Zero Hedge: DoubleLine Capital Founder & CEO, Jeffrey Gundlach, sat down with Yahoo Finance’s Julie LaRoche yesterday for a lengthy interview discussing the outlook for the US Dollar, the economic recovery, currencies, and Fed expectations… among other things.
“We’re running our economy in a way that is almost like we’re not interested in maintaining global reserve currency status.”
Gundlach noted that in the aftermath of the pandemic, the strongest economy “by far” has been China, not the US.
“China’s made no secret of the fact that they want to be a global player and have at least a seat at the table of global reserve currency status,” he said, adding that China has “made no secret of the fact that they want their military to be dominant, maybe the biggest in the world.”
Combine this with the fact that the US is “growing debt like crazy,” and it’s clear the dollar is headed towards losing its reserve currency status, Gundlach said.
“And so as long as we continue to run these policies, and we’re running them more and more aggressively– we’re not pulling back on them in any way– we are looking at a roadmap that is clearly headed towards the US dollar losing its sole reserve currency status.”
Opinion: In my July 31 radio interview with my late friend Jimmy DeYoung, the topic of world reserve currency and its relation to central bank digital currencies (CBDCs) was front and center.
JD: Today, the world currency is the US dollar, which means what to the financial world?
RC: A world reserve currency is ONLY ONE currency that is in use by governments and central banks around the world for the purchase of commodities like wheat, corn, soybeans, and oil. The reserve currency is used in all aspects of the global economy.
Because of its size and strength, the US dollar replaced the UK Pound Sterling as reserve currency in 1944 by a vote of 44 nations at a conference in Bretton Woods, New Hampshire.
Since then, the nations of the world acquire dollars through international transactions and the purchase of US Treasury bonds.
JD: Is this a move for China’s digital currency to replace the US dollar as the international currency?
RC: I believe the real purpose of China’s new digital currency is to challenge the long-standing global reign of the US dollar.
On October 1, 2016, the Intl Monetary Fund added the YUAN to the basket of global currencies called SDR, made up of the: Dollar, yen, euro, British pound, and the Chinese renminbi, or yuan.
The SDR (special drawing rights) was created as a back-up for the world reserve currency. The addition of the yuan was a major boost for the legitimacy of the Chinese currency.
JD: Could China’s digital currency have a controlling power over the world’s population, which the US dollar does not have?
RC: I don’t think so. Even with China’s meteoric rise on the global stage, and Beijing’s long hoped for physical currency to ride on the back of its economic success, a shift away from the dollar has not happened.
No global consensus exists today for China in the same way that it did for the US in 1944 when the dollar was pegged as the world’s reserve currency.
So what currency will have world reserve status if/when the US dollar falls?
In Daniel 7:7, the prophet indicates the final Gentile world kingdom will be the revived Roman Empire. A beast so wicked Daniel could find no animal comparison, ‘trampling the residue (earth) with its feet.’
All eyes in the European Union.
You can hear the whole interview HERE