Bitcoin & the Future of Bonds with Greg Foss

 
 

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“Bonds have been in a 40 year favourable market to own. That’s now changed. Anybody managing a bond fund now has only experienced the positive about being a bond fund manager. This is a new paradigm for them, and old habits die hard.”
— Greg Foss

SHOW DESCRIPTION

Location: Miami
Date: Thursday 2nd December
Company: Validus Power Corp
Role: Bitcoin Strategist

Credit is central to the modern capitalist system. This makes bonds the most important financial contract in the world, significantly more important than equities. So, when credit markets get sick, all other markets suffer.

Bonds have performed well for nearly two generations. However, the market looks like it’s about to turn. Yields are being suppressed by unprecedented government purchase schemes. This has to end, and when it does, yields will increase, prices will drop, and debt will become more costly for governments.

The demand side effects are just as damaging. Pension funds are mandated to make significant bond purchases (usually representing 40% of a portfolio). Low bond yields in a high inflation environment result in increased liabilities for pension funds. Rising yields are obviously better, but not for those holding bonds dropping in value.

Is it time for pension funds to be allowed to add bitcoin to their portfolios?

In this interview, I talk with Bitcoin Strategist Greg Foss about how government bond markets are being manipulated through quantitative easing and how this will soon have to end. We further discuss what this means for equities and pensions and the potential for investors to seek refuge in bitcoin.

TIMESTAMPS

00:03:31: Introductions
00:05:59: Mixed asset funds
00:06:47: Bonds 101
00:13:24: Debt spiral
00:20:30: What can fix the broken bond market?
00:25:43: Bonds causing pension funds to suffer
00:29:43: Bid-to-cover ratio
00:31:29: Double-digit inflation
00:35:21: Debt cycles
00:40:22: El Salvador volcano bond
00:50:18: Syndicate short explained
00:52:32: Outdated investment policy guidelines
00:55:20: Pensions investing in Bitcoin
00:58:40: Bitcoin is digital energy
01:05:07: Final comments

 

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SHOW NOTES

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Mentioned in the interview:

Other Relevant WBD Podcasts:

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