Market Knows Dollar 'Has No Clothes': Asset Manager

Thursday, 31 Mar 2011 | 5:35 AM ET

The dollar sits on the edge of an abyss, with its reserve currency status at risk as America loses its political and military dominance according to David Murrin, the chief investment officer and senior partner at Emergent Asset Management.


“The failure of the dollar to bounce in any meaningful way following the revolutions in the Middle East and North Africa shows the world is losing confidence in the dollar,” Murrin told CNBC.com on Thursday.

“The market has realized that the dollar has no clothes, the dollar's long-term decline is happening already,” Murrin added.

As a contrarian investor, Murrin said he found it difficult to join the huge amount of dollar bears but when looking at the situation in the world, he could not see any reasons to hold the dollar .

“You have the challenge of China, you have Obama’s indecision on Libyaand a possible war in North Africa that will further drain American resources following wars in Iraq and Afghanistan. You have indecision everywhere from government spending to energy policy, which is dangerous given the challenges America faces,” he said.

The West: Denial and Decline
David Murrin, Chief Investment Officer at Emergent Asset Management told CNBC stagflation was a reality and would "destroy our wealth" in the West, which he added was in "denial" about the potential of the New World, led by China.

The collapse of governments in North Africa and possibly the Gulf shows the failure of US foreign policy as a model, he added.

“This is nothing less than a failure in confidence in the power of the US as the world's political and military giant,” Murrin said.

So how would you trade Murrin’s view of the decline of America as a superpower?

“The dollar will trade sideways for a time until the next, big lurch downwards. The money, for want of a better place to go that can handle huge liquidity, will head for the euro and the yen,” said Murrin, the author of a recent book, "Breaking the Code of History", which focused on the rise and fall of empires across the ages.


Contact Europe News


    Get the best of CNBC in your inbox

    › Learn More

Europe Video

  • Victor Anthony, managing director at Topeka Capital Markets, says Facebook is performing "exceptionally well" with engagement at an all-time high and revenue growing for the third quarter in a row.

  • Grigoris Kouteris, general manager at Upstream, says one of the key lessons from Apple's results is the focus on emerging markets and the company's "move beyond the developed world."

  • Pedro Noronha, managing partner at Noster Capital, explains that he remains "not terribly excited" about Apple in spite of the positive quarterly numbers.