Macro guru Luke Gromen says the rise of Bitcoin (BTC) treasury companies is a logical response to the US government’s continued debasement of the dollar.
In a new video update on YouTube, Gromen says investors are currently reacting to a large-scale financial bubble that has been “kicked upstairs” through the stock, banking, and housing markets before finally being pushed into the Treasury market.
Gromen notes that the only way for the US government to maintain the bubble – rather than face a default or a severe depression to get its fiscal situation back in order – is to devalue its debt via inflation.
Now that such a reality is becoming clear to market participants, Gromen says it makes perfect sense that many corporate entities are creating shareholder value by taking advantage of BTC’s strict supply cap.
“In my opinion, it’s critical to remember how we got here. We had an equity bubble, it popped, we kicked the problem upstairs to the banking sector and the housing sector, it created a housing bubble, it popped, we kicked the problem upstairs to the Treasury market by backstopping virtually everything…
Now the credit risk is at the Treasury market level, except, Treasuries have no credit risk. The government can always just print the money to make interest payments and avoid default. So there’s no credit risk in Treasuries, only inflation risk.
So in my opinion, what we’re seeing in Bitcoin treasury companies in particular is logical, in light of this primrose path we’ve followed over the past 25 years. As more and more people begin to realize the only way out of this is severe devaluation of US debt, of US sovereign debt, of Western sovereign debt.
In that case, I would expect credit spreads to remain relatively low, because all else equal, I’d rather own an Apple bond or a Microsoft bond than a US Treasury bond.”
At time of writing, the US government’s national debt is about $37 trillion.
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