A former economist at Goldman Sachs: bitcoin is a reaction to the global debt bubble

The founder of hedge Fund Capital Tetras and a former economist at Goldman Sachs Brendan Bernstein (Brendan Bernstein) argues that bitcoin will help to burst the bubble of traditional Finance.

In a tweet on April 10, Bernstein supported the position of the founding Director of the Fund of the Bitcoin Foundation Jon Matonis (Jon Matonis) who does not agree with statements that Bitcoin is an economic bubble.

It is noteworthy that almost at the same time, the British Barclays Bank has compared the rise and fall of bitcoin prices with «infectious disease», and the publication Time saw the possibility of legalizing investment funds of bitcoin «is a real sign that the bitcoin bubble will burst».

On the other hand, the position of Goldman Sachs towards bitcoin has become more flexible, especially after in February it supports startup Circle acquired for $ 400 million cryptocurrency exchange Poloniex. Himself a former employee of the Bank, Bernstein went even further and decided to point out some «real» bubbles, resulting from the existing financial system and the actions of the world governments:

«Many claim that the Bitcoin bubble has burst. Bitcoin is not a bubble, it is a reaction to these bubbles that exist today in our economy. Government control over money and lending rates has resulted in deformation and real bubbles».

Debt is 57 trillion dollars

Bernstein believes that the main reason for the formation of economic bubbles in China, the US and beyond is debt. According to him in 2009, after the financial crisis, total global debt has increased to 57 trillion dollars.

Bernstein explains:

«China is on another level. With their manic pursuit of 6.3 per cent GDP growth, the debt has soared. After 2008, the growth in banking assets amounted to 450%, reaching 40 trillion dollars.»

China owns banking assets to 40 trillion dollars and 11 trillion in GDP. For comparison, Bank assets in the US is 17 trillion dollars, with a GDP of 19 trillion.

Despite the ambiguous assessment of experts with wall Street analysts, including David Drake (David Drake) predict that by the end of 2018 strong bitcoin returns.

«…it is logical that institutions invest in cryptocurrencies, because investments in them at 1000 -10 000 times the income of the average American. (…) And institutions will continue to invest in bitcoin,» explains Drake.

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