In the early 1990s a well-known global investment strategist, a real smart guy, predicted that “Years from now Europe will be one big open-air museum”. He based his assertion on the idea that Europe was too bureaucratic and stuck in their ways. There was no innovation. There were limited reasons for people to invest in Europe. In his eyes, Europe was doomed.
He clung to the idea that Asia would rise, and the US would remain the most dynamic attractive country in the world for investment.
Europe got kicked to the curb.
He was wrong. Yes, Asia has ascended, and China is rapidly becoming one of the most significant economies in the world. But Europe is not an open-air museum.
Support for this is in the numbers, two mainly, currency movements and GDP. If Europe was on the path to becoming one big tourist attraction, GDP growth would have been less robust than in the US, and the currency would have withered when compared to the US dollar.
As regards the GDP annual growth rate since 2000, the US has shown periods of higher annual growth than Europe in 2003 to 2005, 2010, 2011 to 2015, and 2023 to present. All these years together total 10 years out of 25. And the premium growth rate in the US compared to Europe has not been that large.
A better indicator would be the currencies. If Europe was headed for open-air museum status, no one would want to buy the currency. Currencies are a barometer of sentiment towards a country. You can buy currency for yield, for investment in a business, for investment in stocks, for investment in real estate, or for other things that can provide value.
Contrary to conventional belief, people did buy the European currency. From July 2000 until present, the European currency is up approximately 19% versus the US dollar.
Why do we ask this question?
We ask this question to see if the weakening US dollar fundamentals being expressed at present, such as fiscal concerns, bond downgrades, policy uncertainty, and less robust treasury bond offerings, are factors of the “here and now”. Or are they connected to a longer, slower moving deterioration of the US dollar. Perhaps a movement that could put reserve status into question.
Hard to say, and this is not the venue to try and answer it. But, for crypto and stable coin buyers it is important. As we have noted before, with a sense of trepidation, US dollar stable coins are 99% of all stable coins. Europe, Latin America, and Asia all have stable coins, but no one seems to care.
If stable coin investors could see the past trends, which show a slow weakening of the US dollar versus the Euro or the Yen in the past years, combined with the present weakening fundamentals, it is hard to imagine anyone would want 99% of the assets in US dollar stable coin.
So, for stable coin and crypto investors, seek out Euro stable, Asian stable, or Latin stable. Anything but US dollar stable.
And if you go to Europe this summer, museums are private and indoors. Few are open-air.
This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.
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