Global Macro Investor CEO, Raoul Pal, discussed the current economy this week and asked his 394,000 followers if people are using the wrong denominator when it comes to certain economic factors. One thingâ€™s for certain, wages have not increased, no matter the common denominator people use to measure todayâ€™s salaries. Pal wholeheartedly believes that bitcoin is the only â€œlife raftâ€ he knows of that has â€œthe optionality to change this [issue] over time.â€
Macro Strategist Asks: â€˜Do We Have the Wrong Denominator?â€™
Raoul Pal is a bitcoin bull and heâ€™s said many times that the decentralized crypto asset is extremely â€œhard money.â€ This week on Twitter, Pal discussed a few denominators people leverage to measure things in economics. He asked his social media followers whether or not they thought we had the wrong denominator.
â€œMany of us believe that Fed money printing is creating an asset bubble. But when we switch the denominator to the Fed balance sheet equities look fairly priced,â€ Palâ€™s thread noted. When we look at SPX vs M2, the other measure people look at, equities are expensive but not wildly soâ€¦(itâ€™s sort of just earning growth). Gold has done less well but ok (sort of [like] equities minus the earning growth),â€ Pal said.
As far as gold versus the M2, the entrepreneur says that the denominator has held its ground. M2 is the term used for a broad calculation of the easily convertible (liquid) money supply which includes checking deposits and cash.
SPX versus gold is 60% above its 100-year average Pal said and in his view, â€œgold is the best long-term denominator for assets.â€ Pal then said maybe a devaluation of the denominator is the real issue at hand.
â€œWe think of it as the [Federal Reserve] creating bubbles, but maybe itâ€™s all fairly priced considering the change in [the] value of the denominator? Much like Venz equities rise when the currency devalues,â€ Pal stated. â€œHowever, the situation is much worse when you look at wages, which have barely moved in 50 years in real terms, underperforming all assets massive due to massive demographic bulges, globalisation, and technology,â€ he added.
In the United States, all wages have outperformed things like cars, trucks, and oil, but when the common denominator is gold it looks inferior.
â€œAnother way is [to] look at how many hours [of] work it takes to buy an ounce of goldâ€¦ Wages allow you no investment opportunity,â€ the Global Macro Investor executive emphasized. Purchasing equities is a joke as well said Pal because the median person gets to buy next to zero. People have lost 90% of their purchasing power when it comes to buying property he stressed.
Bitcoin Offers a Chance to Change This Dynamic
Whatever the case may be Pal said, bitcoin (BTC) has dramatically offset â€œthe wages/purchasing power/denominator issue.â€ He said that he thinks it is the only chance people have this day in age for someone to expand their economic horizons.
â€œIt is literally the only chance the median person has to change this dynamic,â€ Pal asserted. â€œEspecially young people who are in huge competition for jobs with boomers and their own massive generation and with technology and workers around the world, struggling to survive too.â€
The Global Macro Investor executive thinks that the wage issue is forcing people to grow more upset and angry at the system. He noted that people feel poorer, they are poorer, they have more debt, and they need to obtain more debt, which is an â€œendless loop,â€ Pal stressed.
As usual, Pal believes that bitcoin can help, as the average person is not included and the traditional financial system is growing less accessible. â€œThe [average person] canâ€™t own enough investments to make up for the difference,â€ he said.
Pal is extremely bullish about bitcoinâ€™s future and for quite some time, the former Goldman Sachs executive said heâ€™s been â€œirresponsibly longâ€™ toward bitcoin. The macro strategist detailed at the time, that he was also short on the U.S. dollar.
â€œMy conviction levels in bitcoin rise every day. Iâ€™m already irresponsibly long,â€ he noted. Following those statements, Pal said he decided to allocate 10% of his companyâ€™s balance sheet toward holding bitcoin and sold all his gold reserves for a portfolio of BTC and ETH.
What do you think about Raoul Palâ€™s conviction toward bitcoin? Let us know what you think in the comments section below.
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