Real Vision CEO and macro economic guru Raoul Pal believes a global economic slowdown is coming.
In a new interview on the Best Business Show, Pal cites several indicators that he says suggest there will be slower economic growth and therefore more stimulus from governments.
“The work that I’ve been doing suggests that the likelihood is the economy, the global economy, slows down pretty significantly into next year. And again, we might see more stimulus and more fiscal stimulus coming as well. So I look at it very differently to what most people are seeing, but on the horizon because of the fiscal cliff, we’ve got like 3.5% of GDP coming off from the fiscal cliff. We’ve got all of the spending brought forward that everybody, including me, did up their houses over the previous year.
We’ve also got the fact that oil prices have gone up, that hits household expenditure. Prices in general hit household expenditure. You see these weird old things like the University of Michigan surveys about cars, houses, and durable goods. Because the prices all went up, basically they’ve gone to all-time lows in terms of affordability. So people are stepping back.
We’re seeing it in the housing market, we’re seeing it all over the place, so these higher prices are kind of a cure for higher prices, as is often the case. And I think that that’s going to lead to much slower growth than we expect and again, as I said, more stimulus.”
Pal says that governments will counter the impact of the downturn by printing more money, adopting fresh stimulus measures that will drive the prices of assets like stocks, Bitcoin, and cryptocurrencies higher.
“I’m not sure that prices [of goods] go higher. That’s a supply-driven issue that I think eventually disappears. Assets go higher and that in itself has been a problem you and I have discussed. Because you can’t buy a house, because you’re 33 years old and your income doesn’t go up – because nobody’s income’s really going up. Then you’re kind of getting screwed. That’s one of the whole premises behind why I got very, very interested in Bitcoin early on. We’re seeing this play through. And I think it’s just going to continue.
Governments have now realized, and the central banks, that they can’t let the collateral go bust. The asset side of the balance sheet is not allowed to fall in price, because if not, you get a big margin call on the economy. So it seems to be that debasement of currency to drive assets higher optically is the only answer they’ve got now.
There’s almost no way around it unless they can generate growth that is higher than previous trends for a longer period of time. And with this aging population, all of this indebtedness, globalization, technology, the chances of doing that are low.”
With the emergence of artificial intelligence and robotics that will compete with workers, Pal predicts governments will soon give universal income to its citizens.
“Between artificial intelligence and robotics, you’re going to be competing for salary with somebody who gets exponentially cheaper in price, because computing power gets exponentially cheaper. So it’s a really, really difficult situation. I think they’re going to continue with the same path for the time being. By the time the next recession comes, then I think that’s a full roll-out of UBI, because there’s no way around it.”
Pal also talks about the current crypto allocations in his portfolio.
“My current allocation is probably 70% ETH [Ethereum], 5% Bitcoin, and then a tail of others. So why that allocation? It’s nothing against Bitcoin, it’s not against anything else. It’s because I’m a financial markets guy and we use risk curves. So at certain points in the cycle, in the middle of a bull market, you want to take as much risk as possible. So you want to go to the more speculative end of the market.
I isolated the fact I thought Ethereum was going to see further flows, it’s early in its adoption cycle and that would probably drive prices further than Bitcoin. And that seems to be playing out.”
This Is What Jack Dorsey’s Cryptic ‘705742’ Tweet Might Mean
A simple but cryptic tweet from Jack Dorsey, Founder and CEO of Twitter and payments firm Square, has sparked a debate about the meaning of the post, and whether the well-known Bitcoin (BTC) advocate has any BTC-related plans that have yet to be announced.
As pointed out by many users replying to the thread, the tweet, saying just “705742,” likely refers to a block number on the Bitcoin blockchain. A block with that number was indeed mined on Tuesday at 20:14 UTC, but it is still unknown what else is special about the particular block.
Been updating block explorer for the last 7 minutes— Katie The Russian (@KatieTheRussian) October 19, 2021
Twitter users were quick to pull up the bitcoin block explorer to see if there was anything unusual about block 705742, which at that point had yet to be mined. However, little out of the ordinary could be found.
Others, meanwhile, joked that the number could be Dorsey’s “[end of year] price target for bitcoin,” or that it could be somehow related to “Moscow time,” – bitcoin slang for the value of 1 USD in satoshis.
Speculating further, one user on Reddit suggested that the block number could be the first block to be mined by a new mining system that Dorsey has proposed.
“Maybe the first block that Square mined as part of their [research & development] for a potential public mining platform,” the user wrote, before adding that it looks like the wallet that received the block reward already has both in and outbound transactions worth almost USD 2bn. “Seems like a plausible volume for Square/Cashapp,” the user added.
However, according to various Bitcoin blockchain explorers, the block in question included 2,787 transactions and was actually mined by the BTC.com pool. Moreover, the block was mined almost an hour after the tweet was published.
