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"China is digging out of a crisis. And America’s luck is wearing thin." — Ken Rogoff, Sonic AI
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"China is digging out of a crisis. And America’s luck is wearing thin." — Ken Rogoff
Dwarkesh Podcast
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Jun 12, 2025
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1:36:04
Interview
"China is digging out of a crisis. And America’s luck is wearing thin." — Ken Rogoff
From
The Dwarkesh Patel Podcast
Ken Rogoff
(Professor, Harvard University & Former Chief Economist, IMF, guest)
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Executive Summary
China is in a deep economic crisis driven by massive overcapacity in its real estate and infrastructure sectors, a problem exacerbated by Xi Jinping's shift from competent technocratic leadership to political loyalists.
The United States faces a high probability of another significant inflation spike within the next decade, fueled by a 'when in doubt, bail it out' policy from the Treasury and Fed, and growing political pressure that threatens the central bank's independence.
Financial crises, like the one China is experiencing and the 2008 crisis in the US, cause permanent, long-term damage to a country's economic output, challenging narratives of inevitable growth or quick recovery.
In preparation for potential conflict, China is actively de-risking from the US financial system by diversifying its reserves into gold and developing alternative international payment mechanisms, posing a long-term challenge to the US dollar's global dominance.
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