Podcasts: The Crisis Across All Markets with Peter Doyle đ 2 years ago
- Category: Podcasts | What Bitcoin Did
- Author(s): Peter McCormack
- Published: 15th June 2022 14:01
âYou could see how inflation could spin out of control under certain environments. Now, Iâm not saying thatâs going to happen, itâs not going to happen probably in the next several weeks. But it doesnât take a lot, where the numbers that we saw that weâve experienced in the recent past, would basically look like nothing compared to what we experience in the future.â
â Peter Doyle
Peter Doyle is the Co-Founder and MD of Horizon Kinetics. In this interview, we discuss investment in an economic climate marked by accelerating inflation, a debt crisis, an energy crisis, war and the potential for Bitcoin to upend the monetary system.
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The worldâs economic leaders are publicly admitting that inflation is not the transitory phenomenon they were claiming it to be only a few months ago. Some observers think that behind closed doors they never really believed inflation would pass; given the extreme levels of debt, rising inflation makes sense as an unofficial government policy.
Irrespective, inflation has to be controlled. But taming inflation is a delicate balancing act. The trick is to achieve a âsoft landingâ: reducing inflation without triggering a recession. This proved impossible during the 1970s and early 1980s when inflation last ravaged the US economy. The dilemma is the current economic and fiscal environment is much worse than during the 1970s.
Interest rates have been at unprecedented low levels for over a decade. These have enabled governments to take on increasingly precarious levels of debt to shore up economies during pandemic lockdowns. Even modest interest rate rises risk triggering both sovereign default and recession. Whilst reducing the size of the state is problematic given its oversized share of GDP.
At the same time, there is a limit to what governments can do to control inflation. The conflict between Russia and Ukraine has resulted in a spike in energy prices. However, energy costs were already rising due to decades of underinvestment influenced by ESG mandates. This is a systemic issue affecting global markets. The expectation is for a prolonged period of inflation.
Investments need to now consider an environment where âcash is trashâ. However, what is becoming increasingly clear is that investment managers are seeking more than just inflation-beating returns. In the face of possible scenarios where inflation canât be controlled, Bitcoin is becoming part of portfolios designed to protect wealth.
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