Economics expert issues dire warning on ‘serious threat’ faced by US dollar: It’s ‘inevitable’
John Carney predicts the global market is returning to a 'Cold War basis'
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Since World War II, the U.S. dollar has been the world's strongest currency - but one economic expert warns that it could soon lose its power.
During an appearance on "Fox & Friends Weekend," Breitbart economics editor John Carney warned that the dollar's feeble valuation could be a "serious threat" to the U.S.'s crucial influence on the world stage.
""[It's] not only a serious threat, I think it is inevitable. We went through three stages, as you said, after World War II. The U.S. was the biggest economy in the world. In the 1970s, global banking became basically dollar central. With the fall of the Soviet Union, the entire world, more or less, came under the domination of the U.S dollar…"
"That is now drifting away. China and Russia are starting to build an alternative block of currency," John Carney explained Sunday.
U.S. One dollar banknotes are seen in front of displayed stock graph in this illustration taken, February 8, 2021. | Reuters
The economic expert's comments come in response to China's ongoing efforts to disband from the dollar. They began the strategic process of de-dollarizing their business dealings during Russia's invasion of Crimea. "Fox & Friends Weekend" co-host Will Cain reported Sunday, that, as a result, nearly 3% of reserve portfolios are currently sitting in the Chinese Yuan.
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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.
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Cain subsequently asked Carney, "how viable is [China's] alternative?"
"I don't think in the long run that the Yuan is actually a threat, that it is ever going to become the dominant currency of the world, because the Chinese communist system is not open enough. The U.S. system is very open. Other countries can trust that our reserve currency, that we're not manipulating it," Carney explained, Sunday.
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"So, I don't think China is going to become the dominant currency. And I think Europe and I think our closest allies and Japan will remain on the dollar. And I think the Saudis and most oil countries will want to remain a close relationship with the dollar. However, I do think we're going to have alternate blocks that we haven't had for a long time," he continued.
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Carney further argued that the U.S. choosing to actively dwindle its trade deficit with China will economically benefit the nation's economy, and bolster the strength of the dollar.
"We're returning to a sort of a Cold War basis, where you have different blocks of economies in different blocks of currencies. Look, we are trying to have a smaller trade deficit with China. That's one of the explicit goals of the United States' policy right now."
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"As we try to cut down on that trade deficit, China naturally will have fewer dollars, which will mean that they need to move into a non-dollar-based system. So, this will benefit us as well. It's part of our policy. It hasn't been necessarily great for the U.S. economy to have the whole world work dollars. It actually could end up being beneficial," Carney concluded.