Policy Punchline

Stephen Roach is a Senior Fellow at Yale’s Jackson Institute for Global Affairs and a Senior Lecturer at Yale’s School of Management, where his research and teaching focus on the impacts of Asia on the global economy. One of Wall Street’s most influential economists, Prof. Roach spent more than 30 years at Morgan Stanley, where he was the Chairman of Morgan Stanley Asia and the bank’s Chief Economist. He has written extensively on globalization, trade policy, and international finance. Last October, Prof. Roach published an article in the Financial Times titled “The end of the dollar’s exorbitant privilege.” He argues that the dollar could fall as much as 35 percent by the end of 2021. In this interview, Prof. Roach walks us through the reasoning behind his arguments and discusses the economic and political significance of a dollar crash, mainly pointing to two metrics – a decline in domestic savings and an increase in the current account deficit. Domestic savings was at 1.4% of national income in Q1 2020, c