Macro guru Hugh Hendry has issued a major warning about the US banking system and the American economy.
In a recent interview with Bloomberg Markets, Hendry stated that panic and capital flight away from the US banking sector are entirely justified.
He believes that a further decline in the M2 money supply, which partly tracks money in liquid checking accounts, could prompt the US government to intervene and prevent citizens from taking their capital out of the banking system.
Hendry says the capital flight from US banks is not solely about fears of whether the FDIC will insure deposits above $250,000, and a blanket guarantee on deposits would not solve the problem.
He believes that the Fed and Treasury officials may have to consider a lock on US bank deposits.
When it comes to where Americans can place their capital amid the uncertainty, Hendry suggests owning US Treasuries and potentially investing in Bitcoin.
According to Hendry, it’s time to own the ultra-long Treasuries, which are trading two to three standard deviations below the ETF.
He believes that Bitcoin is an asset class that could trade three or four times higher in the next five years. He added that there is no other asset class that he could make that determination about.
James Wilson is a crypto writer and researcher with over 5 years of experience in the industry. He is a graduate of the University of California, Berkeley, where he studied computer science and economics. After graduating, he worked as a software engineer at a major tech company before transitioning to a career in crypto.