Regarding: An article published on 26th February 2020 “Bitcoin Isn’t Much of a Haven Asset Right Now. Here’s Why.” by Barrons. Click Here for the full article.
COVID-19 is doing to the real economy just what sub-prime did to the financial economy a dozen years ago. China is the trade engine to the world – a still centralised world that relies on “just in time” delivery”. In China most imports are related to most exports as the country is both a “just in time” economy and the source of choice for other, “just in time” economies. There are frictions in the process, the two main ones being time because nearly all this activity for China involves shipping and labour because China has an abundance of it to exploit.
The point you need to be thinking about is that more than the population of the US is in self-imposed or state-imposed quarantine in China and this affects 90% of the regions in China where the world’s exporters are located. This means not only are they able to make less of the stuff they (and the world) wants but they are not able receive the stuff they have ordered to meet demand for that stuff. The result is a cliff edge on exporting activity and a significant and growing decline in ordering replacement stock to satisfy activity. Exports from China are down 50% or more and imports to China are down 30-40% . Ports are filling up with ships that cannot be offloaded or loaded so congestion and displacement become a significant secondary issue along with spares, components and other supply chain disruptions in both China and other countries.
Central Bank policy response will be the same incoherent mix of Keynesian and Monetarist efforts as in 2008 because Central Banks are already locked in as they had no option last time and even less option this time. This decade will be known as the roaring 20s, the previous one as the timid teens, if Main Street wants to continuing pricing real and financial assets in a fiat such as USD. This time I see the effects of doing what has already done (globally cutting rates and printing more money) lasting for another decade and 2020 being the low point for the price of anything anyone wants to buy with anything – the exception being Bitcoin because unlike anything else it is a known fixed supply so a constant in a world of things of unknown price valued in things with an unknown supply. In time, and hopefully a short period of time, the only known, Bitcoin, is the thing everyone with everything else (or nothing else) chases.