The Chinese economy is poised to take over the U.S. economy, according to financial analyst Richard Bove, who also believes the American dollar is on the brink of a devastating collapse.

Bove, whose predictions have been accurate in the past, is convinced that other analysts also see the writing on the wall but won’t speak up about it because they are “monks praying to money” and don’t want to talk about the financial systems that are the source of their livelihood.

He told the New York Times in no uncertain terms: “The dollar is finished as the world’s reserve currency.”

He identified the offshoring of American manufacturing as one of the biggest threats to the dollar and the financial sector because “the people making the goods elsewhere are getting greater and greater control of the means of production and therefore greater and greater control of the world economy and therefore greater and greater control of money.”

Bove is known for sometimes making dramatic predictions, and while he sometimes misses the mark, he did accurately predict the 2008 housing crisis back in 2005 in a report entitled “This Powder Keg Is Going To Blow.” The 83-year-old has worked for 17 brokerage firms during his lengthy career and counts JPMorgan Chase Chief Executive Jamie Dimon among his supporters.

His newest prediction aligns with projections made from current growth rates. According to World Economics, they indicate that the GDP of China will be more than twice that of America in just over a decade.

Bove isn’t the only analyst who is warning about the decline of the dollar. In recent years, the currency has been sliding toward the end of its dominance on the world stage. Many countries have been working hard to reduce their dependence on the U.S. dollar for global payment transactions, especially emerging markets.

JP Morgan’s Alexander Wise said: “The risk of de-dollarization, which is a periodically recurrent theme throughout post-war history, has returned into focus due to geopolitical and geostrategic shifts.”

Many countries pushing for move away from U.S. dollar

The U.S. dollar has long been the world’s primary reserve currency and is still the most commonly used currency for international transactions and trade. However, more and more countries are starting to shift away from the dollar in favor of currencies such as the Chinese renminbi to pay for imports and exports, particularly in South America.

Some countries have been openly pushing for dedollarization in the wake of sanctions against Russia following its invasion of Ukraine. After the U.S. seized $600 billion worth of Russia’s central bank assets in American dollars and cut the Russian economy off of international money transaction system SWIFT, dozens of nations have expressed a desire to reduce their currency risk and get around potential sanctions.

BRICS, a group made up of Brazil, Russia, India, China and South Africa, has been looking for alternatives to the U.S. dollar and recently announced they will be pursuing a blockchain-based payment system that uses digital currencies for settlements.

Another factor driving the move away from the dollar is events that undermine the global perception of the American dollar’s stability and safety, such as growing political polarization in the U.S. At the same time, positive developments in other countries that enhance the credibility of their currencies are also playing a role. For example, political and economic reforms in China are chipping away at some of the hesitation some countries have had about using their currency.

Should the dollar be dethroned, it could have a significant effect on the American economy. Increased borrowing costs would make it challenging for people to access capital, in addition to making business more expensive to conduct. It would also damage the U.S. stock market, and many fear that it could lead to an economic collapse.

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Sources for this article include:

DailyMail.co.uk

NYTimes.com

JPMorgan.com