Economist Raoul Pal, a former Wall Street expert and former executive of Goldman Sachs, says the world will face many negative economic consequences after the coronavirus.
Global Macro Investor CEO Pal said in a podcast program “What Bitcoin Did” that governments are doing the right thing by igniting mints and injecting cash into the financial system. The main problem was the problem with what would happen if the economic slump took longer than a few months.
“I got a call from the bank in the Cayman Islands. They stopped my mortgage payment for three months. Okay, great. They can’t stop for six months, if it does, the bank will sink. My fear is what will happen to the world after this period. And if it goes like this, unemployment will gradually endure. This will be difficult for many people. Governments will also try to borrow more to help people. This is the right thing to do. The problem is that if you take the full economic burden, help people with debts and mortgages, you take all the economic burden and debts and save them from the state balance sheet.
People in the UK had done this with banks before. But now they do it with credit markets, maybe stock markets, maybe the pension system and economic losses. The only way to finance this situation is to print money, and if each country prints money at the same time, an environment where money is less valuable is created. Does this mean that inflation will increase now? In my opinion, inflation is not increasing in a debt deflation as it is now. However, a situation is created in which the purchasing power of money will decrease against gold or Bitcoin.
And I think Japan is doing this, buying all the debt and putting it on the bank’s balance sheet, which causes a system where currencies can collapse. It seems to be an element of hyperinflation or a result of constant inflation, the end of which indicates the collapse of currencies. ”
In this environment, Pal says that, despite excessive volatility and investment risk, he currently allocates 25% of his net cash to Bitcoin (BTC).
“That’s exactly why Bitcoin exists. The ability to make payments, possess a value store, and record ownership is essentially the three principles of cryptocurrencies and the blockchain during this difficult financial system. It is very reassuring to know that there is such a plan B. Now perhaps all these possibilities do not come true, but it is still necessary to try to act on these assumptions. ”
Pal said that the economy could return to normal in September or October at best. Meanwhile, Pal tries to make as much money as possible while looking for ways to invest.
“Everything returns to normal. There may be a recovery in September and October. Let’s base this on. But we, as humans, have to plan the worst case because we have to make sure we can survive economically. I don’t know what the results will be. According to my hunch, the process will take longer. ”