Stephen Roach, a leading authority on Asia, is worried of a quickly shifting global order and the U.S. budget deficit, suggesting it might spark a dollar crash.
“The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit,” the former Morgan Stanley Asia chairman told CNBC on Monday. “The dollar is going to fall very, very sharply.”
He foresees a 35% drop against major currencies for the dollar. “These problems are going from bad to worse as we blow out the fiscal deficit in the years ahead,” said Roach, a Yale University senior fellow. “The national savings rate is probably going to go deeper into negative territory than it has ever done for the United States or any leading economy in economic history.”