Bitcoin can beat the dollar, if the United States deficit does not fall: Larry Fink’s letter to investors

If the United States does not restore their federal deficit and the dynamics of public debt will not be under control, the dollar risks losing its status as a great reserve coin of the world economy. But not in favor of the euro or Chinese yuan. Rather, in favor of Bitcoin or some other digital activity issued by a private operator.

The warning comes from the largest investor in the world, the founder, Chairman and CEO of Blackrock Larry Fink. Launched in New York in 1988, Blackrock last January came to manage savings masses all over the world for 11,550 billion dollars (of which 2,700 billion collected only in Europe).

Larry Fink’s letter to investors

Today Larry Fink publishes his annual letter to investors, a 27 -page document, with an observation that can only capture the attention of the administration of Donald Trump and the US Treasury Secretary Scott Beesent. Fink is asked: « Bitcoin can erode the state of the dollar as a reserve currency? ». His analysis is synthetic but direct: « The United States benefited that the dollar had a function as a reserve coin of the world for decades » writes Fink. The reference here is mainly to the availability of investors from all over the world to finance debt securities in dollars to rather low returns. But the founder of Blackrock warns: « There is no guarantee that this lasts forever. National debt (public, editor’s note) has grown three times faster than in the gross domestic product From what the debt account began in Times Square in 1989 ». And again: « This year the payments of interest on public debt (American, editor’s note) will exceed 952 billion dollars. By 2030, the mandatory government expenses and the debt service will consume all federal revenues, creating a permanent debt ». And then the conclusion of Fink, with a clear warning to the Administration and Congress: «If the United States does not bring their debt under control, if the deficit continues to swell, America risks losing that position (as an issuer of the international reserve currency, editor’s note) in favor of digital assets such as bitcoin ».

The difficulties of the US economy

In his letter Fink he cites the difficulties and tensions of the moment in the international economy and in the United States, without directly appointing Donald Trump and his duties policies but mentioning what happens: « Protectiveness has returned strongly », complains. «Today many countries have twin and overturned economies: one in which wealth creates wealth and another in which difficulties create other difficulties. This division has given shape to our political life, our political choices, « writes the founder of Blackrock. « The unexpressed basic idea is that capitalism is not working and something new must be tried. »

Fink does not agree and indicates a road: to participate many more savers in the development of investments in infrastructures that will arrive in the next fifteen years. Blackrock estimates projects for 68 thousand billion in the world between roads, energy and more. Blackrock is strutting to offer even you smaler investors and savers, access to these plans.

Optimism on Europe

But above all, Fink expresses a relative optimism on Europe which until a few months ago was not at all fashionable among the great international investors. A chapter of the letter is titled: « We must be positive again on Europe. » In the text, Fink cites Mario Draghi: « The former Italian prime minister and head of the European Central Bank stressed that Europe has lowered barriers with countries outside the continent but not those among the countries of the continent », reads. The paradox is that for a German company it can be « more interesting to operate in China than in France ».

But Fink’s conclusion is positive, even here without mentioning the impact of Trump (never appointed in the letter) on the international scene: « I think Europe is waking up. The political managers with whom I speak – and I speak to us – now understand that the regulatory obstacles of themselves will get aside on their own. Must be addressed. The potential advantage is enormous, « he concludes.