticipates that money printing will be on a historical scale and that there will be a corresponding desire to exit the printing.
Insurance industry affected
According to Srinivasan, insurers hold government bonds devalued amid the string of rate hikes issued by the Federal Reserve over the past year, similar to banks.
The bonds are among insurers’ “safe” assets to pay their customers back. However, the recent rate hikes have made these assets less safe, and the insurer’s portfolios are primarily made up of bonds.
Srinivasan added that the crises will cause people to learn not to trust the state, as the U.S. is currently facing a fiat crisis.
Srinivasan’s recent Bitcoin forecast
Last month, Srinivasan made a bold prediction, stating that BTC looks poised to explode to $1 million in less than 90 days from then. He believes the asset is a better alternative than the traditional banking system currently facing a meltdown.
Expert warns of U.S. dollar losing power
The U.S. dollar has been the world’s strongest currency since World War II, but economic expert John Carney warns that it could soon lose its power.
During an appearance on “Fox & Friends Weekend,” Carney explains that the dollar’s feeble valuation could be a “serious threat” to the U.S.’s crucial influence on the world stage.
He says that after World War II, the U.S. was the biggest economy in the world. In the 1970s, global banking became dollar centric. With the fall of the Soviet Union, the world came under the domination of the U.S. dollar. However, that is now changing as China and Russia are starting to build an alternative block of currency.
China’s de-dollarizing efforts
Carney’s comments come in response to China’s ongoing efforts to disband from the dollar. They began strategically de-dollarizing their business dealings during Russia’s invasion of Crimea. Nearly 3% of reserve portfolios are currently sitting in the Chinese Yuan, according to “Fox & Friends Weekend” co-host Will Cain.
Over the last two decades, the United States dollar has lost 12 percentage points of market share, falling from 71% to 59%, according to the International Monetary Fund.
Viability of China’s alternative
Carney doesn’t believe that the Yuan is a threat in the long run, or that it will ever become the world’s dominant currency. He argues that the Chinese communist system is not open enough. In contrast, the U.S. system is very open, and other countries can trust that their reserve currency is not being manipulated.
Alternate blocks of currencies
Carney believes that Europe, the U.S.’s closest allies, and Japan will remain on the dollar. The Saudis and most oil countries will want to stay in a close relationship with the dollar. However, he thinks that alternate blocks the world hasn’t seen for a long time will emerge.
Dwindling trade deficit with China
Carney further argues that the U.S. actively dwindling its trade deficit with China will benefit the nation’s economy and bolster the dollar’s strength. As the U.S. tries to cut down on that trade deficit, China will naturally have fewer dollars, meaning that they need to move into a non-dollar-based system. This, in turn, will benefit the U.S. as well.