Macro guru and Real Vision CEO Raoul Pal is making predictions about a massive wipeout of wealth that he says could bring drastic changes to the financial landscape.
Pal tells his 962,500 Twitter followers that the current economic slowdown will likely result in an economic contraction back to pre-Covid levels.
The former Goldman Sachs executive says that baby boomers, who hold the largest amount of wealth in the US, face limited choices in dealing with a potential recession.
“For the Boomers the choices are:
Destroyed pension value, or inflation-eroded annual pension payments, or QE (quantitative easing) to infinity.
And that leads to more debts for those with low pensions or savings to offset this… which leads to the need to debase debt via QE…
And that screws anyone younger, who just get poorer in asset purchasing terms (assets are just future delayed consumption).”
Pal says such an economic environment could force younger generations to allocate their wealth into crypto and technology markets as he says they are the only asset classes that can keep up with currency debasement.
“And that means young people either have to opt out entirely or take more risk as crypto and tech are the ONLY assets to have outperformed the debasement but they are riskier and more volatile.”
Ultimately, he thinks 20 years of negative interest rates are on the table as they create room for debt reduction and the rise of asset prices.
Last month, the macro expert said that even though there still may be more pain to come, he thinks that Bitcoin and crypto markets are in a long-term opportunity zone.
“But can things get worse? Absolutely. But for my investment framework, we are in the buy zone… right near the two standard deviation [logarithmic] regression channel.”