Before the current crisis began, it was often said that it would be global reset and the most severe crisis for many years. Some – falling into quite apocalyptic moods – even suggested that it would be the hardest recession in history. Although we do not know the future today, newer macroeconomic data do not fill us with optimism. It turns out that global debt is at a record level!
World debt breaks records
At the end of the first quarter of 2020, global debt-to-GDP ratio was 331%, and total debt reached USD 258 trillion, according to a report IIF.
“Recession-induced pandemic conditions have caused global debt-to-GDP debt to reach a new record of 331 percent. GDP (USD 258 trillion) in the first quarter, compared with 320 percent in the fourth quarter of 2019. “
– written in the document.
“The largest increases were recorded in Canada, France and Norway. Emerging market debt has risen to more than 230 percent GDP in the first quarter of 2020, mainly due to non-financial enterprises in China “
– added further.
What does this mean for BTC?
It is important to consider how this will affect cryptocurrencies. Governments will have to pursue monetary policy based on Modern Monetary Theory to get out of this debt. This in turn means almost constant printing of money. Theoretically, all this – according to the creators of this theory – can work and support development, but it is … just theory. No country has tested this in practice. In addition, it is not difficult to imagine what will happen if at some point things get out of control of politicians and officials. This can end in high and global inflation, in an extreme variant even with massive collapse of fiat currencies.
In addition, there will be a reduction in interest rates, which is already taking place.
All this should strengthen BTC and other leading cryptocurrencies. Why? Simply investors – and even so-called “Street” – they will start looking for markets that are not dependent on the authorities’ decision and are not subject to such strong inflation. Gold, silver, real estate market (mainly land trade) and BTC and leading altcoins can gain.