Galaxy Digital CEO Mike Novogratz has warned of a credit crunch in the US and around the world. Emphasizing that “we’re headed for a recession,” he expects the Federal Reserve to cut interest rates “sooner than we think.”
Novogratz on the recession and the global credit crunch
Galaxy Digital CEO Mike Novogratz shared his outlook for the US economy in an interview with CNBC on Wednesday. Comparing the current market condition to one in December 2018, he said: “This reminds me a lot of December 2018, when the Fed had this idea of one last (interest rate) hike and of course sent the market to a crisis. chopped, and they had to reverse it shortly after.”
Noting that “information has changed dramatically” in a short period of time, he explained:
The commodity market tells you, the oil market tells you that we’re headed for a recession. We are going to have a credit crunch in the US and around the world.
Novogratz stressed that Federal Reserve Chairman Jerome Powell “should pause and cut rates sooner than we think.” He added: “That is a big change in psychology. Has bitcoin (BTC) and ethereum (ETH) moving.”
The executive continued: “If there was ever a time to be in bitcoin and crypto, that’s why it was created, in the sense that governments print too much money every time the pain is too great, and we’re seeing that.”
Responding to a question about whether he sees “the possibility of contagion” in the US banking system and globally, Novogratz said: “There is contagion.” He added that people learn their lessons and will eventually be dependent on just four or five depository institutions.
“I think Congress and the Fed are going to have to do something more dramatic… or we’re going to see constant pressure on these regional banks and the whole system,” Novogratz opined, concluding:
Now that we have a market going into a credit crunch, how do banks rebuild capital? They lend less. You’re going to see a credit crunch in the United States and that’s starting to take a toll on the market in a dramatic way.
What do you think of Mike Novogratz’s statements? Let us know in the comments section.
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