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Hey Everyone,
Over the weekend, I had the opportunity to shake hands with a local politician named Larry Elder, a Republican who is running for governor of California in the upcoming recall election.
My grandparents, who live here in California, are quite active in local politics, and they were kind enough to put on a grand fundraising event in their home.
As much as I try to stay neutral in the great American political divide, I thought it prudent to mingle during the party and hear some of the thoughts being shared.
After all, California is one of the world's largest economies, so it pays to pay attention.
In retrospect, the time that I spent at the Los Angeles meetup seemed a lot more fruitful, not that there is much to compare.
The two events were about as opposite as two events can be. However, for some reason, I felt like I was actually having an impact on how the future might look in one event, whereas in the other, it was just politics as usual. |
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Causing trouble
It's always helpful to try and visualize how things might look in the future.
Even though predicting it can be tough, we can often get a good sense of the way things are going and how they might develop further down the line.
One of the members in the audience at the LA blockchain meetup had some rather interesting questions for me about whether stablecoins might pose some sort of systemic risk in the future, should DeFi get really popular and start taking money from the bond market.
I could only respond that we're nowhere near that now, but we should hope that the pace of change will be more gradual than that.
In 2017, the central banks clearly stated that crypto was too small to be a threat. Clearly, some politicians, like Sen. Elizabeth Warren and Treasury Secretary Janet Yellen, think that we may be getting there soon.
On CoinDesk TV yesterday, analyst Jason Deane pointed out the growing number of transactions that have taken place recently on the Bitcoin network, and what it means for the industry.
Still, bitcoin's market cap has yet to significantly break $1 trillion, and the total value locked in the DeFi market is still less than $100 billion. |
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The thing is that you would be surprised how fast things can change. Even just the graph above shows tremendous growth in a short amount of time.
My feeling is that once there are viable onramps for institutional investors to take advantage of DeFi lending rates and growth, government bonds won't stand much of a chance as an alternative.
So yes, that could create a serious issue for governments if the only ones buying their debt are central banks.
Retail customers like you and me will be the first to take advantage of the new market. Big banks will come, but it will take them a while.
So yes, on a long enough timeline, this could present a real issue for governments, and those holding their existing debt may face significant event risk, but I guess we'll need to see how it plays out.
Anyway, it's just something for us to ponder at this point. Have a wonderful day! Best regards,
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Mati Greenspan Analysis, Advisory, Money Management |
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