Dollar to Lose “Exorbitant Privilege” as Reserve Currency

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  • The dollar is set for a huge crash, according to a former Morgan Stanley Asia chair
  • Stephen Roach writes that a gap between domestic saving and current account deficit is degrading its value
  • Bitcoin, gold, and silver can all take advantage of a dollar collapse

A former Morgan Stanley Asia chair and Yale University faculty member has predicted that the U.S dollar is set to lose its “exorbitant privilege” as the world’s reserve currency. Stephen Roach, writing in the Financial Times, yesterday warned American monetary policy creators that decades of abusing its position as the dominant monetary force in the world was about to come to an end, and that the value of the dollar could decrease by over a third before the end of next year. The argument is another reminder of why alternatives like Bitcoin are so important.

35% Dollar Crash by 2021?

Roach doesn’t pull any punches in his dissection of the future strength of the dollar and the reason for its probable decline. He cites a proposition put by the then French finance minister in the 1960s that America had spent decades supporting the country’s “over-extended standard of living” through abuse of its “privileged position as the world’s dominant reserve currency”.

Roach argues that this position of privilege is about to come to an end, and that a 35% crash in the value of the dollar by the end of 2021 was not out of the question. Roach blames a “a lethal interplay between a collapse in domestic saving and a gaping current account deficit” for the dollar’s demise, both past and future, calling it “the world’s most overvalued major currency” which is due a sharp correction.

Bitcoin Can Take Advantage

Such a proposition is a stark reminder of why alternatives like gold, silver, and Bitcoin are vital. As we have seen in the past, these commodities are negatively correlated to the dollar, and provide a useful way of retaining personal wealth in times of currency collapse.

We have already seen such a message coming loud and clear from numerous parties in the traditional finance and business worlds, including hedge fund managers, former pension fund CEOs, and heads of business, all of whom have realized the same thing as roach – the dollar is in a perilous position, and the likes of Bitcoin are set to take advantage in a big way.