Posted 7 months ago | by Ben Armstrong
It isn't exactly a secret that central banks use debt to paper over financial issues in the markets – and have been doing so since at least the Greenspan-FED era. What might be more surprising is that the magnitude of those interventions is getting bigger – and there are no solutions in sight.
This isn't good news. New information from the Bank for International Settlements (BIS) shows that the global DEBT/GDP ratio is now the highest on record – and it is growing at a record clip.
The reason for this massive rise in global debt is simple – the Western financial system nearly ended earlier this year – and a big pile of debt was used to keep the show going. While this does work in the short run – the huge uptick in demand for alternative assets – like gold – aren't a great sign from the perspective of a stable monetary system.
The Global Debt Bomb isn't Your Friend
At current global DEBT/GDP ratios – it is far more likely that central banks (central planners) will look to inflate the debt burden away – and not allow massive defaults to run through the global companies that own the political class.
For anyone who isn't on the level of former business mogul and political player Jeffrey Epstein – you probably aren't going to like what real inflation does to your assets – or your lifestyle.
It is nice to think that inflation will drive up the price of your assets – like a stock portfolio or a home – but this isn't the kind of inflation that central banks need to deal with the debt they must continue to create.
Crypto is Probably the Most Undervalued Asset in the World
For as much as crypto is talked about – most people don't own any. In fact, the vast majority of the people in the world don't even know how to buy tokens or where to put them.
Clearly, more adoption will lead to higher prices, and in a world where central banks are planning to use inflation to torch the debt bubble they created – there may be a rush into assets that exist outside of the fiat debacle.
Gold was the go-to asset after the FED decided to reliquify markets earlier this year – but gold has some major drawbacks when compared to crypto. Transporting gold is one of the big ones, and its ability to be seized by governments is another.
Near Term Weakness in Crypto Prices is Likely
Despite the fact that crypto will almost certainly benefit in both price and level of adoption because of the current central bank policy – they may take a hit over the coming weeks or months due to overall market conditions.
It is difficult to overstate the amount of uncertainty in global markets – and many still see tokens as a risk asset. This may lead to furious bouts of selling – which are probably a good time to pick up a few extra tokens.
As regular people – and larger economic interests – realize that the inflationary endgame that the central planners have put into motion will destroy value on a scale that is rare in history – the demand for assets that can't be perverted by sociopaths will soar.
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