The idea that a trade war between China and the United States could strengthen the dollar is “utterly absurd”, and may lead to the depreciation of the US currency, according to economist, investor and stockbroker Peter Schiff, who made this claim from his YouTube channel.
According to the analyst, those who believe that this policy will generate a deficit in the US budget and, in the long run, will benefit the currency, are simply not right.
This is due to the fact that US Treasury bonds would have to secure excess liquidity when there was no difference between dollars and securities. Thus, while the US Federal Reserve would “reduce” its balance, Washington would otherwise “expand” it.
With this in mind, while dollar supply would continue to grow, demand for dollars would be reduced, which could cause “massive inflation” in the US.
Peter Schiff had already anticipated the global economic recession in 2008 and the US financial crisis as a result of the bankruptcy of US banks and the mortgage crisis, a bankruptcy that had serious repercussions on the global economy. Recently, the economist has warned about the impending collapse of the dollar.
The 2008 global financial crisis was a key reason why Russia and China were able to become global world powers, as economies closely attached to the US suffered greatly. One of the few US allies that did not suffer as much as other allies, especially Europe, was Australia as it has a booming economic trade relations with China.
As a result of the 2008 global financial crisis, Russia and China were able to emerge as global powers after US unipolarity was cemented after the collapse of the Soviet Union in 1991. The repercussions of this sees Russia and China holding vast amounts of gold and the expansion of their militaries that are capable of challenging US hegemony around the globe.