In the eyes of many across the globe, including anti-establishment figures, credited and established economists, and consumers, the macroeconomy could be on the verge of collapse. The U.S.’ sovereign debt has surpassed $22 trillion, with the Federal Reserve (Fed) showing no indication about whether it will put its foot on the brake. But Bitcoin (BTC) may be a way out.
Since the cryptocurrency was invented by Satoshi Nakamoto, it has been pushed as a way out of the traditional banking industry, as the Great Recession in 2008 has left lasting scars on many an investor. As some pundits like to say, “Bitcoin isn’t the bubble, it’s the pin” that could reverse the ramifications of debt-based economies, a common sight following Nixon’s decision to drop the gold standard.
Bitcoin Has Found Its Identity Of Gold 2.0
In a recent op-ed published by The Block, Travis Kling, a self-described libertarian, flamed the Fed and lauded Bitcoin simultaneously. The chief investment officer of Ikigai explained that over recent months the U.S. central bank’s actions have gone from bad to worse. Following a period of quantitative tightening, in which the fiscal entity depressed the stock market by unloading its $4.5 trillion in assets, the Fed took a U-turn, as a result of overt berating from the Oval Office.
While this decision to end quantitative tightening and to tentatively begin the opposite of this monetary policy — quantitative easing — has allowed the S&P 500 and other indices to retest their all-time highs, Kling is fearing the worst.
He explains that the world’s largest central banks — the European Central Bank, the Bank of Japan, the People’s Bank of China, etc. — are also doubling down on their attempts to “print money at a breakneck pace.” Kling, a former Wall Street investor, calls this the “largest monetary and fiscal policy experiment in human history.” And unlike other experiments, this one is seemingly being done on a malice-filled premise.
As an outsider to their choices, many common Joes and Jills likely take only a few issues with these policies. In fact, most in the general public likely low little about the fiscal decisions of the entities that reside over one of the most aspects of their lives — their financial wellbeing.
Much appreciation to @TheBlock__!
I wrote this primarily for the no-coiners that look at the current global macro backdrop, specifically in the context of never-ending QE from central banks, and think- “what are the chances this experiment ends badly?” https://t.co/TU4uUvVz8o
— Travis Kling (@Travis_Kling) April 1, 2019
But with the U.S. yield curve recently inverting (a market tendency that has preceded historical recessions multiple times), resulting in a mass of media reports on the subject matter, the public might just be waking up to the fact that the market might be on a precipice. The Ikigai founder writes that the backdrop for a recession sure is there:
“The increasingly erratic U.S. president is yelling at an irresponsible central bank to act even more irresponsibly with its monetary policy, while running a $1 trillion deficit for the second year in a row.”
As it stands, however, there are few ways to opt-out of the Federal Reserve’s propensity to keep on pressing the print button. There’s gold, sure, but the barriers to entry for that store of value can be high. And more importantly, the precious metal can be confiscated, as seen in the 1930s’ America. That’s where Bitcoin comes in.
Although Bitcoin undoubtedly remains a risk-on asset, as hinted at by Fundstrat’s Tom Lee in recent mainstream media appearances, this could soon change, Kling explains. The cryptocurrency’s value proposition as a non-sovereign, hard-capped supply, global, immutable, decentralized, digital money could be just what modern consumers are looking for in a market rife with uncertainty — a way out of this ongoing fiscal experiment that many argue benefits the wealthy before the underprivileged. The Ikigai C-suite head adds that “central banks and governments are proving the profound need” for such an asset, not discrediting it.
The Perfect Storm
What Kling writes may sound like heresy against the state, but many are in agreement with his well-timed conjecture. In response to a tweet that accentuated the growth in global money supply’s effect on the S&P 500, Chris King of Morgan Creek Digital, a partner of Kling & Co., explained that while he isn’t an economist, he knows the “music has to stop at some point.”
I’m no economist but the music has to stop at some point. https://t.co/ofsrArIO67
— Chris King (@cjking711) April 1, 2019
As reported by NewsBTC on Monday, even if a global recession isn’t imminent, the macroeconomy could soon enter a worse state. The U.S.’ interest expenses will surpass the tax receipts themselves by 2022, meaning that America will be paying more in interest on its debt than tax it receives, creating a negative, potentially never-ending feedback loop that may leave only one option left: print, print, print the debt away.
And this need for printing is what industry analyst PlanB recently claimed will drive Bitcoin not just past $1 trillion, but past $100 trillion too.
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