In a recent video, RealVision founder and CEO Raul Pal shared his thoughts on the impending economic collapse which he dubbed the “great unraveling.” He is known for his deep understanding of macroeconomic trends and his ability to connect the dots to help investors and market watchers make sense of the situation.
Raul began by explaining that the world is on the brink of a debt crisis, which is the result of central banks’ attempts to prevent economic collapse after the 2008 financial crisis. These banks injected trillions of dollars into the economy through quantitative easing, creating an environment characterized by excessive risk-taking, artificially inflated asset prices, and ballooning debt.
He warned that the debt burden will eventually set off an irreversible chain reaction that will lead to a massive breakthrough. Raul stressed that the global economy is an interconnected system, and if one domino falls, it’s only a matter of time before others follow suit.
The first domino, according to Raul, is the corporate sector, which is over-leveraged. Some industries, such as the energy sector, were already showing signs of trouble, and companies were carrying more debt than ever. Defaults and bankruptcies will become more prevalent as these companies struggle to service their debts.
The second domino is the sovereign debt crisis. Countries such as the United States, Japan and Europe are all suffering from unprecedented levels of debt. If these governments fail to meet their obligations, bond markets will come under severe pressure, leading to higher interest rates and further economic distress.
Finally, a third domino could bring down the financial system itself. Banks and financial institutions are exposed to both corporate and government debt, and a domino effect could overwhelm the system and trigger widespread banking crises.
Raul’s insights into the great unraveling of the global economy are a stark reminder of the fragile state of our financial system. It’s important for investors and market watchers to stay informed and be prepared for the potential fallout of a debt crisis.