‘Dr. Doom’ economist Nouriel Roubini says bitcoin is not a hedge against inflation and investors are ‘feeding the bubble’

Nouriel Roubini 4
Nouriel Roubini

  • Economist Nouriel Roubini renewed his pessimistic views on bitcoin in an interview with Yahoo Finance this week.
  • The professor said he sees bitcoin as a “pseudo-asset” that is pumped by “massive manipulation.”
  • Roubini also argued bitcoin isn’t a hedge against inflation or a store of value, because of its correlation with stocks.
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Nouriel Roubini, an economist known as “Dr. Doom” for his bearish views, said bitcoin is not a hedge against inflation and investors are “feeding the bubble” in an interview with Yahoo Finance on Monday.

 “If people were really worried about inflation they would diversify in a wide range of assets that are historical good hedges against inflation. That’s not happening,” Roubini said.

“People say bitcoin’s a store of value against tail risk, but in February, March of last year when US stocks went down, say 35%, bitcoin was not a hedge, it went down by 50%” the economist added. “The reality is that no one knows what the value of this pseudo-asset is.”

Roubini has long been a critic of digital currencies, but after bitcoin hit a $1 trillion market cap last week the NYU professor has renewed his bearish calls. 

Roubini said he sees the digital currency as a volatile “pseudo-asset” and argued much of the price movement “is driven not by worries about inflation or debasement of fiat currencies,” but rather by “massive manipulation.”

The economist said that there are a number of schemes used by digital currency whales to push the price of bitcoin higher. In particular, he highlighted the stable coin tether as an example.

Roubini said tether is “produced out of nowhere with we don’t know which kind of backing and every other day there is another billion dollars of it that goes to buying bitcoin.”

“We know there are a whole bunch of legal investigations by the DOJ, CFTC, the attorney general’s office in New York, they are looking into what’s going on,” the economist added.

JPMorgan strategists including Josh Younger and Joyce Chang, also warned investors about tether in a note to clients last Thursday, per Bloomberg.

The analysts said Tether Limited is “engaged in a classic liquidity transformation along the lines of traditional commercial banks, but is not subject to the same strict supervisory and disclosure regime, and certainly does not have anything like deposit insurance.”

They also warned problems with Tether could lead to liquidity issues in the crypto market and that Tether Limited has “famously not produced an audit.”

Tether Limited announced a settlement with the New York AG for $18.6 million on Tuesday. The firm was accused of hiding $850 million in losses and has been under scrutiny to see whether it has sufficient cash reserves to back up all tether tokens in circulation, per CNBC.

Tether responded to questions about its business in a statement saying, “contrary to online speculation, after two and half years there was no finding that Tether ever issued tethers without backing, or to manipulate crypto prices.”

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‘Dr. Doom’ economist Nouriel Roubini warns Biden’s presidency will suffer civil unrest and cyberattacks by Russia and China during his term

Nouriel Roubini
  • Economist Nouriel Roubini expects Joe Biden’s presidency to face civil unrest and cyberattacks.
  • Russia and China will launch cyberattacks against the US and spread false information, he said.
  • He’s worried Donald Trump could execute military action in Iran, making things difficult for Biden.
  • Visit Business Insider’s homepage for more stories.

Joe Biden’s presidency can expect to go through civil unrest and cyberattacks, “Dr. Doom” economist Nouriel Roubini told German magazine Der Spiegel on Friday.

Biden’s term will face more armed uprisings, especially from white nationalists, mainly to provoke the left-wing, the economist said in an interview with Tim Bartz.

According to Roubini, who is famous for his pessimism, Russia and China will launch cyberattacks against the US and circulate false information. 

“That will shape the next four years,” he said, according to a transcript translated from German. 

But in the short-term, the American economist is more worried that President Trump could strike an attack on Iran’s key nuclear site in Natanz – the only uranium enrichment plant in the country that’s allowed to operate under the nuclear deal.

Read More: Bank of America says the warning signs that stocks are hurtling into bubble territory are growing – and pinpoints 6 that could signal a bear market is beginning

Trump’s administration has engaged in aggressive foreign policy against Iran throughout his term and imposed a number of sanctions on a number of Iranian targets.

Biden, who will succeed Trump on Wednesday, has declared to return to the 2015 nuclear pact as long as Iran resumes strict compliance with it, according to Reuters.  

Trump could execute military action against Iran’s key nuclear site to present himself as powerful to his supporters and make life more difficult for Biden, according to Roubini.

The economist also called for tighter regulation on Big Tech platforms, such as Facebook and Twitter, because of their power. Since antitrust rules are devised for traditional monopolies, separate rules should govern social-media companies that have distinct structures, he said.

Read More: GOLDMAN SACHS: Buy these 25 stocks best-positioned to juice profits in 2021 as stimulus and vaccine progress spur economic growth

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