Fund manager Lawrence Lepard believes Central Bankers are in a ‘QE doom loop’, and that the changing monetary regime will lead to a $2 million Bitcoin price-tag.
In a QTR podcast, the central-bank sceptic explained his position in detail, noting that commodities such as gold and bitcoin will benefit greatly in the next five years.
Larry Lepard manages Boston-based investment firm EMA Garp, whose strategy focuses on providing “Monetary Debasement Insurance”.
Asked about criticisms levied at Austrian economists who are sometimes referred to as “doomsday sayers” or “permabears”, Larry stressed that ‘fiat has ruined price discovery’.
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I obviously am self-interested in gold doing better. Having saving that, I’m an analyst and I call them like I see them, and I like with my mistakes. My strong belief is that I’m trying to communicate a need for why the money is broken, and why we need to fix the money to fix the system. To me, it’s even more than what my fund does. Fiat has ruined price discovery, and as a result of that we’re all going to suffer.
According to Larry, Fed monetary policy failures, insider trading among Fed officials and the US Congress, and spiralling moral hazards will result in a decade-long bull market in commodities.
I don’t see anything that says we’re going to go back to a deflationary environment. We’ve been so underinvested in commodities for so long that we’re going to see an enormous inflationary boom in commodities in the next ten years.
Larry also opined about the “debt doom loop” which is well-underway on a global scale.
Within 3 years a lot of our debt rolls. We’re at $1.2 trillion more in interest owned annually than we were. They need to issue bonds to finance that. You can’t sell more bonds in a market where yields are spiking. It’s a doom loop.
From @markets
Of the 3 major risk factors in play for #markets/global #economy—interest rate/central bank-, credit/growth-, and liquidity/market functioning-risk—the third is the least internalized by economists and #investors. IF unleashed, it could cause significant disruption. pic.twitter.com/Ydus8gbOmm— Mohamed A. El-Erian (@elerianm) October 13, 2022
Underlining the accelerating deterioration and change in the global monetary regime, Larry said to keep a distance from long-term US bonds (30-year), while stacking up on the ‘sound money trade’, primarily gold and bitcoin.
There might be case for buying 1 or 2 year bonds. I wouldn’t buy a 30 year at 4%. The odds of continued debasement are high. I would argue for cash, gold coins, silver coins and bitcoin,” Larry says. “And for stocks that are in commodity related businesses.
During the discussion, the fund manager and interviewer also noted that the energy sector is undervalued.
Larry believes the current global-debt crisis could send Bitcoin to $2 million within five to six years. His case relies on continued yearly network growth; specifically that a 20%-30% annual growth rate in the bitcoin network is enough to take the cryptocurrency’s valuation into the millions.
Lightning changes the entire game. It’s impossible to track and makes it completely anonymous. Gary Gensler admits that it’s a commodity. It’s too late to stop it. The horse is out of the barn now.
Larry is not alone in advocating for sound money like Bitcoin and Litecoin. Legendary hedge fund managers Paul Tudor Jones, Stanley Druckenmiller and Ray Dalio have argued the case for Bitcoin from various perspectives, all of which relate to central bank meddling precipitating Bitcoin’s exponential adoption curve.
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