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US strategic rivals will move away from the dollar and create a “bipolar” global reserve currency system, said economist and NYU professor Nouriel Roubini.
In a new series of interviews, Roubini said there is no doubt that China and Russia are working with allies to build an alternative monetary system that doesn’t use the USD.
“Unfortunately, the cold war between the US and China is getting colder by the day…
It is clear that the United States’ Strategic Rivals – China, Russia, Iran or Korea, Pakistan and their own friends and allies – want to build an alternative monetary economy and global reserve currency system because they are concerned about US sanctions. , Europe and others can impose.
China has $1 trillion dollars in reserves. And because of that, they will move towards proposing the RMB as an alternative to the US dollar and gradually we will move from a unipolar to a bipolar global reserve currency system.”
Roubini said the process would not happen overnight, but the end result would slow global growth and make goods more expensive to produce.
“We have moved from free trade to safe trade, from offshoring to friend-shoring, from just-in-time to just-in-case supply chains. These things are expensive, reducing global growth and increasing production costs…
That means less financing for our own fiscal and current account deficits, when we still have huge stocks of private and public debt. That could push the cost of financing for the US higher, when we have a very high ratio of private to public debt.”
As for the recent crash in the US banking system, Roubini said the crisis is far from over.
“I think the worst in terms of severe banking pressures is still ahead of us and of course this credit crunch will significantly reduce economic growth. They lend to SMEs, they lend to households, they lend to commercial and residential real estate. The credit crunch will send the US economy into recession later this year.”
You can view Roubini’s full interviews with Yahoo Finance and CNBC-TV18 here and here.
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