U.S. On A 'Roadmap To Losing Global Reserve Currency Status'

Gundlach Warns US Is On A "Roadmap To Losing Global Reserve Currency Status"

TYLER DURDEN

DoubleLine Capital Founder & CEO, Jeffrey Gundlach, sat down with Yahoo Finance's Julie LaRoche yesterday for a lengthy interview discussing the outlook for the US Dollar, the economic recovery, currencies, and Fed expectations... among other things.

As usual, the new bond king was not shy of expressing his strong opinions, warning that:

"We're running our economy in a way that is almost like we're not interested in maintaining global reserve currency status."

Gundlach noted that in the aftermath of the pandemic, the strongest economy "by far" has been China, not the US.

"China's made no secret of the fact that they want to be a global player and have at least a seat at the table of global reserve currency status," he said, adding that China has "made no secret of the fact that they want their military to be dominant, maybe the biggest in the world."

Combine this with the fact that the US is "growing debt like crazy," and it's clear the dollar is headed towards losing its reserve currency status, Gundlach said.

"And so as long as we continue to run these policies, and we're running them more and more aggressively-- we're not pulling back on them in any way-- we are looking at a roadmap that is clearly headed towards the US dollar losing its sole reserve currency status."

Watch the interview below:

JULIA LA ROCHE: Welcome back to Yahoo Finance Live. I'm Julia La Roche. And we're having a fascinating discussion with DoubleLine Capital Founder and CEO Jeffrey Gundlach. Jeffrey, you're just making a point about your strongest conviction on the future of the US dollar. I want to explore this a bit further and help our viewers understand what some of the longer term implications of this might mean, especially for the standing of the US globally.

JEFFREY GUNDLACH: Well, the US has enjoyed the status of sole reserve currency globally for decades. And it's an incredible benefit. We also have the biggest military in the world, which just kind of goes hand in glove with being a reserve currency, I think.

But in the aftermath of the lockdowns and pandemic that continues to wear on, the strongest economy in the world, by far, has been the Chinese economy. And the US economy has bounced back with a lot of consumption. A lot of that consumption is going to China. It's one of the reasons China has such a strong economy.

So what we're seeing is the United States is starting to fall behind in economic growth. That's not a new thing. That's been going on for a generation-- the US falling behind. But the Chinese economy is growing so rapidly that the estimates as to when the Chinese economy will be the largest in the world keep getting pulled forward. 20 years ago, it was thought to be 2050 the Chinese would be bigger than the US, and then it was 2040.

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