Will Bitcoin Survive Through The Next Global Recession?
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The next recession could come sooner than we think. Key indicators reveal that we may have two or fewer years of economic growth.
The fiscal stimulus is expected to end by 2020, yet the US government has yet to come up with a new plan. Moreover, interest rates across the US, and the world, in general, are expected to increase, placing pressure on interest-sensitive sectors of the economy.
The sector that could be affected most is the housing market. The hidden imbalances in the traditional financial system are expected to be exposed. In our opinion, as the economy slows and interest rates rise, many people would want to mitigate the risk of loss by investing their USD in BTC. This strategy would shield them from the non-financial corporate debts that caused mayhem in the 2007/08 financial crisis.
The traditional financial system will become strained by the highly leveraged over-borrowing that the corporate sector has been undertaking. As some multinationals including tech companies, healthcare companies, and pharmaceuticals companies make use of the funds they have stored abroad with strong balance sheets, the rest of the population will be left alone to fight off the economic fallout.
On the other hand, there are highly-leveraged companies, such as private equity firms, leveraging various companies to increase the returns to shareholders through leveraged buyouts. When you add up all this debt issued by companies that are themselves already highly leveraged, the amount comes down to $2.8 trillion.
As growth slows, interest rates rise, and interest payments rise too, so the pressure is transferred to these companies that are forced to cut back on hiring and investments. To maintain their billions, American capitalists will sacrifice the common man who lacks a voice because of the size of his bank account.
Many people will begin to value the decentralized, borderless, and frictionless system that is provided by the Bitcoin network, as the network will allow them to operate in the same fashion as these multinationals. Since the government’s policies are significantly misplaced, Bitcoin alone can ensure that everyone comes out of the upcoming recession unfazed.
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