Luke Gromen, a macro strategist at the University of California Berkeley warns against using US dollars to buy anything in a world where debt is exploding.
According to a recent YouTube video, Gromen, the US is forced, due to its unprecedented national debt level, to either sacrifice the bond market, or let the dollar drop in order to maintain economic and financial stability.
The macro-expert believes that the US will eventually resort to printing more currency to deal with its debt rather than allow Treasury yields soar to try to attract investors.
What we are seeing on these bond markets in the US, and for now, more important, Japan, and the UK is that there’s a choice. Your currency is at stake or your bond market. Our view is that gold and Bitcoin trade where they do because they choose to sacrifice their currency.
If they let the rates go up indefinitely, and given the debt they have, they end up losing both the currency market and the bond markets, because the higher rates cause receipts to fall and increase interest, which means that interest will quickly exceed your receipts.
When this happens, it leads to hyperinflation. They can either not pay off the bonds, and then the bonds return the currency. Or more likely they will print money to cover the interest. This creates a form of hyperinflation.
They always sacrifice currency when the debt level is high. This is because the bond markets only gives them a small amount of time and ultimately they end up losing both.
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