According to economist Stephen Roach, a double dip recession is very probable in 2021, as a dollar crash is on the horizon. The seemingly crazy idea of a dollar crash is nothing new in “alternative media”, but this time we have a “reputable” mainstream guy saying it.
Yale University senior fellow Stephen Roach said on CNBC that 2021 will be brutal for the dollar during the Trading Nation show on Wednesday.
We’ve got data that’s confirmed both the saving and current account dynamic in a much more dramatic fashion than even I was looking for. The current account deficit in the United States, which is the broadest measure of our international imbalance with the rest of the world, suffered a record deterioration in the second quarter. The so-called net-national savings rate, which is the sum of savings of individuals, businesses and the government sector, also recorded a record decline in the second quarter going back into negative territory for the first time since the global financial crisis.
“Lacking in saving and wanting to grow, we run these current account deficits to borrow surplus saving, and that always pushes the currencies lower. The dollar is not immune to that time honored adjustment.”
“As we head into flu season with the new infection rates moving back up again with mortality unacceptably high, the risk of an aftershock is not something you can dismiss. The record of history suggests that this is not a time unlike what the frothy markets are doing to bet that this is different.”
Peter Schiff, another reputable economist and investor, also predicted the demise of the dollar during a recent show. Schiff is best known for his eerie warnings about the 2008 financial crash avant la lettre.
