Renowned investor Jim Rogers believes that the U.S. dollar dominance is coming to an end as the tensions between the U.S. and China mount. The growing national debt, the protests, the political uncertainty surrounding the presidential election, and countries seeking a USD alternative in fear of sanctions will take a toll on the dollar, he explained.
Jim Rogers Discusses End of USD Dominance
Jim Rogers shared his view on the end of the U.S. dollar dominance in an interview with RT publication Saturday, factoring in recent world events. He co-founded the Quantum Fund in 1973 with billionaire investor George Soros, which was considered one of the most successful hedge funds in its heyday.
Firstly, Rogers explained that “the US is now the largest debtor nation in the history of the world, and it’s getting higher and higher every day,” emphasizing that it will take a toll on the dollar. The U.S. national debt is currently more than $26.73 trillion. The veteran investor opined:
Traditionally, the US dollar has been the soundest currency in the world. But tradition changes … the US dollar is coming to its century or so of dominance, and something else will replace it.
The investment guru pointed to the examples of the British pound and Dutch guilder, noting that both were previously considered the most reliable currencies.
According to Rogers, the dollar could still show strength next year once the current turmoil in the U.S. is over, including the protests and the November presidential election. However, he added that it will “probably be [the dollar’s] last shot,” reiterating his stance that the dollar is just a few years away from losing its dominance. Some analysts have predicted that the presidential election outcome could collapse the U.S. dollar and send the prices of gold and bitcoin skyrocketing.
Meanwhile, the world’s second-largest American debt holder, China, is planning to cut its U.S. debt holdings as tensions with Washington escalate, Chinese state-run newspaper The Global Times reported. Experts in Beijing expect China to reduce its U.S. debt holdings by 20%, from $1 trillion to $800 billion. The paper further warns that it could even “sell all of its US bonds in an extreme case like a military conflict.”
Rogers emphasized that China reducing American debt will put pressure on U.S. interest rates, adding that they “should be going up.” From the Chinese standpoint, the famed investor said that “it’s a smart economic and investment move,” one that would strengthen the Chinese yuan, which he noted has already been happening for several weeks. Rogers elaborated:
If they sell US debt, they sell dollars, therefore their currency goes higher.
In addition, several countries have already started looking for an alternative currency to the U.S. dollar due to the current turbulence in the U.S. and the Trump administration’s tough foreign polices. News.Bitcoin.com recently reported that the Russia-China de-dollarization is approaching a “breakthrough moment.”
While these plans are likely underway in Beijing, Rogers believes that the Trump administration will downplay this threat. “You know, Trump thinks he’s smarter than everybody in the world, so they’ll probably do whatever they want to do and think, ‘Don’t worry – we’re Washington and we can take care of it,’” he was quoted as saying.
This is not the first time Rogers has warned about the U.S. dollar losing its dominance; he also warned about the USD losing its world’s reserve currency status, as did Goldman Sachs. Last month, the investor also predicted that the worst economic downturn in his lifetime is coming. Meanwhile, Morgan Stanley recently estimated that the Chinese yuan will become the world’s third-largest reserve currency within 10 years, and several analysts are expecting the U.S. dollar to crash. A growing number of investors now say bitcoin is a good investment for this environment, but Rogers believes that governments will not let cryptocurrency flourish.
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