In a congressional hearing, White House economist Jared Bernstein says there’s “some evidence” that China wants the U.S. dollar to lose its status as the world’s reserve currency. However, U.S. Senator Bill Hagerty worried that the biggest threat to the USD supremacy originates from within.
China Wants to See U.S. Dollar Losing World’s Reserve Currency Status, Says Bernstein
White House economist Jared Bernstein addressed some congressional concerns about the U.S. dollar’s status as the world’s reserve currency prior to the Senate Banking Committee on Tuesday throughout a hearing on his election to be chairman of the Council of Economic Advisers.
Bernstein, a present member of the White House Council of Economic Advisers, formerly functioned as primary economist to then-Vice President Joe Biden in the Obama-Biden Administration prior to signing up with the Center on Budget and Policy Priorities, where he functioned as a senior fellow from 2011 to 2021.
During the hearing, Senator Bill Hagerty (R-TN) kept in mind efforts by a number of nations that threaten the status of the U.S. dollar as the worldwide reserve currency, such as Brazil’s president, Luiz Inácio Lula da Silva, requiring an end to the dollar trade supremacy. Emphasizing that China praised this, the senator from Tennessee asked Bernstein: “Do you agree that China wants to see this happen?” The White House economist without delay responded:
I believe there’s some proof that it does.
Commenting on why China wants to see the USD supremacy decreased, Bernstein detailed: “I think there are extremely important privileges, and even in the realm of security reasons, to have — the benefits from having — the reserve currency.” He included: “One of the most obvious is, of course, sanctions. If you control the reserve currency, you’re able to impost sanctions as we’ve done on Russia to considerable effect.”
Debt Ceiling and the ‘Biggest Threat’ to USD
Senator Hagerty continued to raise issues about “the incredible debt” the U.S. federal government “has piled up,” and “the interest rate cost, which the CBO [Congressional Budget Office] has projected to actually be greater than our entire defense budget.”
However, Bernstein stated: “One thing we could really do to help both the dollar maintain its reserve currency status, but also to protect the value of the dollar, would be to raise the debt ceiling.”
Commenting on the U.S. dollar possibly losing its reserve currency status, Hagerty worried the value of getting financial policies in order. “The financial costs is, I believe, going to let the marketplace determine what occurs to the dollar as a reserve currency, and if we continue to permit budget deficit to leave control, I really, really seriously am worried that we do it to ourselves. I understand China would like to do it to us.” He concluded:
China would like to see us lose our status as a reserve currency however I believe the biggest threat is from within by enabling our costs to leave control. That’s the course that we’re on now. We requirement to see it back under control.
Do you believe the U.S. dollar will lose its status as the world’s reserve currency? And, do you concur that the biggest threat to the USD originates from within? Let us understand in the comments area below.
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