Renowned investment strategist Lynn Alden argues that the US has entered an era of “fiscal dominance” where government deficits drive monetary policy, a change that could be bullish for Bitcoin BTC/USD. be.
Appearing on the podcast “Less Noise More Signal,” Alden outlined his views on the current economic environment, the role of Bitcoin, and the challenges facing the traditional financial system.
She argues that this shift from the previous era of financial dominance began around 2016-2017 and was primarily driven by demographic changes as baby boomers entered retirement age.
The implications for monetary policy are profound, Alden said, because raising interest rates could paradoxically increase the government’s debt burden and worsen inflation.
“When they[the Federal Reserve]raise rates, it does slow down bank lending, but it actually blows up the deficit by an even bigger number than the slowdown in bank lending,” the strategist notes.
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Alden sees Bitcoin as a potential hedge against currency depreciation, but emphasizes that its success will depend in part on its continued adoption and usefulness as a “store of value.”
Regarding the government’s stance on virtual currencies, Alden emphasized that “the government is not a monolith,” pointing out the diversity of opinions within the political structure. She believes this diversity is important in preventing overly restrictive policies.
Alden advocates education as a key strategy to promote a balanced approach to cryptocurrency regulation.
Mr. Alden also discussed the importance of liquidity in asset markets. In a recent study, she found that Bitcoin is highly correlated with global liquidity indicators, moving in the same direction 83% of the time over a 12-month period, higher than any other asset class studied. I discovered that.
However, Alden cautions against oversimplification. She points out that in 17% of cases where Bitcoin does not follow liquidity trends, other factors such as valuation are at play.
He concluded that new technologies like Bitcoin offer a potential alternative and can hedge the risks of the traditional financial system.
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