The global markets have come crashing down since the beginning of 2020, and March has been that worst affected. In India alone, it is estimated that the stock market lost about $600 billion since February, and the losses haven’t stopped yet. Similar crashes have been witnessed across the globe, including the US, the UK, Italy, France, Germany, etc.
While some part of this downfall can be attributed to the outbreak of the Coronavirus pandemic, most of it was a result of months of building up, right from the Sino-US trade war, to the collapse of the banking sector, to unwanted and unnecessary sanctions on countries that didn’t agree with Washington, and even to the systematic destruction of emerging markets like Venezuela and Zimbabwe.
Commenting on the overall economic slowdown, Morgan Creek Digital Co-founder Anthony Pompliano posted a long thread on Twitter, making bold statements, which will definitely raise several eyebrows, especially those who believe that the crypto industry, or basically, Bitcoin is just a bubble that could burst anytime. He stated that the COVID-19 had created a liquidity crisis in the market, which is why investors will sell every asset that has a liquid market in order to gain access to US Dollars.
4/ When the dollar strengthens, the asset prices of equities/commodities/etc all goes down. This is what we are seeing in the market today.
In order to stabilize asset prices, the dollar has to be weakened. @DTAPCAP has been all over this. You should follow him to learn more
— Pomp 🌪 (@APompliano) March 18, 2020
This, he added, has made the USD more valuable against other assets, as the Wall Street Investors can now buy a similar quantity of stock with less amount of dollars, and that’s why it is important that USD should be weakened.
“The United States is going to have to weaken the dollar at some point. This is only way to stop the bleeding. They will have to flood the market with trillions of US dollars in order to accomplish this. My guess is that it will require at least $5 trillion. When the US floods the market with dollars, they are essentially devaluing the dollar. The current environment is a deflationary one (dollars get more valuable), but once they make a move we will move to an inflationary environment (dollars get less valuable).”
He further added that as the USD weakens, the price of assets like equities, commodities, Bitcoin, etc., will rise as the same quantity of these assets will need more amount of dollars to be paid, citing the example of the gold market between 2009-2011. Pompliano also mentioned that the fiat currency experiment has been in practice only for the past 49 years, and there’s no guarantee that it will survive. When another user asked on thread about Russia and China accumulating gold and creating an oil price war to launch an assault on petrodollars and the USD, Pompliano was quick to agree.
I didn’t want to get into the geopolitics in this thread but you are correct that I think the group most likely to try to short the USD if given the chance is a nation state
— Pomp 🌪 (@APompliano) March 19, 2020