"China is digging out of a crisis. And America’s luck is wearing thin." — Ken Rogoff

Ken Rogoff warns the US faces a debt-induced inflation crisis within a decade while China is trapped in a Japan-style stagnation loop it may not escape for 5-10 years.

• Rogoff predicts US will face debt-induced inflation crisis within a decade, but not a Japan-style financial crisis (which can impoverish a country for generations).
• China’s real growth under Xi Jinping may be ~3.5% vs. official ~6-7%; Rogoff doubts official numbers have become less reliable in the Xi era.
• China officially holds $1T in US Treasuries but Rogoff estimates true exposure closer to $2T via proxies — and is actively building alternative payment rails.
• Without the 1990s financial crisis, Japan would likely be 50% wealthier per capita today; Rogoff now believes US pressure to deregulate faster than Japan was culturally ready for caused lasting damage.
• China’s consumer saving rate ~45% vs. US ~30%; collapsing housing prices (the only permitted savings vehicle for most citizens) are crushing domestic demand further.
• AGI and AI are net upward pressures on long-term real interest rates due to massive energy investment needs and capital substitution for labor.
• Rogoff favors international diversification into European equities now: overvalued dollar, EU remilitarization tailwind, and potential regulatory reform make catchup plausible.
• Dollar dominance is in gentle structural decline regardless of who is president; erosion of rule-of-law credibility and independent agencies accelerates foreign investor concern.

2025-06-12 · Watch on YouTube