U.S. policymakers could “change the world” by devaluing the dollar, one analyst has claimed.
Speaking to CNBC’s “Squawk Box Europe” on Monday, independent macro advisor Hugh Hendry said quantitative easing programs — where central banks buy assets like government bonds to inject liquidity into the economy — were not working.
Instead of targeting bonds as a form of economic stimulus, policymakers should look to the value of the greenback, he suggested.
Quantitative easing — we’re being missold something,” Hendry argued. “Simply publishing or expanding these inert central bank reserves and trying to scare us all to death that they’re actually printing real money is a fraud.”
The underlying problem, he claimed, is that there is a shortage of dollars in the global market.
“America has decided over several decades to impose a global dollar standard, a monetary standard on the rest of the world,”
Hendry said. “It’s one thing to be the king, (but) you have to behave regally, you have to behave like the king. So if you’re going to impose a dollar standard on the world, you have to stand by and provide sufficient liquidity. And that’s actually where they’ve been failing.”
Hendry said the widespread sell-off in March, where global markets plummeted amid the height of fears around the coronavirus, was partially due to investors having to sell assets in order to create dollars and repay debt.
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The U.S. can 'change the world' by devaluing the dollar, analyst says
Speaking to CNBC’s “Squawk Box Europe” on Monday, independent macro advisor Hugh Hendry said quantitative easing programs — where central banks buy assets like government bonds to inject liquidity into the economy — were not working.
Instead of targeting bonds as a form of economic stimulus, policymakers should look to the value of the greenback, he suggested.
Quantitative easing — we’re being missold something,” Hendry argued. “Simply publishing or expanding these inert central bank reserves and trying to scare us all to death that they’re actually printing real money is a fraud.”
The underlying problem, he claimed, is that there is a shortage of dollars in the global market.
“America has decided over several decades to impose a global dollar standard, a monetary standard on the rest of the world,”
Hendry said. “It’s one thing to be the king, (but) you have to behave regally, you have to behave like the king. So if you’re going to impose a dollar standard on the world, you have to stand by and provide sufficient liquidity. And that’s actually where they’ve been failing.”
Hendry said the widespread sell-off in March, where global markets plummeted amid the height of fears around the coronavirus, was partially due to investors having to sell assets in order to create dollars and repay debt.
Read more:
The U.S. can 'change the world' by devaluing the dollar, analyst says
