US dollar to collapse in 2013: Economist

The US dollar is expected to take a value nosedive in 2013 if China refuses to continue financing Washington’s spiraling debt, an economic analyst tells Press TV.

Touching upon the recent tax law and spending cuts in the United States, Max Keiser noted in a Thursday interview with Press TV that when America takes on more debt than it is able to repay by collecting taxes, the difference is paid for and financed by China.

China’s support for the US debts has turned America into the worst G20 economy in terms of the gap between its spending and revenues, he pointed out.

Keiser noted that in 2013 “…the US dollar will collapse because China won’t finance it anymore and that is the risk that we are talking about, the risk that [the US President Barack] Obama does not tell his population and that is unconscionable; that is a lack of leadership.”

The analyst stated that US is heading into a “hyperinflationary economy” as a consequence of the catastrophe caused by “the very rich in America.”

He also warned of an imminent neo-feudalism in the global economy where there is an “incredible disparity” between the economic titans and the ordinary public.

On Wednesday, Obama signed into law the ‘American Taxpayer Relief Act of 2012’ to avert the so-called fiscal cliff.

On January 1, the House of Representatives voted 257 to 167, approving the bill, which entails raising taxes on the wealthiest Americans, while exempting others who earn less than $450,000 a year. It will also put off USD109 billion in budget cuts for two months.

The Congressional Budget Office has criticized the bill, saying it would add almost four trillion dollars to the federal deficit over a decade, since the deal continues to entitle nearly all Americans with low tax rates.

The International Monetary Fund said the bill was too limited to deal with the financial problems of the United States.