This article was first published on Insights – Ripple
Ripple CTO David Schwartz continues to explore the wider world of blockchain and digital assets on the Block Stars podcast. In the latest episode, he talks with Professor of Economics and Political Science at the University of California, Berkeley, Barry Eichengreen, about the current state of the global economy and where digital assets fit in a post-COVID climate.
As an economic historian, Barry usually looks to the past as a guide for understanding today’s economic problems. However, he admits that the impact of 2020’s global pandemic has few parallels from the past.
“We’ve never really had a crisis before that was precipitated by the need to shut down the economy,” he explains. “Typically, what you have is demand collapsing because of a financial crisis or bank failures or something. [It’s] very fast moving. This one is kind of going to be a slow-motion crisis. I don’t think there are really good historical analogies for what we’re about to go through.”
While he believes that governments have been right to provide funding to save businesses and preserve jobs, Barry acknowledges that today’s stimulus will likely lead to tomorrow’s problems.
“This pandemic is tantamount to fighting a war,” he states. “I think [governments have] to do what it takes to keep financial markets functioning…by buying everything that moves. There will be a bill to pay down the road.”
Some people believe increased liquidity in the market will lead to hyper-inflation and are looking for investment opportunities that can maintain value if dollar prices soar. Gold is traditionally considered a safe bet, while digital assets are increasingly seen as a new inflation hedge.
“Gold doesn’t really have any intrinsic value,” says Barry. “People [believe] it will hold its value because other people value it. There is, from that point-of-view, a ...
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