Former Goldman Sachs executive Raoul Pal explains what he believes will be two positive catalysts for crypto assets in 2024.
In a new interview on Wealthion’s YouTube channel, the macro guru and CEO of Real Vision tells SkyBridge Capital founder Anthony Scaramucci said upcoming stimulus packages in the US and around the world will boost the digital asset industry.
According to Pal, politicians tend to “hand out sweets” during elections in the form of stimulus packages, leading to higher inflation and in turn higher prices for digital assets.
“We see China in an economic mess, they’re facing full-blown debt deflation on the same issues – aging population, high debt, everything blowing up, they’ll probably stimulate further. It’s likely that the Europeans will eventually stimulate more, and eventually the US will stimulate more, because they need growth to pay for these interest costs.
So that’s what awaits us. And then we have the other great point in the middle of this, which is when politicians hand out candy during elections, and the candy that everyone wants is an incentive. So they will hand out stimulus checks that have to be paid for. These either end up on the Fed’s balance sheet, or some other liquidity measure is taken to allow the government to finance itself.
So what we have is a high probability that our money will become less valuable. Asset prices will rise, but our wages will not, which is the big problem. So our future selves become poorer because we can’t afford as many assets and we have a huge wave of debt that needs to be refinanced. That is normally a very positive backdrop for crypto, a lot of liquidity and liquidity is what drives all markets.”
Pal goes on to say that the devaluation of fiat currency via inflation is akin to paying hidden taxes, as investors are deprived of the power to purchase assets due to rising costs.
“Asset prices continue to rise. And that’s because they devalue the currency. What depreciating the currency is, it sounds like a complicated economic term, but what it actually means is that they rob you of the power to purchase assets. Since 2008, this has been an average of 15% per year.
So you lose the opportunity to buy assets by 15% per year. So every year you sit in a pile of money and don’t buy a house; that house goes up roughly 15% per year. That’s bananas, you’re stuck on cash for two years, or you have no savings, it’s getting more and more expensive. What they’re actually doing here is taxing you. But by hiding it, it’s like a socialization of all these costs.”
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