Cryptocurrency news site reported:
Senior macro investor Luke Gromen believes that trillions of dollars will shift from the US bond market to Bitcoin, gold, and the stock market.
In a recent Kitco news interview, Gromen stated that he sees the $130 trillion bond market running out of liquidity.
The macro guru stated that central banks around the world are afraid to hoard US Treasuries after seeing how the government arbitrarily seized a country’s national debt.
“Central bank treasuries are no longer risk-free tools. If you do something the US government doesn’t like, they will stop your treasuries. They did it to Russia. They did it to other countries too.”
As for other Treasury investors, Gromen believes they will eventually sell their holdings because gold, Bitcoin, and stocks have more potential for growth than bonds. He emphasized that the US government can no longer afford to raise interest rates because it holds a large amount of debt, making other asset classes more attractive to investors.
“The $130 trillion bond market is the sucker on the table, and it will figure it out. When it does, it will sell bonds [and] buy something valuable. What’s valuable right now is $65 trillion in US stocks, $14 trillion in gold, and $1.4 trillion in Bitcoin.”
This process will continue until bond sales become so high that they cause dysfunction in the Treasury or force interest rates to a level where the US government can’t afford its debt burden, at which point the Fed and Treasury will intervene and print more money to limit this, which will only feed back into gold, Bitcoin, and stocks.
“Anything left in the $130 trillion bond market has the incentive to move into other assets faster – wash, rinse, repeat… It can really feed on itself very quickly.”
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