Global Money Printing Is Good News For Cryptocurrencies

The novel coronavirus pandemic has triggered another wave of money printing. As of July 2020, the global debt-to-GDP had surged to 331%. In addition, U.S. all-sector-debt has surged to 441% of GDP.

As government spending increases, let's look at the major source of debt funding for the governments.

The chart below from the International Monetary Fund (Fiscal Monitor, October 2020) provides an important insight.

To make it simple, the Bank of Japan has purchased 75% of the government debt issued since February 2020.

Therefore, the government issues debt, the central bank purchases debt and an equal amount of money is printed.

The European Central Bank is not far behind with 71% debt monetization during this period.

With governments all over the world printing money, the implication is devaluation of fiat currency. Overall, the trust on fiat money is likely to decline in the coming years.

This is a key reason to believe that cryptocurrencies are here to stay.

In addition, hard assets like gold and silver are good for savings than holding paper money.

End Note The Federal Reserve was created in 1913. Since that time, the dollar has lost 96% of its value.

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