Russell Read: Cryptocurrency is a surprise for the global financial system

This week, Bitpush exclusively interviewed Russell Read, managing partner of C Change Group and former chief investment officer of CalPERS and Gulf Investment, at the annual meeting of the Chinese Financial Association of America (TCFA). He said in the interview that cryptocurrency is a surprise to the global financial system. At the same time, he also believes that the results of the US election are perfect for the capital market.

Today, the Dow Jones Industrial Average surged 834.57 points, approaching 30,000 points. The good news that Pfizer announced that the vaccine is 90% effective and Biden's victory made the capital market happy. Biden narrowly won the election. The by-election in Georgia in January next year will determine the ownership of the Senate. In addition, the Democrats lost more than a dozen seats in the House of Representatives, making it difficult for the extreme policies of the left-wing Democrats to implement.

"This is simply the best outcome for the financial market," Read told Bitpush. "A decentralized government is actually a very beneficial check and balance that can prevent extreme policies from being introduced. Under such circumstances, the U.S. market is unlikely to experience major fluctuations."

Since the beginning of this year, institutional investors from the Wall Street financial industry have begun to frequently get involved in the encryption field, and companies including MicroStrategy and Square have also invested in Bitcoin in a high-profile manner.

Read told BitPush, “The role of cryptocurrencies is tied to that of gold. Cryptocurrencies have become a surprise to the global financial system, which is a very constructive role, especially in an era of very low interest rates and the potential devaluation of traditional currencies.”

He believes that the trillion-dollar fiscal stimulus measures to deal with the COVID-19 pandemic have raised questions about the value of the dollar, which has led to a sharp rise in the value of gold and Bitcoin. Read emphasized to Bitpush that "Bitcoin is a store of value that can hedge against inflation."

According to Bitpush's report this month, the Federal Reserve stated in its November Federal Open Market Committee statement that it would maintain the benchmark interest rate at 0%-0.25%. The United States will maintain an accommodative monetary policy stance and strive to keep the inflation rate moderately above 2% for a period of time so that the long-term average inflation rate reaches 2%, while long-term inflation expectations remain at 2%.

Regarding whether the United States will experience inflation in the next few years, Read explained to Bitpush, "If you study the history of the 20th century, you will find that inflation and deflation are balanced, and inflation is very common. Our question now is whether this is temporary? I think there are risks here, not only currency risks, but also risks in the fixed income market."

He said that with interest rates in fixed income markets currently very low, “confidence in the bond market could be key to stabilizing fiat currencies.”

Read also shared his views on the current development of the US economy with Bitpush. Economic data showed that the US economy grew at a record pace in the third quarter, up 7.4% from the previous quarter, or 33.1% on an annualized basis.

He believes that "one reason for the 7.4% quarterly growth is that the U.S. economy experienced the Great Recession in the previous quarter, and the U.S. economy is a miracle in terms of transformation and adaptability. In other words, the U.S. economy has experienced countless shocks in the past few decades, and each time it has transformed in some way."

However, Read also admitted that some transformations are challenging and difficult. For example, the traditional source of job growth and economic vitality in the United States is small businesses, but in the new crown crisis, large companies have done well and small companies have done poorly.

“Innovation comes from small companies, so this is a structural challenge for us because one of the reasons why the United States has traditionally been so resilient is because of the dynamism of small companies,” he said.

Although the US economy appears to be recovering from the stock market, he told Bitpush that the real economy is not optimistic.

Read emphasized, “We find that as a society, Americans don’t necessarily understand our disasters very well. Whether it’s a hurricane or something else, it takes us a while to adapt. In that sense, when it comes to the coronavirus, the business response has been better than our policy response.”