Macro strategist Raoul Pal has issued a worrying report that the US debt burden, aging population and central bank interventions are setting the stage for long-term currency depreciation and positioning Bitcoin (BTC) as the only safe haven asset.
The founder of Global Macro Investor and Real Vision also shared two key macroeconomic charts that he believes are largely ignored, emphasizing that demographics, not fiscal policy, are the true driver of sovereign debt.
The first chart compares the U.S. labor force participation rate to the U.S. government debt as a percentage of GDP. Since 2002, participation has been steadily declining while debt has been rising, a trend that has accelerated sharply since the 2008 financial crisis and in 2020.
Labor force participation rate in the United States. Source: Global Macro Investor
By saying «demographics are the key driver of debt,» Pal emphasized that an aging workforce means less contribution to the economy and greater reliance on government spending.
The second chart shows the close correlation between US government debt and the Federal Reserve’s net liquidity.
Net liquidity Fed. Source: Global Macro Investor
According to Pal, once debt exceeds 100% of GDP, organic economic growth is not enough to service the interest payments. The gap is covered by money printing, “lowering the value of the currency and lowering the denominator,” he believes.
Against this background, Bitcoin becomes the main asset capable of absorbing the shock, Pal wrote:
Cryptocurrencies (mainly, Bitcoin) is a life raft because it not only offsets the 8% annual decline in value, but also gains value due to adoption effects.
