Veteran macro investor Luke Gromen says that both Bitcoin (BTC) and gold can flourish as fiscal issues continue to mount within the US economy.
In a new interview on the Blockworks Macro YouTube channel, macro investor Luke Gromen says that relentless quantitative easing and a potential pivot from the Federal Reserve will create an environment where assets such as gold, oil and BTC can thrive.
“If the Fed cuts rates, will short-term treasuries do well? Yeah, probably. Will they do as well as gold, Bitcoin and oil? No…
Maybe they don’t cut rates, maybe they just do the latest iteration of ‘not quantitative easing (QE),’ whether it’s treasury buybacks or (bank term funding programs) or [other types of] ‘not QE’ or whatever… ‘Not QE’ is gonna be great for oil and gold and Bitcoin…
[Gold and BTC will do well] because they are simply duration assets with a more fixed supply and a face value that can rise. They do well when a nation has a fiscal problem, and when the reserve currency issue of the world and her allies all have fiscal problems, and hers is at least as bad or probably worse than the others – even Europe – then it’s really good for gold and Bitcoin.”
The macroeconomist goes on to say how the global economic alliance known as BRICS (Brazil, Russia, India, China and South Africa) potentially launching a gold-backed currency may weaken the US dollar as the world’s reserve currency.
“[The world’s reserve currency] will still be the dollar… What Russia and China are doing are just moving the system to what it should have been after World War II…
At the end of World War II, there were two choices – [John Maynard] Keynes’s bancor system where there was a neutral reserve asset made up of commodities and then there was the dollar. We went with the dollar, and the fact that we’ve had all these crises shows that we should have gone with the other one…
[BRICS’] actions have shown that they’re moving back towards [the bancor system]. I think we’re moving back. Yeah, the dollar is [still] the global reserve currency, but the primary reserve assets are going to be gold and a floating price in all currencies.”
Bitcoin is trading for $27,132 at time of writing.
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