tl;dr
Goldman Sachs executive Ashok Varadhan predicts a continued decline in the US dollar due to the growing national budget deficit, currently about 6% of GDP, with similar deficits seen in France and the UK. He suggests gold and Bitcoin as hedges against currency devaluation. Despite concerns, Varadhan...
A top Goldman Sachs executive, Ashok Varadhan, predicts that the US dollar may continue to decline in value, while stocks could reach new all-time highs. Varadhan highlights concerns over the ballooning US national budget deficit, which is estimated to be about 6% of GDP this year. He notes that other developed countries, such as France and the UK, also face sizeable deficits, with France at 5.5% and the UK at 3.6% of GDP.
In light of these fiscal challenges, Varadhan suggests that assets like gold and Bitcoin could serve as effective hedges against currency devaluation, potentially rising relative to fiat currencies. Investors wary of the US dollar’s future may find refuge in these alternative stores of value.
On the equity front, Varadhan remains “super bullish,” citing several tailwinds for the US economy. He points to President Trump’s deregulation efforts as a potential catalyst for economic stimulation, alongside the emerging impact of artificial intelligence (AI). According to Varadhan, the adoption of AI by companies is still in its early stages, and as this process unfolds, it promises a significant “productivity dividend” that could boost corporate profits and drive stock prices even higher.
Varadhan emphasizes the importance of the US maintaining a fair recalibration of trade policies and attracting top talent to sustain this optimistic outlook. The combination of deregulation, AI advancements, and strong human capital could keep the stock market on an upward trajectory despite already reaching record highs.