Expect a 35% Decline in the Dollar

“The Vice Tightens on the Dollar” reads the headline warning there’s only one direction for the U.S. Dollar now— down, down, down!

Stephen S. Roach is a faculty member at Yale University and noted author.  His writings appeared in an opinion piece for Project-Syndicate.org on September 27, 2020.

Here are his dire projections for the Dollar

The US Dollar has now entered the early stages of what looks to be a sharp descent. The dollar’s real effective exchange rate (REER) fell 4.3% in the four months ending in August

Even with the recent modest correction, the greenback remains the most overvalued major currency in the world, with the REER still 34% above its July 2011 low.

I continue to expect this broad dollar index to plunge by as much as 35% by the end of 2021.

Stephen S. Roach warns that the “explosive growth” of U.S. government debt has lasting, long-term consequences. Even a quick look at this chart below shows exactly how out-of-whack deficit spending has become in so short a period of time.

 

The Long-Term Cost of Massive U.S. Deficits

Rather than summarize the writings of Stephen S. Roach, we urge you to read his analysis in full. He echos our worse fears that massive money creation, in so short a time—to fight the Covid pandemic and ensuing financial crisis—will cost us all in a huge loss of buying power.

We must say that his expectations of a 35% decline in the U.S Dollar even shocked us. On the positive side: The impact of a huge, sudden drop in the value of the Dollar has only positive implications for the last remaining safe havens— Gold and Silver.

Buy Gold, buy Silver, buy soon!