(Bloomberg) — The dollar’s decades-long position as the global reserve currency is in jeopardy because of steps the U.S. has taken to support its economy during the Covid-19 pandemic, according to Ray Dalio, founder of hedge fund giant Bridgewater Associates.
While equities and gold benefited from the trillions of dollars in fiscal spending and monetary injections, those efforts are debasing the currency and have raised the possibility that the U.S. will go too far in testing the limits of government stimulus, Dalio said Tuesday in an interview with Bloomberg Television.
“There is so much debt production and debt monetization,” Dalio said.
The Bloomberg Dollar Spot Index has dropped 10% from its peak in late March as investors responded to the pandemic and efforts by central bank and government officials to contain the economic fallout. All of the world’s major developed currencies have gained against the dollar as have precious metals such as gold, silver and platinum.
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WNU Editor: What the US government and Congress doing right now is not sustainable. If this deficit spending and debt production continues for two or three more years, the Americans can kiss-away their dollar as a reserve currency. To say that the economic and national security consequences of such an event will be profound is an understatement.