Opinion: Governments could ‘crush’ Bitcoin
Governments will stoke inflation and begin cracking down on gold and Bitcoin as competitors. This view was presented by investor Michael Burry, who predicted the collapse of the U.S. housing market.
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— Michael Burry Archive (@BurryArchive) February 19, 2021
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In the thread, the financier who became the prototype of the main character in the film ‘The Big Short’, predicted an expansion of government stimulus to overcome the COVID-19 crisis.
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By Burry’s estimates, previously it took borrowing $3 to generate $1 of GDP. Now that ratio has worsened. He drew a parallel with Germany in the 1920s, which serves as an example of the consequences of an active issuance of unsecured money. Burry noted the similarity of the current situation to that which preceded the inflation spike in the United States in the 1970s.
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— Michael Burry Archive (@BurryArchive) February 19, 2021
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In separate posts, Burry backed his view with charts. They show how the U.S. government, guided by modern monetary theory, is expanding the money supply. This decision comes as retail sales and business activity indices recover. The financier says trillions of dollars of new stimulus will boost consumer demand and drive up production costs.
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Burry also touched on bubbles in financial markets. In his view, they manifest not only in traditional metrics such as Put/Call Ratio or the level of margin debt, but also in a new phenomenon — Reddit trader activity .
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The investor does not believe in Bitcoin, arguing that its scale is insufficient to meet the needs of a global economy. He cited the Swiss franc, which is not a reserve currency, despite its high reliability.
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At the same time, Burry explained that he has no ill will toward Bitcoin.
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\”I think the long-term future for a decentralized currency is precarious. Hard, unscrupulous centralized governments will not relinquish their monopolies on currencies. In the short term anything is possible. So I am not shorting Bitcoin,\” — the investor said.
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I don’t hate $BTC. However, in my view, the long term future is tenuous for decentralized crypto in a world of legally violent, heartless centralized governments with #lifeblood interests in monopolies on currencies. In the short run anything is possible- why I am not short #BTC.
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— Cassandra (@michaeljburry) February 20, 2021
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As noted, SEC Commissioner Hester Peirce questioned whether there is a way to completely outlaw Bitcoin. Barry Silbert, founder of Digital Currency Group, shares a similar view.
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Earlier, U.S. Treasury Secretary Janet Yellen pledged to closely monitor the cryptocurrency market. She intends to curb the use of digital currencies for illicit purposes.
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President of the Federal Reserve Bank of St. Louis, James Bullard rejected the prospect of Bitcoin competing with the dollar.
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