JAKARTA - One of the world's leading crypto figures, Balaji Srinivasan, issued a stern warning about the future of the US economy. According to him, the US government will continue to print money indefinitely to cover the budget deficit and save sectors hit by the pandemic.
Srinivasan, who once served as head of technology at Coinbase, one of the largest crypto exchanges in the world, said the US was facing a severe fiat crisis. Fiat is a currency issued by the state and is not supported by any asset.
In a series of tweets on Twitter, Srinivasan said that many US economic sectors had been destroyed or would be destroyed by loose monetary policy and excessive government intervention. He called banks, commercial real estates, Democratic-dominated states, and even the insurance industry as examples of threatened sectors.
"Everything is destroyed. Banks, commercial real estates, blue states (states controlled by the democratic party. ed). There are whispers about insurance too. Money printing will be historic. Likewise, the desire to get out of printing the money," he wrote.
Srinivasan explained that insurance companies, which should provide protection for their customers, actually have a very risky investment portfolio. He said that most of the assets held by insurance companies are government bonds whose value continues to decline due to the increase in interest rates made by the Federal Reserve.
"About insurance... do you know all the'safe' assets that insurance companies hold to pay you back? Many of them are also in bonds that the Fed considers low," added Balaji.
Remember, insurance companies hold'safe' assets such as bonds and mortgages. And what is the performance of these secure assets? In an era of unexpected and unprecedented interest rate hikes? Not so good, Bob," he said.
Srinivasan shows a graph showing that bonds cover more than 70 percent of the US insurance company's portfolio in 2019. He said that this makes insurance companies very vulnerable to financial crises.
Srinivasan said that the lesson of this crisis is not to trust the country as a provider of security and prosperity. He said that the best solution is to switch to crypto, such as Bitcoin, which is out of control or printed by any government.
"This is not just a financial crisis. This is a fiat crisis. All bills come. Only a few parts are seen in public. But it will be clear in the retroflex: don't trust the country," he concluded.
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