Peter Schiff warns that Microstrategy's $42 billion plan to increase bitcoin holdings, funded by debt and equity, risks creating a dangerous liquidity trap. He referred to Michael Saylor as the "Egg Man."

Is a liquidity trap emerging? Schiff's concerning message for Microstrategy's bold plan

Economist and gold advocate Peter Schiff has criticized Microstrategy CEO Michael Saylor's latest bitcoin buyback strategy, likening it to an old investment joke about beating the market. In a post on social media platform X on Thursday, Schiff wrote:

Michael Saylor is the Egg Man. His latest announcement is that MSTR will spend an additional $42 billion to buy bitcoin, funded by issuing $21 billion in debt and $21 billion in equity over the next three years. This reminds me of a joke I heard a long time ago.

Schiff used the story of a fictional trader, who sensed a promising market, buying increasingly large egg futures contracts as prices rose. This trader speculated on egg futures, initially purchasing 100 contracts at 25 cents each. After the price rose to 35 cents, he bought 1,000 more contracts. As the price continued to soar — reaching 50, then 65, and finally 95 cents per contract — he bought even more, eventually owning millions of contracts. When the price hit $1.75, he decided to sell 2 million contracts. His broker replied, "Sell to whom, you are the egg seller!"

The economist's analogy highlights a potential liquidity trap that he believes could affect Saylor and his company, Microstrategy, if bitcoin prices ultimately decline or stabilize.

Schiff, president of precious metals trading company SchiffGold, frequently criticizes bitcoin and promotes gold. Last week, he noted that while assets tied to Trump's potential victory were rising, bitcoin was not, and questioned: "If Trump's victory is a bullish trend for bitcoin, why isn't it rising in accordance with Trump's odds?" The gold advocate suggested that speculators may have invested and warned about a "Trump sell-off." He also cautioned that the Federal Reserve risks repeating past policy mistakes with the anticipated rate cuts and the potential return to quantitative easing (QE). According to Schiff, this approach will further increase debt, drive consumer prices up, weaken the dollar, and ignite inflation.
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