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Top Economists Warn That the US Economy Poses the Greatest Threat to Dollar Dominance

The dominance of the dollar as the world's top reserve currency is likely to continue, but the biggest threat to its status comes from the US economy itself, according to economists Steven Kamin and Mark Sobel. They argue that the dollar's widespread use in global trade and central bank reserves puts it far ahead of other currencies. However, they warn of a "severe deterioration" in the US's financial and economic situation due to political polarization, congressional dysfunction, and a lack of interest in curbing the widening US budget deficit. This could lead to sustained inflation, reduced private investment, financial volatility, and a less dynamic economy, which would pose a greater threat to the dollar's dominance than any external challenges. Additionally, the fragmentation of global economies into separate blocs could further impact global trade, productivity, economic growth, and international stability. The US's precarious fiscal situation, with a projected federal budget deficit of $1.6 trillion this year and $2.6 trillion in ten years, also poses a risk to the dollar's status. Read More.

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Leak Suggests Federal Reserve's Digital Dollar (CBDC) May Be Imminent

A leak from a closed-door meeting between Federal Reserve Chair Jerome Powell and senior Democrats has revealed ongoing discussions about the creation of a central bank digital currency (CBDC), also known as a digital dollar. This comes amid a significant surge in the prices of Bitcoin and Ethereum, which has brought renewed attention to cryptocurrencies. Powell stated that Congress would need to authorize the creation of a digital dollar, and while the Fed has not made a decision to recommend a CBDC, it is not advocating against it either. The potential creation of a digital dollar has sparked a culture war, with former President Donald Trump, a 2024 Republican front-runner, stating he would block its creation based on advice from Vivek Ramaswamy. Meanwhile, China is leading in the development of its digital yuan, and the EU and UK are exploring their own digital currencies. Read Now.