Erik Voorhees, an American startup founder and current CEO of crypto-exchange ShapeShift, is proposing debt will drive a cryptocurrency rally. More specifically, Voorhees has recently claimed that the US’ massive amounts of central-bank issued debt will inevitably cause problems.
US debt is more than $21 trillion, could cause the next financial crisis
Voorhees made these comments on Twitter, arguing that the next global financial crisis will entail massive distrust in fiat currencies. As cryptocurrencies such as Bitcoin are decentralized and impossible for governments to directly manipulate, they could be poised for action.
”When the next global financial crisis occurs, and the world realizes organizations with $20 trillion in debt can’t possibly ever pay it back, and thus must print it instead, and thus fiat is doomed… watch what happens to crypto,” Voorhees tweeted.
His comments allude to disappointment in traditional fiat currencies as potentially equaling an influx of interest in cryptocurrencies. Moreover, his reference to ”organizations with $20 trillion in debt” is directly aimed at the US.
At the time of writing, the United States has a national debt of more than 21.7 trillion dollars. If Voorhees’ comments came true, the US government would commission the Federal Reserve to simply print more money.
This would, however, not solve the country’s debt-related problems long-term. Rather, it would cause rampant inflation, drastically reduced the US’ purchasing power, and likely diminish confidence in the dollar.
It is, therefore, not hard to see why Voorhees believes such an event would boost consumer appetite for cryptocurrency.
Cryptocurrency-skeptic Nouriel Roubini agrees with Voorhees’ statements
Furthermore, the theory that the US economy’s debt-fueled growth could cause a financial crisis is widely shared among economists. The major asset manager BlackRock recently voiced concerns related to the United States’ budget deficit.
BlackRock’s CEO, Larry Fink, has noted that the US could soon be forced to borrow up to $1 trillion a year. Moreover, the US dollar’s rising inflation rate is viewed by many as too high to properly sustain the economy.
”That could be the real issue related to everything: where we have interest rates becoming too high to sustain the economy with its growth rates,” Fink noted.
Even the notoriously cryptocurrency-averse NYU Stern School professor Nouriel Roubini has shared this sentiment. He has previously predicted that the US economy will overheat as it struggles with rising inflation.
Due in part to this and monetary policy decisions from the Federal Reserve, Roubini predicts a financial crisis by 2020.
If this was to occur, it is highly likely that investors will seek stores of value disconnected to the economy. Such assets have traditionally been precious metals, but cryptocurrencies could plausibly fill these shoes.
In addition to this, Vinny Lingham, the founder of Civic, recently proposed cryptocurrency wealth could soon see a drastic increase. A potential financial crisis that pushes consumers towards cryptocurrency could conceivably be the cause of this.
”Fun fact: More wealth will be created in crypto over the next 10 years, than over the prior 10 years… but remember, like any success story, it’s not going to be a straight line up. Keep believing and just be patient,” Lingham noted.
Photo by David McBee from Pexels
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.