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'Selective Default' Only Solution to US Debt: CIO

The U.S. should choose to default instead of delaying the inevitable by raising the debt ceiling without dealing with the crux of the financial problems, David Murrin, chief investment officer at Emergent Asset Management told CNBC Monday.

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"It's incredibly frustrating to watch this slow train wreck taking place. All we have are incremental solutions to the problem and that's no good anymore. You need some very drastic solutions to shift America out of its paradigm because it's being chased by a hugely powerful China," Murrin said in an interview.

"The only solution is the unthinkable and that is selective default. They will default whatever happens why not choose your default?" he added.

U.S. lawmakers agreed late on Sunday on a plan to raise the debt ceiling and to cut $2.4 trillion from the budget deficit over the next ten years.

In his book 'Breaking the Code of History' Murrin argues that the shift of power from the West to the East both economically and militarily is inevitable, but while there is time the U.S. can choose to shape its future in a East-dominated world.

"The worst-case scenario is not about economics but about impending conflict between China and America," he said.

Unless the gap between China's gross domestic product and the US one is maintained tight, America will be "vulnerable to the process which produced the two world wars," according to Murrin.

"In comparison, choosing selective default and shifting your financial system, which might appear to be a big event but compared to the potential risks we face ahead of us, I think it's a more acceptable method.

While they still have leverage they need to do something radical," he added.

While the markets will read the current deal as a boost, it is just an illusion, Murrin warned.

"I wouldn't be surprised if we see an August rally, although it is just a collective illusion. You have to be realistic and stagflation is a reality but people in critical situations tend to be delusional.

When you look at the dollar, the yen, the euro they are all crap - it's just crap versus crap," he added.

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