What the average person fails to understand is that the next “financial crisis” will not just be a stock market crash, a housing bust, or a collapse in bond prices. This time, it will be the simultaneous implosion of all three. We are heading for the double whammy of a political crisis and a thundering financial breakdown at the same time.
The paradox is that every increase in financial stimulus also increases US dollar demand creating what is known as a “liquidity trap”. This occurs when the demand for dollars exceeds the supply leading to a global bank run and the bankruptcy of many banks and brokerages. In other words, a new global financial crisis is about to occur.
My question is: Will the Forex Brokerages that have Bitcoin deposit/ withdraw be more likely to survive the next financial crisis since they operate outside the mainstream banking system?
I would suggest that with Covid 19 vaccines reducing the impact on world economies, the risks of an implosion is fading. It could well depend on confidence (or not) on world governments, and strength of Bitcoin, ironically.
That’s not to say the next pandemic, when it arrives as humans destroy the planet, could produce the tipping point, as it’s as likely as a war with China. Then your scenario could be realised.
When the next financial crisis occurs traders around the world will be cashing out as fast as they can. This could overwhelm most brokerages.
The trouble will start in the bond market. Last week saw the largest net negative positioning in the US bond market(TLT) in history. This video gets interesting from 18:00 to 20:00 minute mark.
April fools day could take on a whole new meaning this year.
What most people don’t know is the US will likely adopt negative interest rates starting April 1st.
People may be starting to believe that the $120 billion a month in FED stimulus is permanent. Its not.
“Bottom line: we have three weeks until a potentially calamitous event takes place and unless the Fed steamrolls political opposition from both the FDIC and progressive Senators Brown and Warren, the US banking sector will suddenly find itself with a $2 trillion capacity shortfall making it virtually impossible to continue the Fed’s monetary policy, and forcing QE to grind to a halt.”
Goldman Does The SLR Math, Stumbles On An Huge, $2 Trillion Problem
I was going to open an account with an Australian broker a few months ago, I’m glad I didn’t There’s a lot of turmoil going on in Melbourne and Sidney right now. I get the feeling its going to get a lot worse.