An economist with the Heritage Foundation has warned about the potential calamity of the U.S. dollar losing its reserve currency status. He stressed that “The Biden administration has taken so many actions to dethrone King Dollar that it would be difficult to rank them all by their destructiveness.”
Economist Warns Biden Administration’s Actions Threaten U.S. Dollar’s Reserve Currency Status
Heritage Foundation economist and research fellow E. J. Antoni sounded the alarm on the potential calamity of the U.S. dollar losing its reserve currency status in an interview with the Daily Caller News Foundation, published Sunday.
“The Biden administration has taken so many actions to dethrone King Dollar that it would be difficult to rank them all by their destructiveness,” the economist stated, warning:
Losing reserve currency status … would mean 70 years of deficits flooding back to the U.S., all competing with existing dollars held domestically to buy goods and services. That’s a hyperinflation scenario.
“It also means we could no longer export inflation abroad, so we’d bear the full cost of future inflation ourselves,” he opined.
The weakening value of the dollar is further exacerbated by inflation, with economists attributing it to the policies of the Biden administration and the Federal Reserve. In June, the Bureau of Labor Statistics revealed that the Consumer Price Index (CPI) rose by 3.0% on an annual basis.
While noting that “It’s difficult to overstate just how calamitous this would be and how quickly it could happen,” Antoni told the publication:
The Biden administration’s spending, borrowing, and printing of trillions of dollars gave us 40-year-high inflation … Such devaluation of the dollar has shaken foreigners’ confidence in the currency’s stability over time.
One currency that many expect to challenge the dominance of the U.S. dollar is the proposed BRICS currency. The economic bloc comprises Brazil, Russia, India, China, and South Africa. Russian news outlet RT recently claimed that the BRICS nations are launching a gold-backed currency. Antoni opined: “A gold-backed currency represents a real threat to all fiat monies, including the dollar.”
However, Leslie Maasdorp, vice president and chief financial officer of the New Development Bank, also known as the BRICS Bank, has insisted that the BRICS does not have an immediate plan to create a common currency to challenge the dominance of the USD. “The development of anything alternative is indeed a medium to long-term ambition,” he clarified. In addition, the International Monetary Fund (IMF) said it has not seen any specific proposal for a common BRICS currency.
Do you agree with the Heritage Foundation economist about the U.S. dollar? Let us know in the comments section below.