Former Goldman Sachs executive Raoul Pal is outlining what he says are the two most important charts “in all of macro.”
The Real Vision chief executive and co-founder tells his 1.2 million followers on X that aging demographics force governments to borrow more money to support gross domestic product (GDP) growth and pay interest on the debt.
-->Pal’s first chart looks at the US labor force participation rate against the inverted chart for US government debt as a percentage of GDP.
Source: Raoul Pal/XHis second chart looks at U.S. Federal Reserve net liquidity compared to the normal chart for US government debt as a percentage of GDP.
Source: Raoul Pal/XPal says the charts highlight a serious macroeconomic challenge, and the end result will be currency debasement.
“At over 100 of GDP in debt there isn’t enough economic cash flow to fund the debt growth, so it gets ‘printed’ via Fed Net Liquidity and also forced, via regulation, onto the balance sheet of the banks.
That debases the currency and lowers the denominator, optically making scarce assets more valuable.
Crypto (mainly Bitcoin) is the life raft as it not only offsets the annual 8 debasement but also gains value due to adoption effects.”
In the long run, Pal says he believes artificial intelligence (AI) and robotics will improve the dilemma and play a key role in mitigating the pressures of aging demographics.
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