In either case, as reported, the latest tweet from the Twitter CEO followed another thread from last Friday, where Dorsey said that Square is considering building “a bitcoin mining system based on custom silicon and open source.”
“Mining needs to be more distributed” and it “should be as easy as plugging a rig into a power source,” Dorsey wrote, asking his followers what the biggest barriers are for people who want to run miners.
Facebook Finally Launches Digital Currency Wallet Novi but Senators Want to Close This Project
Amid the Facebook Novi launch, some federal legislators want the social media giant to discontinue the project.
Facebook Inc (NASDAQ: FB) has launched the pilot phase of its digital currency wallet Novi in the US and Guatemala using stablecoin Paxos. Facebook finally launches Novi and is going with Paxos’ USDP after its own native crypto Diem failed to secure regulatory approval. Furthermore, the social media giant heralded the pilot launch in a blog post on Tuesday.
Novi’s pilot launch is more than two years after it was first announced. The wallet will facilitate fast, secure, and free fund transfers between users via mobile smartphone apps. However, all users must register with government-issued identification.
For now, Paxos’ stablecoin will serve as Novi’s transactional currency, while powerhouse exchange Coinbase will provide custodial services. According to David Marcus, head of Facebook’s Novi wallet, this pilot phase will, “test core feature functions, and operational capabilities in customer care and compliance.” Furthermore, it will test the viability of stablecoins as a valid and sustainable form of payment.
Facebook Launches Novi to the Disapproval of US Congress
Amid the Facebook Novi launch, some federal legislators are calling for the social media giant to discontinue the project. Senate Democrats addressed a letter to Facebook CEO Mark Zuckerberg on Tuesday questioning the company’s credibility with crypto. In their own words, Facebook “cannot be trusted to manage cryptocurrency”. The senators base this conviction on the social media company’s past inadequacies in handling cyber risks and keeping consumers protected. Signed by Senators Brian Schatz, Sherrod Brown, Elizabeth Warren, and others, the letter read:
“Facebook is once again pursuing digital currency plans on an aggressive timeline and has already launched a pilot for a payments infrastructure network, even though these plans are incompatible with the actual financial regulatory landscape — not only for Diem specifically, but also for stablecoins in general.”
Part of the Congress letter to Facebook further states:
“We urge you to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market.”
Facebook responded to the Senators’ query through a spokesperson for Novi, suggesting that the company would address the issues raised therein.
Facebook Has a Long-Running History with Federal Lawmakers over Its Operational Practices
In recent times, Zuckerberg and Facebook have locked horns more frequently with Congress. Back in 2019, Congress summoned the Facebook CEO to provide testimony on the Diem project (then called Libra). Zuckerberg’s summoning was the culmination of weeks of tussling, between Facebook and the federal lawmakers, who were skeptical of the project. In addition, the Zuckerberg hearing came just a year after Facebook’s Cambridge Analytica scandal. This may have been another reason federal legislators were agitated against the company.
Another recent red flag raised against Facebook was earlier this month from whistleblower Frances Haugen. Haugen appeared before the Senate Commerce Committee to testify on the threat Facebook posed to users. Some of these include the usage of Facebook itself and other affiliated services, such as photo and video-sharing behemoth Instagram.
Australian Parliamentary Committee Sets Guidelines to Give Crypto Industry a Big Push
Australia’s parliamentary committee on crypto-assets aims to bring concrete regulatory and policy changes to give a major push to the crypto industry in the country. The committee believes Australia needs a robust policy and regulatory changes to help it compete against the global leaders. The said committee released a draft report on 20th October outlining the need for encouraging investors and ensuring protection against frauds.
Some of the key recommendations in the draft report include,
- Establishing a market licensing regime for Digital Currency Exchanges, including capital adequacy, auditing, and responsible person tests under the Treasury portfolio
- Establishing a custody or depository regime for digital assets with minimum standards under the Treasury portfolio
- Conducting a token mapping exercise to determine the best way to characterize the various types of digital asset tokens in Australia
Andrew Bragg, a senator from the conservative Liberal Party and chair of the committee said that the recommendations in the draft would help Australia set a new regulatory framework for the highly popular crypto industry which will, in turn, help Australia compete against the likes of Singapore and UK. He said,
“The draft recommendations are a big push to detail a cryptocurrency framework for Australia, which would allow us to compete with the U.K. and Singapore,”
Crypto Market Has Become Too Big to Ignore
The Crypto market was primarily seen as a speculative ecosystem for the most past of its life, but that perception has changed quite fast over the past year. Governments have now realized that the crypto market has become too big to ignore as a fad. This is why the likes of El Salvador have made Bitcoin a legal tender, while Paraguay passed a law to legalize the use of Bitcoin and Ethereum in the financial market.
The United States’s policymakers who were adamant about keeping the crypto market at bay have finally approved the first-ever Bitcoin Futures ETF. This shows how the sentiment around the crypto market has changed as it became a $2.5 trillion industry again in October.