the Butterfly Effect: Coronavirus may Redefine the Global Currency Landscape

Shaoshan Liu

No zus5h, SocArXiv from Center for Open Science

Abstract: In Trump’s political viewpoint, all problems within the U.S. were caused by external problems, such as the rise of China, and thus Trump has rejected globalism and took on the policy of ‘America First’. Trump’s policy inevitably leads to the decoupling between the U.S. and China, and the recent coronavirus outbreak may catalyze the decoupling process. In short term, the U.S. fiscal and monetary rescue plans may expose the national debt and deficit problems, hurting foreign countries’ confidence of the U.S. ability to pay its obligations. In long term, the U.S. has limited ability to stimulate economy without hurting the U.S. dollar’s supremacy; whereas China has a greater ability to coordinate fiscal and monetary policies to stimulate economy. May the decoupling continues, the U.S.-China capital war becomes inevitable and it may redefine the global currency landscape.

Date: 2020-03-24
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:zus5h

DOI: 10.31219/osf.io/zus5h

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