Soros: U.S. economy will be a drag on global growth

China, however, does not allow its currency to float freely -- i.e., be determined by market forces -- but rather keeps the yuan in a tight trading band, preventing its appreciation versus the dollar. The practice keeps the value of the yuan artificially low, thus substantially lowering the cost of the country's exports, enabling Chinese companies to increase exports sales and grab market share from foreign competitors. China's yuan presently trades at about 6.82 yuan to the dollar.

The U.S. Treasury Department has criticized China's essentially fixed currency rate policy, but has stopped short of branding the nation as a currency manipulator, Bloomberg News reported Friday.

Soros said the global economy's "currency arrangements" are fraught with danger. He added that the globalization of financial markets was built on the "false pretense" that markets could be self-regulating and self-correcting, Reuters reported.

Economic Analysis: Soros touched on a point expressed by many economists and business executives. Namely, if emerging market nations are expecting U.S. consumer spending to be the catalyst for global GDP growth, the developing world - particularly those dependent on exports to the U.S. -- is in for a rude awakening. Near 10% U.S. unemployment, wage stagnation in many U.S. job classifications, and what looks like a new long-term trend - the 'frugal consumer' - will all weigh on U.S. GDP growth and the nation's purchase of foreign goods. A weaker dollar represents another headwind, as it makes imports more expensive for U.S. consumers.

Given the above, other growth engines -- particularly emerging market economies -- will be needed to keep the global economy growing at an adequate rate. And that means increased domestic consumption in China, India, Brazil/Latin America, Russia/Eastern Europe, the Middle East, and Australia, among other economies.