The global financial system sits on a precipice at the moment where the future is quite uncertain. Major central banks have had to start enacting policies in an attempt to keep their economies afloat and to stimulate spending. One of the negative backspins of this is that saving gets sacrificed in these policies.
With savings being the sacrifice, it leaves a lot of people with nowhere to keep their money to attract interest. This is also coupled with uncertainty around the traditional stocks and markets. In times like this, gold has been a popular alternative, but 12 years on from the last major financial crisis, Bitcoin has emerged as a possible hedge.
Generally, the fear of a recession and the moves by the bigger traditional analysts and economist have been showing no fear – 2008 crisis predictor Nouriel Roubini has said he has no problems with the Fed’s financial policies. However, former Bitcoin Basher Jamie Dimon, while still being positive about the future, is nervy about negative interest rates.
Negative interest rates
The idea of negative interest rates flies in the face of traditional conversion as it suggests that if you store cash in a bank you will not only earn no interest, but you will in fact have to pay to store it. The reason for this is that the banks want money to be spent in order to stimulate the economy.
In the US, President Donald Trump has been calling for negative interest rates, but it has the bankers worried.
J.P. Morgan Chase CEO Jamie Dimon told CNBC that negative interest rates are one of the only things that concern him in a market that’s otherwise in a “Goldilocks place.”
“The only thing I have trepidation about is negative interest rates, QE, and the diversion between stock prices and bond prices and yield and stuff like that,” Dimon said on “Squawk Box” from the World Economic Forum in Davos, Switzerland.
“It’s kind of one of the great experiments of all time, and we still don’t know what the ultimate outcome is,” Dimon added.
Bitcoin a better bet
Interestingly, this decision to enact negative interest rates would suddenly make Bitocin far more attractive. There would be very little left to invest in if negative interest rates were in place – baring gold – but many may weigh up the risk of Bitcoin’s volatility against the certainty of losing savings at a bank.