Will Biden’s Spending Spree Shake Confidence In The World’s Reserve Currency

FILE PHOTO: U.S. dollar banknote is seen in this picture illustration taken May 3, 2018. REUTERS/Dado Ruvic/Illustration

Zero Hedge: While the greenback may look forward to supercharged U.S. growth, the spending that’s being unleashed to drive American exceptionalism comes with an eventual cost –- and a big dollar sign in front of it.

“The Lord will open to you His good treasure, the heavens, to give the rain to your land in its season, and to bless all the work of your hand. You shall lend to many nations, but you shall not borrow.” Deuteronomy 28:12

U.S. Exceptionalism Comes With a Cost to the Dollar

A fiscal push amounting to more than 20% of GDP, towering over those of peers, adds to tailwinds for relative U.S. growth. And a resumption of strong U.S. data can bolster near-term upside, with a robust March non-farm payrolls print kicking it off. That’s as the U.S. braces for a period of unleashed pent-up demand and a transitory surge in price pressures.

Ultimately, U.S. growth boosted by free-flowing fiscal taps comes with an eventual price tag of a weaker greenback.

Ballooning budget shortfalls, the risk of depleted private savings and U.S. strength feeding into widening trade deficits can finally shake confidence in the world’s reserve currency. Read More