Billionaire George Soros said the U.S. economy is “dragging down” global growth as troubles with the dollar mount. The dollar has lost about 7 percent this year vis-a-vis the world's other major currencies.

"The world economy is going to have some growth, but we are bound to be flat," the CEO of the Soros Fund Management said yesterday at a forum sponsored by The Economist Magazine at the New York Stock Exchange.

China's pegging of its currency to the dollar is keeping the U.S. currency undervalued and this is "unsustainable.”

This “currency arrangement” is dangerous, and should be contained by global regulation, said Soros.

Soros said the globalization of financial markets was built on a "false pretense" that financial markets could be self-regulating.

"That is a tremendous challenge," said Soros.

However, Soros said that since the yuan is linked to the greenback, the Chinese currency is “constantly undervalued” while the dollar is sinking against the world's other major currencies.

“Current currency arrangements are fraught with danger,” said Soros.

Soros, a financier of the Obama campaign, came to fame with audacious currency bets decades ago, particularly a notorious bet against the British pound sterling.

He now reckons that the U.S. dollar ought to be falling in value against the Chinese currency. This will enable the United States to “contain its current account deficit,” said Soros.

Others note that the turmoil over the dollar is now becoming a legitimate public policy issue in the United States which may soon rival the concern over healthcare reform.

Conservative leaders believe the dollar is losing its viability as the international reserve currency because of the massive federal deficit, according to Reuters.