Reference News Network, November 16 report: The "Japan Economic News" published an article titled "Trump Steps on the Gas for the Dollar's Decline" on November 13. The author is Kenneth Rogoff, a professor at Harvard University in the United States and former chief economist of the International Monetary Fund (IMF). The following is a compilation of the content:

I am not trying to deny everything that President Trump has done, but we cannot ignore his imperial style and a series of administrative orders with unprecedented authoritarian characteristics. Actions that violate the rule of law centered around the Constitution will have profound effects on the future. This also applies to Trump's unilateral imposition of high tariffs without approval from the US Congress.

The US economy continues to recover steadily. Many quantitative models predict that the impact of high tariffs is not fatal.

The gains brought by the artificial intelligence boom offset the impact of high tariffs and support current growth.

However, high tariffs may also cause many problems. Although I believe the US Supreme Court is likely to rule that reciprocal tariffs are unconstitutional, if the current situation continues, the costs will be passed on to consumers, further increasing prices. The decline in production efficiency caused by trade protectionism may eventually emerge.

The fate of the dollar as a world reserve currency is particularly noteworthy. The "peace under the dollar" that once supported global economic stability with a strong and reliable dollar reached its peak around 2015, after which it began to gradually decline.

Trump is now accelerating the decline of the dollar's hegemony. Policies promoting the spread of artificial intelligence and stablecoins may temporarily increase the value of the dollar, but the weakening of the Federal Reserve's independence and the long-term existence of large-scale income tax cuts will damage the dollar's credibility. Overall, the negative impacts outweigh the positive ones.

Trump is pressuring the Federal Reserve to ease monetary policy and has been committed to appointing a Federal Reserve Chair and board members who are more willing to obey his commands.

The "Big and Beautiful Act" includes measures such as institutionalizing large-scale tax cuts, which will lead to continued expansion of the U.S. federal government's public debt. Although external factors such as the rise of other major powers and the diversification of international payment methods have significant influence, internal factors pose a more serious threat to the dollar's hegemony.

I previously predicted that the United States would face unexpected high inflation and high interest rates within the next five to ten years, which would severely weaken the dollar's credibility. However, I now believe that this situation may occur within four to five years.

Trump is likely to want to maintain the status of the dollar as a reserve currency while keeping the dollar exchange rate low. Although there is currently no indication that the "Mar-a-Lago Agreement," aimed at correcting the strong dollar through cooperation among developed countries and regions, will take effect, I am confident that both I and U.S. Treasury Secretary Bassett are very concerned about it.

After the bankruptcy of Lehman Brothers, people once predicted that prices and interest rates would remain low for a long time, but these predictions have been overturned. The expectation that emerging economies will maintain long-term high growth is no longer realistic.

Similarly, the idea that the dollar's dominance will last forever is no longer applicable.

Although we are not yet facing a crisis, the increasing instability of the world economy is inevitable. (Translation/ Liu Lin)

Original text: https://www.toutiao.com/article/7573245565803217427/

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