The dollar will remain dominant because most countries 'don't want to own their own currency,' Chamath Palihapitiya says
Most countries "don't want to own their own currencies," Chamath Palihapitiya said.
For this reason, even if the dollar would weaken, it would still remain the dominant currency.
A weaker greenback would help foreign trading partners import more goods, supporting dollar demand.
The greenback's position as a global reserve currency is at little risk of changing anytime soon, Chamath Palihapitiya said on the All-in podcast.
Even if the dollar were to weaken, the venture capitalist and so-called SPAC King said it would maintain its dominant position, and potentially provide more reason for other countries to trade with it.
"The position of the US dollar hasn't changed. Again, you have to remember a lot of these foreign governments — 187 or whatever the number is — countries outside the United States, rely on the US dollar," Palihapitiya said. "They don't want to own their own currency."
His comments were related to his take on US spending, and in response to recent remarks from by billionaire investor Stanley Druckenmiller, who warned runaway budgets could create serious fiscal issues in the future.
Palihapitiya acknowledged this could lead to an inflationary regime, but not an end to dollar supremacy.
"Dollars do get inflated, but that increased purchasing power also actually drives the balance of power back to the United States because all of these other folks all of a sudden find the ability to import a little bit cheaper, their economies get slightly better, but the US dollar actually still does well," he said.
Palihapitiya's perspective measures up against recent warnings that de-dollarization is well underway, with many analysts pointing to the emergence of alternatives, such as the Chinese yuan and a proposed shared currency among so-called BRICS countries — Brazil, Russia, India, China, and South Africa.
At the same time, some countries have raised the idea of using local currencies over the dollar, such as Indonesia and India.
But, in a previous episode of the podcast, Palihapitiya called de-dollarization concerns a "huge nothingburger," especially pushing against the idea that the yuan was a serious threat, given that it's too tightly controlled by China to become the backbone of global trade.
Meanwhile, a weaker dollar could manifest sooner if the ongoing debt ceiling crisis failed to resolve before the US defaulted, which could happen as soon as June 1.
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