In a recent interview on Fox & Friends, Breitbart economics editor John Carney discussed the concerns over a possible global shift away from the US dollar, warning that the weakening of the US dollar is a “serious threat” to America’s influence on the world stage.
Carney said the dollar’s weak valuation may be inevitable. He said after the Second World War, the US had the largest economy in the world. In the 70s, “global banking” became “dollar central.” Once the Soviet Union fell, the US dollar became the world currency. And now, Carney added, that is “drifting away.”
He noted that both Russia and China are building an “alternative block of currency.”
However, Carney doesn’t believe that China’s yuan will become the world’s “dominant currency.” He said America’s closest allies, including Europe and Japan, will remain with the US dollar. Likewise, Carney thinks Saudi Arabia and the other oil countries will also want to keep a close relationship with the US dollar.
At the same time, Carney does think there are going to be “alternate blocks” that haven’t been seen for a long time.
Carney believes in essence, the world is returning to “a sort of Cold War basis,” with different blocks of economies using different blocks of currencies.
He said the United States is currently trying to lower the trade deficit with China, which will force China into a non-dollar-based system while being a boost to the US economy.
In the last 20 years, the US dollar has lost 12 percent of the market share, falling from 71 percent to 59 percent, according to the IMF.
China began efforts to disengage from the US dollar in 2014 during Russia’s invasion of Crimea. Since then, nearly 3 percent of reserve portfolios are in the Chinese yuan.
Watch Carney’s interview HERE.