Gold proponent and financial analyst Peter Schiff spoke to Rick Sanchez, the host of ‘Journalistically Speaking,’ about the Chinese yuan challenging the US dollar. Schiff explained that the US could be in serious trouble as it is heavily dependent on foreign manufacturing. While America outsources most of its workload, it could soon spell doom for the economy due to the closure of manufacturing plants. Foreign manufacturers could command the shots after they turn financially independent in the coming years.
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Manufacturing Could Make the Chinese Yuan Stronger Compared to the US Dollar
This gives the Chinese yuan a bigger advantage than the US dollar as China controls the global manufacturing industry. He also added that many countries are looking to disinvest from the US dollar due to the massive national debt, which is now running towards $40 trillion. The Federal Reserve printing money is causing ripple effects, making it risky to hold the USD in central reserves. If the US economy falls, the economies of developing countries will also be hit, thanks to holding the greenback in their reserves.
“It’s not just China,” Schiff noted. “Countries all over the world want to divest from the US dollar (not the yuan). Not only because the US keeps printing them to finance massive debts, but also because holding dollars has become a political risk.” Schiff also pushed back against the notion that the US holds the upper hand because it is the world’s biggest consumer. “That’s backwards,” he said. “Producers have the power, not consumers. China and other emerging markets can consume what they produce. America can’t consume what isn’t produced,” he said, citing that the yuan has an upper hand.
Decades of outsourcing workload, he added, have left the US dangerously dependent on foreign manufacturing. Without manufacturing countries like China, Vietnam, Thailand, and Bangladesh, America’s consumeristic firms could shut down in a year. The ripple effects could be felt from the clothing industry to the GPU chips and appliances. In conclusion, the Chinese yuan has an upper hand in the coming decade to walk all over the US dollar.