Billionaire Chamath Palihapitiya is predicting a resurgence of the American balance sheet and an influx of new capital into the US.
In a new episode of the All-In podcast, Palihapitiya says current forecasts of the US economy are overly negative and don’t factor in the potential development of two events.
According to Palihapitiya, President Trump’s tariffs are likely on track to contribute an extra $300 billion in receipts to the US government’s current account in what he says is a big positive for the economy.
The investor says that when factoring in the likelihood of at least 100 basis points in Fed rate cuts, the US is on track to save $300 billion as well – meaning a total of $600 billion in revenue boosts to the United States, providing a big jump to overall confidence in the American economy and markets.
“We all thought that this was like a bogeyman that you weren’t allowed to touch it, and if you touched the stove, you’re going to get burned. The mathematical reality is that this is actually going to work out much better for us than we anticipated, and it’s going to be somewhere in the range of $300 to $400 billion of extra revenue per year. That’s a huge win.
So why is that important? That then sets up this next cataclysmic thing that we’re going to see in the next 60 days, which is, what does Jerome Powell do? If Jerome Powell stays politicized, his incentive will be to keep interest rates where they are.
If Jerome Powell looks at the conditions on the ground, especially when you start seeing inflation stay in the low 2s, and approach 2.0, the real thing that he’s going to be under tremendous pressure to justify is ‘Why are you not cutting?’
And just to give you a sense of how important that is, if we cut by a hundred basis points, that’s another $300 billion. In that case, that’s not money we get in, but it’s money we don’t have to spend.
So if you add these two things together, we are in the next 60 days, going to have to reforecast the American balance sheet where this is, or we’re actually going to be able to positively forecast an extra $600 billion – $300 billion of incremental revenue and $300 billion of savings.
If that happens, watch out. It means that every single risked dollar is going to run to America. Every single one. Forget Japan, forget Europe, there is no place to put your money except the United States.”
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