Jamie Redman
Analysts Say an Onslaught of Fed Rate Hikes Could Spur a ‘Bond Market Flash Crash’ or ‘Blow up the Treasury’
The U.S. economy has been struggling with inflation running rampant and investors are eagerly waiting for the U.S. Federal Reserve to announce the next federal funds rate hike next month. Harris Kupperman, the founder of the hedge fund Praetorian Capital, believes the onslaught of Fed rate hikes could very well “blow up the Treasury.” Furthermore, amid the gloomy macro trends, the chief marketing officer at Fluid Finance, Jessica Walker, says the failing economy and floundering fiat currencies reveal the true benefits of cryptocurrencies.
Praetorian’s Harris Kupperman Says a Barrage of Fed Rate Hikes Could End up ‘Blowing up the Treasury’
This week Bitcoin.com News reported on a number of analysts who believe the U.S. central bank will codify another federal funds rate (FFR) rise by three-quarters of a point at the meeting in November. On October 18, the founder of the hedge fund Praetorian Capital, Harris Kupperman, published a report that claims an “avalanche is in motion” as he believes the Fed is currently trapped and despite talking tough, he believes the Fed will need to pivot on raising the FFR.
Kupperman also argued his case on the podcast “Forward Guidance” when he detailed that the Fed will have a real hard time when oil surges again. The Praetorian Capital founder and chief adventurer at Adventures in Capitalism, argued on the podcast that the Fed will have to pivot and accept high inflation as today’s reality. In the report published on October 18, Kupperman notes that continued rate hikes targeting a rate of 4.6% or higher could lead to “blowing up the Treasury.”
J. Kim Insists ‘2008’s Financial Weapons of Mass Destruction’ Still Exist and if the Fed Goes Rogue, the US Central Bank Could ‘Create Illiquidity in the Largest Bond Market in the World’
Additionally, J. Kim of skwealthacademy substack explains in a recent blog post that the forgotten 2008 financial weapons of mass destruction are still a problem in 2022. Kim further believes that a “U.S. Treasury bond market flash crash is inevitable under these market conditions.” Speaking about the financial weapons of mass destruction, Kim details how the perception of a mass decrease in global derivatives since 2008 is an illusion.
Kim’s article adds:
If you assume the perspective that bankers have cut their positions in these extremely risky products that can collapse like a procession of dominoes if one large bank defaults on any major category of these derivatives, you would be wrong.
Kim’s blog post explains how it’s possible the U.S. central bank has gone rogue and similar to Kupperman’s position, it could wreak havoc on the bond market.
“While the ECB seems to be keeping their end of the bargain in not imploding this critical derivative market, U.S. central bankers have not,” Kim’s blog post notes. “If the Feds really go rogue in continuing to drive the USD strength against all other major global fiat currencies higher, not only will this possible create illiquidity in the largest bond market in the world, U.S. Treasuries, but it may cause massive defaults in the USD denominated interest rate derivative market as well.”
Fluid Finance CMO Says Failing Fiat Currencies and Gloomy Economy Highlights the Benefits of Crypto Diversification and Decentralization
Meanwhile, Jessica Walker, the chief marketing officer at Fluid Finance told Kitco’s David Lin, anchor and producer at Kitco News, that diversification and options like cryptocurrencies shine during these macro trends. “There is a huge concern right now about the security of people’s own fiat currency, and their own country’s coin,” Walker told Lin at the Future Blockchain Summit in Dubai. “Being able to diversify and have other options besides fiat is really important now, more than ever, with so much geopolitical uncertainty.”
Walker also talked about the Canadian truckers’ protest against the vaccine mandates earlier this year. At the time, the fundraising platform Gofundme stopped the Freedom Convoy in Ottawa from receiving donations. At the time, banks froze bank accounts and Canadian prime minister Justin Trudeau invoked the Emergencies Act to deal with the protests. “It was a pretty scary time, and if anything, it was an advocate for decentralization,” Walker said on Friday. “This is why we need bitcoin. This is why we need currencies that governments can’t control,” the Fluid Finance executive said.
In terms of diversification, Walker believes in bitcoin, ethereum, and a few other blockchain projects. “I dollar-cost-average into bitcoin, ethereum, and then I look at projects that I really believe in,” Walker told the Kitco host on Friday.
What do you think about Harris Kupperman’s and J. Kim’s opinions about the current erratic Treasury market amid an aggressive U.S. central bank? What do you think about Fluid Finance executive Jessica Walker’s diversification strategy? Let us know your thoughts about this subject in the comments section below.
