Steve Eisman, the investor made famous by his portrayal in the movie “The Big Short,” has dismissed talk of the dollar losing its reserve currency status. In a recent interview with CNBC, Eisman scoffed at the idea that the growing US sovereign debt would be a problem for the dollar, stating, “The people who have been making this argument about US debt have literally been making it for 30-40 years. When you’re 40 years too early, have a little humility and keep your mouth shut.”
The concept of “de-dollarization,” or the dollar losing its status as the world’s reserve currency, has gained traction in recent years. Advocates point to developments like Russia and Iran trading outside of the SWIFT payment system as the first steps toward a dollar substitution. The argument is that the increasing US national debt, which currently stands at $34 trillion, could lead to a redirection of capital away from US debt and into other “safe haven” assets like gold or a potential “BRICS currency” (a currency proposed by the BRICS nations: Brazil, Russia, India, China, and South Africa).
However, Eisman, who famously profited from betting against subprime mortgages during the 2008 financial crisis, dismisses these arguments. He believes that the dollar will remain the dominant international reserve currency, pointing out that 59% of foreign exchange reserves are still held in dollars, albeit a 25-year low. He also references historical data, noting that the dollar’s share of global reserves was as low as 50% in 1990 when the United States was the sole geopolitical superpower.
While Eisman’s opinions provide reassurance for those who believe in the strength of the dollar, discussions about the dollar’s strength and the mounting US debt burden are likely to persist. With 2024 being an election year, the issue of the national debt is bound to remain a topic for debate.
In conclusion, Steve Eisman’s dismissal of the dollar losing its reserve currency status adds weight to the argument that the dollar will remain the dominant international currency. However, the issue of the growing US national debt and its potential implications will continue to be a topic of discussion, especially with the 2024 election on the horizon.
