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Are you here for more, Nourreel Rubini, chairman and CEO of Verbini Macro Associates, who's also not psyching himself out, Noreel, are you on the positive camp here? And if so, how.
Well I mean in the positive camp in the following sense. I've been arguing for weeks now that tech trum start because there's a revolution coming from AI and other does and industry of the future. It's an AI, robotic automation, a siliconductor, fintech, defence tech, green tech, act tech, you name its space exploration quantum. This thing is going to increase US potential growth from the current two percent to a level I expect by the end of this decade
closer to four percent. So two hundred business points increasing productivity growth instead, even in the worst scenario on trade, domestiction to migration, and we're going to escalate the potential heat to potential growth could be maybe fifty business points.
So the ratio between two hundred.
Business points up because of technology and negative fifty basis points is four to one. So tech Trump studies and therefore the US American exceptionalist is going to remain in spite of bad trade policies, in spite of bad migration policies. So in that sense autistic that not just in the short run, those of the medium term. We're going to avoid the severe reception and you have to remain strong.
And you know, so tech trumps tariffs and at the same time, like for health Ham, it was the regulation trumping tariffs as well. At this point, what about the issues with the dollar in the back end of the curve, so higher yields and weaker dollar, and if we move out of dollars a reserve currency, even on a margin, how do you factor that in?
Well, regardless the dollar, there are different types of investors. There are those that are fixing investors, foreign reserve asset managers of the wealth funds where in fixed income some of them are worried about the dollar because of course we have undermined the credibility of the US dollar. If I'm right that we're going to go from a two to four percent growth in the US, there will be a massive capex an investment boom that's already occurring right now.
It's a mac seven hyperscalers firms in a NASDAC but even nontech firms have to have an AI strategy and how they're going to do less investment because of because of trade restriction, No way. So we have massive tail winds imply larger investments shore GDP and capital inflows that are going to be FDI, green Field and brown Field, and portfolio investment into the equity market. So the dollar can weakend because fixed income folks are nervous about US
meddling with the reserve currency role of the dollar. But that massive inflow of capital to finance this investment boom is going to imply get Any weakening of the dollar is going to be very gradual. I don't think there'll be a collapse in the value of the dollar, and I don't think that the US dollar is going to
be undermined to any significant extent as a global reserve currency. Yes, the Chinese and our enemies are going to try to create alternative payment rails that are not based on the US dollar substitute for sweets and so on, but that'll be a very very gradual process.
I am curious though, as we go through this process, Doctor Rubini, there's been a lot of talk because not just with the dollar, but when you talk about the technological advancements or the potential there. These two aren't necessarily divorced from one another. And someone was bringing up kind of you go back, you look at the other big sort of the Industrial Revolution, obviously the digital revolution a few decades ago, and this idea that it wasn't just
about one country leading the charge. In fact, a lot of the countries that led the charge ended up not being the primary beneficiaries down the road, Great Britain.
For example.
With the Industrial Revolution, of course, most of the benefit it ended up being to what within a burgeon in the United States of America. Is there a chance that we could see that play out again where China and deep seek and everything else affiliated with that becomes the real beneficiary.
I don't think so. For the following reason.
In these twelve Industries of the future, US currently is number one, China is number two in all of them but green tech and electric vehicles, the mobility revolution. Secondly, in the past innovations, where loger itmay, they've spurt of growth, say after the first Internet revolution in the nineties, US god goes from one to three, then it flattens out and goes back to two. Instead, the nature of this
revolution in technology lead by eye is exponential. US growth today two percent, four percent by the end of this decade, six percent by the end of the next decade. When it's exponential, you have a first mover advantage, and whether it's first because of economy of scale and net remains first and whoever is second remains a second.
China is going to do well, but.
The idea they're going to catch up with US, I think is totally far fetched.
And everybody else is not even number three or four.
There are some pockets of excellence in Europe, in Israel, in India, in Japan, in Taiwan, in South Korea, and so on and so on. So in this game about the technology of the future, US remains number one, China's going to be number two, and everybody else is going to be adopting this new technology. And by the way, you don't need to be innovating. Even if you adopt
the technology, you'll have some productivity growth. You know, after all, in sub soual And Africa there has never been any iPhone or smartphone produced, but even a poor farmer using a smartphone can do lots of business transaction, selling the crop, ensuring, financial, and so so upon. In the US is going to remain number one, Chinese number two, and everybody is going to be behind but adopting either the technology of the US or those of China and innovating either with US
or with China. But you're going to get first mover advantage. The second ones are not going to catch.
Ups in terms of global economic conditions and whatever structural changes are taking place in Norriel. Do you get a sense here that the lack of international cooperation, at least as it stands right now visa these what we saw over the last few decades, that that might actually be a benefit to the United States or could it actually hamper us?
Well, the reality is that the global system is going to be divided in two areas. One with US is friends and allies, and some of the countries in the global South, said the Indians of the world are going to be following the economic, monetary, trading, financial, technological, and I would say even the military and security system of the United States. Instead, China, Russia, North Korea, Iran, Cambodia, Pakistan and a few others are going to be in the technological and economic and trading area.
Of China.
Now, if we reach an agreement on China to partially escalate with the risk the relationship on what's strategic, high tech and related critical things like rare earth medals and things are critical to us and to them, but we still do business on the stuff is law value added or media value added? After all, we don't need to produce in US t shirts or cheap toys, right, that
doesn't make any sense. So we could have a ground bargain in which we decouple fully on technology and that's the risking and still we do some trade and then everybody else Europe, Asia, the Global CEU can do business with the US, with the China apart from technology, in which led to choose either American AI or Chinese EE.
That's going to be a full decappening and.
You're already starting to see those choices being made. Doctor Rabini, really appreciate you taking time for us. Neurial Rabini, of course, the chairman and CEO over at Rubini Macro Associates