Raoul Pal, popular investor and Bitcoin advocate in his recent tweet explained the deflationary wave that the world’s economy is currently going through, is the largest one in modern history. Hence, making the possibility of negative Consumer Price Index (CPI) turning negative exceedingly high.
· Apr 3, 2020
Replying to @RaoulGMI
Clearly, the broader ramification of rational actions by market players driving bond yields lower, is very bad. It will nuke the pension system and the value of money. Its not necessarily bad for the dollar, yet, as the other CB’s will be even more actively destroying their money
Dollars, Gold and Bitcoin make the most sense. Later, much later, just gold and bitcoin.
This is an 18 month to 36 month view. Expect many counter-trend moves along the way. We will have to navigate those.
Bitcoin price and Federal Funding Rate
Pal noted that an analysis of the Fed Funds tends to indicate that the FF rate can drop up to 2 percent in the near-term, whilst the ten-year bonds can also flip negative.
The negative interest rates can have dire consequences, as it would blow up the whole pension system, along with destroying the value of money.
However, this can prove to be positive for three assets, namely: Bitcoin, Gold and US Dollar. As the Fed would likely be compelled to take extreme measures, hence making the US Dollar the strongest currency.