The world witnessed unprecedented inflation rates throughout the past several months, with the economic turbulence seen recently catalyzing unprecedented economic involvement from governments across the globe – leading many to claim that this has vindicated Bitcoin’s purpose.
There’s no doubt that widespread money printing will have grave impacts on fiat currencies across the globe, and one prominent economist is noting that he thinks these effects will be particularly impactful to the Dollar.
He believes that its value will fall “very sharply” due to the growing national deficit and waning global faith in American exceptionalism.
This could provide Bitcoin with a serious boost, as it is structurally the antithesis of highly inflated fiat currencies like the US Dollar.
Yale economist: US Dollar’s value to see a sharp decline in coming years
As a response to the ongoing pandemic and its economic implications, the US government has been taking unpredicted actions to try to support a buckling economy.
These actions – which include trillions of dollars in stimulus and massive loan programs – have been funded by money printing.
That being said, they have so far been highly effective. The stock market has been trending up over the past couple of months, posting a strong rebound from its March lows as most benchmark indices fast approach their previously established all-time highs.
This has even had positive effects on Bitcoin, with the cryptocurrency closely tracking the markets in recent times.
Stephen Roach – a Yale economist – does think that this governmental involvement will have negative impacts on the US Dollar’s value. He said:
“The dollar is going to fall very, very sharply.”
In a recent op-ed, Roach offered a similar sentiment, explaining that “the era of the U.S. dollar’s ‘exorbitant privilege’ as the world’s primary reserve currency is coming to an end,” later adding that the devaluation of the USD for the sake of sustained prosperity would be the primary factor driving this.
Why a falling Dollar will boost Bitcoin
The Dollar losing its dominance as the global currency of choice for investors may provide Bitcoin with a serious boost.
If the Dollar does see a sharp decline, it will leave a vacuum that could be filled by the benchmark cryptocurrency.
Legendary macro investor Paul Tudor Jones seems to think this is a real possibility. He spoke about this in his widely covered note to investors, in which he stated that hard assets like gold and Bitcoin will be the beneficiaries of mass inflation.
He also noted that Bitcoin reminds him of gold in the 1970s – suggesting that it could be poised to see a massive upside in the decades to come.
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