We run our economy as if we are not interested in maintaining the status of the global reserve currency.
Billionaire bond investor Jeffrey Gundlach, founder and CEO of DoubleLine Capital valued at $ 137 billion, has been convinced for several years that the current economic policies will cause the US dollar to fall, making the US the only one Lose reserve currency.
“My number one belief, if I can look at a few years – I’m not talking about the next few months, but several years – is that the dollar will go down,” Gundlach told Yahoo Finance Live in an exclusive interview on Monday afternoon.
In Gundlach’s view, the “place to be” in the long run are emerging markets and “non-US companies”. While the Gundlach is already rotating in European stocks, the investor expects an “aggressive rotation in emerging markets”, but notes that it is “currently too early” for that.
“So the dollar is falling, which is another reason why ultimately – we touched gold – I think gold will go much higher in the end, but it’s really hibernating right now,” he added.
The 61-year-old “Bond King” later stressed that the United States’ status as a global reserve currency was in jeopardy.
“[The] The US has enjoyed the status of the world’s only reserve currency for decades, and that’s an incredible advantage, “said Gundlach.
Jeffrey Gundlach, CEO of DoubleLine, will be interviewed on Thursday, May 5, 2016 in New York during a taping of Wall Street Week on Fox Business Network. (AP Photo / Richard Drew)
He pointed out that China’s economy was “by far the strongest economy in the world” after the global coronavirus pandemic and lockdowns. While US GDP has “recovered with high consumption, much of that consumption goes to China,” he added.
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“That’s one of the reasons China has such a strong economy. So what we see in the United States is starting to lag behind in economic growth. This is not a new thing to fall back on, “said Gundlach.
The investor also noted that estimates of when China’s economy will be its biggest are “always going on”.
“We have debt-to-GDP ratio that drives most of our so-called economic growth. So is it really economic growth when you borrow money or print money, send checks to people who turn around and also buy goods on Amazon? maybe to pay off debts and speculate and these goods come from China? “said Gundlach.
He added, “We run our economy in a way that is almost like we are not interested in maintaining global reserve currency status, or the greatest military or the world calls it supremacy or control. As long as we continue this policy, and we are leading it more and more aggressively, we are not withdrawing it in any way, we are looking at a roadmap that is clearly heading towards the loss of the US as the only reserve currency status. “
With the current economic policy, it is “almost certain” that the US dollar should fall, according to Gundlach.
“The value of the dollar is so high because we enjoy global reserve currency status and don’t really respect it enough. We take it for granted, I think United States, in terms of how we thought of things in previous decades and generations. And I think we’re setting the stage to unfortunately … really since 1980, but it’s really accelerated that much in the last decade and there’s no sign that it could help, “he said.
According to Gundlach, the US dollar “already peaked” when the US dollar index hit 103.
“I believe the dollar will break the lows of the last downward cycle. The dollar has been in a series of falling highs for decades – dating back to the 1980s. Because of this, I think if we get to the next break at the lower levels, the dollar will cross the recent low of around 80 and even break the low of 70. So I think the US dollar is going down a little 25%. “
Julia La Roche is a Yahoo Finance correspondent. Follow her up Twitter.
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