Currency

The Era of US Dollar Dominance Is ‘Finished,’ Says Wall Street Veteran


  • The dollar’s reign as the world’s reserve currency is nearly over, Dick Bove says.
  • The newly retired bank analyst blamed corporate offshoring and flagged the threat posed by China.
  • Bove highlighted the de-dollarization trend and said other analysts are too bought in to admit it.

The US dollar has been the lifeblood of global finance and trade since World War II — but one Wall Street veteran thinks the end of that era is nigh.

“The dollar is finished as the world’s reserve currency,” Dick Bove, who retired as a financial analyst after 54 years this month, told The New York Times.

Bove, 83, predicted that China’s economy would surpass America’s in size. He blamed the outsourcing of US manufacturing to other countries, arguing that trend has given other countries more control of international production, the global economy, and worldwide money flows.

He also suggested that cryptocurrencies such as bitcoin could help fill the void left by the dollar’s shrinking influence.

Dollar-denominated assets make up nearly 60% of international reserves, per the International Monetary Fund. However, several countries are embracing “de-dollarization” — working to erode dollar dominance — especially after the US took advantage of Russia’s reliance on the greenback to levy sanctions against it following its invasion of Ukraine in 2022.

Nations ranging from Brazil and Argentina to India and Bangladesh are exploring the use of backup currencies and assets, such as the Chinese yuan and bitcoin, for trade and payments.

Several governments have blasted the excessive influence of US monetary policy on other economies and currencies, the dollar’s strength for pricing out poor countries from imports, and the diminishing need for a petrodollar now the US has achieved energy independence through domestic shale oil and green energy production.

Bove, who worked at 17 brokerages during his career, told the Times that analysts who aren’t forecasting dollar doom are simply “monks praying to money” who are unwilling to bite the hand that feeds them: the traditional financial system.

The former chief financial strategist at Odeon Capital began working as a construction analyst in the late 1970s. Decades later, he was one of the few market watchers, along with the likes of “The Big Short” investor Michael Burry and hedge fund titan John Paulson, to spot deep-seated problems in the US housing sector before it collapsed and sparked the 2008 financial crisis.

He warned of a “powder keg” in that industry as early as 2005, a few years before multiple banks blew up and a global recession set in.

Bove also embraced his contrarian, combative tendencies during the interview. “I’ve liked to be a pain in the ass at times,” he said. “A lot of the time.” 



Source link

Leave a Response