Citadel CEO Ken Griffin has warned that the accelerating global move away from the U.S. dollar indicates that investors are de-risking their portfolios from U.S. sovereign risk.<\/p>\n
\u201cWe\u2019re seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize, or de-risk their portfolios vis-a-vis U.S. sovereign risk,\u201d Griffin told<\/a> Bloomberg in a recent interview.<\/p>\n For Spencer Hakimian, founder of Tolou Capital Management, that shift is a stark signal. He argues<\/a> it\u2019s akin to telling Americans: \u201cYou now live in a third-world country.\u201d<\/p>\n Hakimian\u2019s comment may be hyperbolic, but it underscores a deeper concern.<\/p>\n Sovereign risk, the fear that a government may fail to meet its financial obligations, is typically a problem for emerging markets, politically unstable regimes, or nations with high debt and weak currencies. <\/p>\n It\u2019s rarely associated with the issuer of the world\u2019s de facto reserve currency. Yet, several warning signs are emerging in the U.S. itself.<\/p>\n The national debt has climbed past $37 trillion<\/a> and continues to rise, fueling concerns among bond investors about growing pressure on demand for Treasurys<\/a>. <\/p>\n Meanwhile, Washington remains mired in fiscal and political gridlock, with recurring debt ceiling standoffs and a recent government shutdown that triggered a temporary blackout of key economic data.<\/p>\n Adding to concerns, the Federal Reserve has begun cutting interest rates even as inflation remains elevated \u2014 a combination that some economists warn could pave the way for stagflation, a toxic mix of stagnant growth and rising prices.<\/p>\n For investors, Griffin\u2019s warning suggests a deeper unease that the U.S., long considered the world\u2019s safest bet, may be drifting toward the risks it once stood apart from<\/a>.<\/p>\n America\u2019s fiscal nightmare deepens<\/p>\n Economists have long sounded the alarm over Washington\u2019s ballooning national debt, warning that unchecked borrowing poses serious risks to economic stability, interest rates, and future growth. <\/p>\n