Bloomberg Article Pick&Summary (200503~200510)

# 1. 

 

<Paul Tudor Jones Buys Bitcoin as a Hedge Against Inflation>

 

Macro investor Paul Tudor Jones is buying Bitcoin as a hedge against the inflation he sees coming from central bank money-printing, telling clients it reminds him of the role gold played in the 1970s.

 

Paul Tudor is holding low single-digit percentage of its assets in Bitcoin futures through one of funds he manages. He was motivated to take a hard look at Bitcoin after considering the implications of massive fiscal spending and bond-buying by central banks to combat the COVD-19 pandemic.

 

He regards printing money in such enormous amount would lead to the Great Monetary Inflation. He said he considered various bets on gold, Treasuries, certain types of stocks, currencies and commodities , however he now evaluated Bitcoin as a store of value. The reason why he made these evaluation is based on four characteristics of Bitcoin: purchasing power, trustworthiness, liquidity and portability.

 

He argues that post-pandemic recovery will be different from what happened in last GFC, partly because bank B/S are stronger now and Federal Reserve is allowing them to lend aggressively.

 

Government and corporate debt levels are exploding, making it harder for the economy to ‘digest’ increases in borrowing costs, he said. He also noted that there is a possibility that the Fed chairman becomes a political tool of the administration in power so that rate hikes will be slow to come and smaller than needed.

 

Link: https://www.bloomberg.com/news/articles/2020-05-07/paul-tudor-jones-buys-bitcoin-says-he-s-reminded-of-gold-in-70s?sref=AZRweBR4

 

# 2.

 

<How Long-Feared ‘Monetary Finance’ Becomes Mainstream>

 

Governments borrowing from their own central banks to pay for extra spending is an practical example now happening based on hot-debated theory ‘ Monetary Financing’

 

Monetary Financing goes like this. When a country increases spending and at the same time creates the money needed to pay for it via central bank which can either buy the bonds sold by a government or offer and overdraft.

 

*overdraft: a deficit in a bank account caused by drawing more money than the account holds.

 

It is different from QE in that it involves more explicit and direct cooperation between treasuries and central banks. QE was operated through secondary market, whereas this Monetary Financing is made by central banks buying government debt directly.

 

The argument is that it’s a once-in-a-lifetime emergency, and penny-pinching now represents a bigger risk: better to spend whatever it takes to keep businesses and households afloat, finance the relief effort by any means necessary, and worry about long-run consequences later.

 

Modern Monetary Theory, an emerging school of economics, argues that it doesn’t make much difference if public spending is financed by treasury bonds or central-bank reserves in any case.

 

However there are many historical examples of letting go of the control in monetary supply and the independent role of central bank is harsh: Weimar Republic a century ago to Latin America today.

 

Link: https://www.bloomberg.com/news/articles/2020-05-05/how-long-feared-monetary-finance-becomes-mainstream-quicktake?sref=AZRweBR4

 

# 3.

 

<India looks to lure more than 1,000 U.S. Companies out of the China>

 

India is seeking to lure U.S. businesses, including medical devices giant Abbott Laboratories, to relocate from China as President Donald Trump’s administration steps up efforts to blame Beijing for its role in the COVID-19 crisis.

 

The government in April reached out to more than 1,000 companies in the U.S. and through overseas missions to offer incentives for manufacturers seeking to move out of China. India is prioritizing medical equipment suppliers, food processing units, textiles, leather and auto part makers among more than 550 products covered in the discussions, they said.

 

Hitting a target to grow its manufacturing sector, creating employment in this crisis, pushing through long-stalled reforms on land, labor and taxes etc will be forced to realized by luring U.S. businesses.

 

 

Link: https://www.bloomberg.com/news/articles/2020-05-07/india-looks-to-lure-more-than-1-000-u-s-companies-out-of-china