With governments making a bumbling mess of things, Bitcoin will likely be the most preferred safe-haven asset
Global debt has reached unprecedented levels this year. The International Monetary Fund (IMF) has reported that debt has increased to $ 188 trillion of 230% of global GDP. And as this situation continues, Bitcoin will likely be the most preferred safe-haven asset in the world.
Public debt is growing day by day
And after the IMF released this report, previous large-scale debt cycle information continued to be exposed. The last time was about the crisis before 2008, which led to a significant shortage and international suffering.
Debt has increased in large part due to a new spending system in developing countries. By the desire to strengthen infrastructure, the leaders have taken to spend in volume. When funds are invested, huge expenses and debts arise.
Source: IMF Global Debt Database, IFS, and WEO
In more developed countries, spending is also unprecedented. However, these countries have seen spending to increase and stabilize economic growth or prevent disasters.
However, significant changes in debt ratios could signal tough times ahead. Both the IMF and the World Bank have warned that better fiscal policies are crucial to maintaining stability.
However, the secondary issue is also related to inflation and the central bank. Faced with excellent debt pressure, the government often prints money to pay off debt. Nearly 70% of the debt bubble is in Africa.
As the country’s central banks keep printing money, inflation almost always rises sharply. This inflation makes buying and selling difficult and only stagnates the local economy. This stagnation leads to more significant spending needs, and the cycle continues.
Central banks are then forced to move in different directions to find stability. Lowering interest rates below zero and providing quantitative easing (QE) are just two of the possible options.
However, the IMF warns that these solutions are not feasible in the long term. When the market turns into debt, the tsunami will eventually collapse, leaving these countries in turmoil. This is precisely the problem that Venezuela, Zimbabwe, and others face even now.
Bitcoin will be an effective solution for inflationary economies
However, Bitcoin and other cryptocurrencies function separately from government spending and poor fiscal policies. Cryptocurrencies represent an economy for themselves, distinct from global market movements.
Of course, Bitcoin and other cryptocurrencies respond to the global market – but they operate with independence. This is very important when economies start to decline. This can be vividly seen in the dependence on Bitcoin that happened in Venezuela and other collapsing economies.
The future may be bleak, but Bitcoin can provide a lifesaver for transitions and transactions. With governments creating a mess about everything, Satoshi may have found a suitable solution.