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Sean Parker on How Global Currency Collapse Will Improve Markets

In this session from Techonomy 2011 in Tuscon, Ariz., Sean Parker, Managing Partner at Founders Fund and a co-founder of Napster, asserts that the collapse of currencies worldwide, starting in European countries, will improve markets more than investing in new technologies. Also appearing in this video: Jim Breyer of Accel Partners and Techonomy’s David Kirkpatrick.

Parker: There’s a set of ways that Europe can get themselves out of their current mess.  The one that’s most likely to prevail is some form of, you know, basically printing money or quantitative easing, and that likely kicks off some degree of a currency war, some kind of currency war, because Europe’s exports suddenly become much cheaper.  That probably gives the US license to print money as well, so QE3, quantitative easing 3, will be massive, and probably many times larger than its predecessors, and that results in pressure on China to try to keep their Renminbi as weak as possible.  So you’ll probably see this weird form of protectionism that takes the form of currency war.

This is like, you know, this is a very bad thing, and it means that—and I don’t think that you can overcome this with technology investing in the consumer internet, even if it creates productivity gains and new markets.  I think you have to overcome this by basically assuming that certain markets are going to either deliberately or accidentally devalue their currencies, and therefore make themselves more competitive as manufacturers, and I think the world is going to want to have an alternative to China and a handful of other Asian countries as manufacturers of consumer electronics and chips.  So you can put—you know, if you believe that that’s the case, there are some public-private partnerships that makes sense in terms of scaling up manufacturing, but in places where markets are suddenly becoming more competitive because of the collapse of their currencies.

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