The Federal Reserve and the U.S. government are working aggressively to implement policies aimed at addressing the financial crisis triggered by COVID-19 and the economic impact of the societal shutdown.
Americans across the country have begun receiving stimulus checks to recoup lost income. Meanwhile, the Fed has said that it would serve as a backstop for the junk bond market, announcing – for the first time – purchases of corporate bonds, including those in junk territory.
Such actions have triggered a cavalcade of critics, some of whom argue the stimulus doesn’t go far enough to address mounting unemployment. Others say the Fed’s actions could result in a surge in inflation.
In an episode of The Scoop, Raoul Pal – legendary macro investor and founder of Real Vision joins The Block’s Frank Chaparro and Ryan Todd to examine the current macro backdrop.
Pal argues that the impact of COVID-19 on consumer of behavior – including a dip in spending on concerts and restaurants – is not being truly appreciated by the markets.
In this episode, we also explore:
- Why existing stimulus measures are “papering up the cracks” and won’t be enough to sustain the economy
- What he would do if he ran the Fed
- Why people should be worried about deflation, not inflation
- How the “dollar is going to break the global system” and how that could benefit Libra or bitcoin