$10 trillion could be ‘wiped’ from banking sector as more banks collapse, Bitcoin insures against US debt crisis – Greg Foss

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(Kitco News) – $10 trillion in equity could be “wiped out” from the banking system as more banks fail, according to Greg Foss, Bitcoin strategist and CEO of Validus Power Corp.

Foss, who has more than three decades of experience trading high-yield credit, was responding to Federal Reserve Chairman Jerome Powell’s recent statement that the US banking sector is “sound and resilient,” which Powell made at Wednesday’s FOMC press conference.

“I think Jerome Powell is a terrible poker player,” Foss told Kitco News Lead Anchor and Editor-in-Chief Michelle Makori. “It’s another shoe to drop [for banks]or as Elon says, it could be an anvil.”

Foss quoted Elon Musk as claiming, in an interview with former Fox News host Tucker Carlson, that more banks will fail when commercial real estate loans default. Foss said “many more” banks could collapse.

“The biggest banks are too big to fail, which means they will be bailed out,” he said. “But that doesn’t mean shareholders are bailed out, and that’s where a lot of money could be lost. There’s probably, in my estimation, at least $10 trillion in banking capital globally that could literally be wiped out if the system fails.”

Soft landing

The Federal Reserve raised interest rates by 25 basis points on Wednesday, in line with market expectations. The rapid pace of Fed hikes, amounting to 500 basis points in a little more than a year, has Fed staff predicting a recession.

Fed Chair Powell disagreed with the projections and suggested that a soft landing is still possible.

“This is the first time in my history that I’ve seen the Fed, as a group, predict a recession,” Foss claimed. “I don’t think he does [Powell] going to be able to thread the needle on this soft ledge.”

Foss stated that at this point it “doesn’t matter” what the Fed does because of the “constraint in credit standards” due to failing banks, which will lead to a contraction in the real economy.

– This is not monetary policy now, said Foss. “This is a matter of influence coming out of the system.”

To find out how Foss is positioning itself for future financial risks, watch the video above

Bitcoin and US dollar collapse

Foss, a long-time proponent of Bitcoin, argued that owning Bitcoin reduces investors’ risk exposure, as it is a hedge against US debt and dollar collapse.

“You can look at Bitcoin as insurance against the failure of a basket of fiat currencies,” he argued. “$200 trillion is America’s responsibility alone. You take 160 [basis points] times $200 trillion and you get … $3.2 trillion would be the implied insurance value for the US … What is Bitcoin trading for? Well, about half a trillion dollars.”

To find out why Foss thinks Bitcoin is worth $700,000 and when it will reach that amount, watch the video above

Gold and Bitcoin

Although he claimed that Bitcoin is a “superior” technology, Foss said that gold is a good asset for investors to keep in their portfolio.

“Don’t sell gold to buy Bitcoin,” he said. “Sell part of your bond portfolio to buy Bitcoin. Because if you own 0% Bitcoin, you’re actually taking more risk.

To find out the optimal Bitcoin allocation that Foss recommends, watch the video above

Follow Michelle Makori on Twitter: @MichelleMakori

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