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(Any opinions expressed in this article are solely the personal opinions of the author and should not be used as a basis for investment decisions, nor should they be regarded as recommendations for investment transactions.)
What do you think the price of Bitcoin will be on December 31, 2024? Over $100,000 or under $100,000?
There is a famous Chinese saying: "It doesn't matter whether the cat is black or white, as long as it can catch mice, it is a good cat."
I would call President Trump’s newly elected policies “American capitalism with Chinese characteristics.”
The elites who rule Pax Americana do not care whether the economic system is capitalism, socialism, or fascism, they only care about implementing policies that help maintain their power. America stopped being purely capitalist as early as the early 19th century. Capitalism means that when rich people make bad decisions, they lose money. This was prohibited as early as 1913 when the Federal Reserve System was created. As the gains of privatization and the losses of socialization took their toll on the country, creating an extreme class divide between the many "mean" or "lower" people who lived inland and the high-minded, respected coastal elites, President Roosevelt had no choice but to Not correcting course and handing out crumbs to the poor through his "New Deal" policies. Then, as now, extending government relief to the laggards was not a popular policy among wealthy so-called capitalists.
The shift from extreme socialism (the top marginal tax rate was raised to 94 percent on income over $200,000 in 1944) to unrestricted corporate socialism began in the 1980s under Reagan. Central banks then pumped money into the financial services industry by printing money in the hope that wealth would flow from the top to the bottom, a neoliberal economic policy that continued into 2020’s COVID pandemic. President Trump showed his inner Roosevelt in responding to the crisis; for the first time since the New Deal, he distributed the largest amount of money directly to all people. The United States printed 40% of the world’s dollars between 2020 and 2021. Trump opened up the distribution of "stimulus checks," and President Biden has continued the popular policy throughout his term. When assessing the impact on government balance sheets, something curious emerges between 2008 and 2020 and between 2020 and 2022.
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From 2009 to the second quarter of 2020, it was the peak period of the so-called "trickle-down economics". Economic growth during this period mainly relied on the central bank's money printing policy, commonly known as quantitative easing (QE). As you can see, the economy (nominal GDP) is growing faster than the national debt is accumulating. In other words, wealthy people use the money they receive from the government to buy assets. Such transactions do not generate substantial economic activity. Thus, providing trillions of dollars through debt to wealthy financial asset holders only increases the debt-to-nominal GDP ratio.
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From the second quarter of 2020 to the first quarter of 2023, Presidents Trump and Biden took different approaches. Their Treasury issued debt purchased by the Fed through quantitative easing (QE), but this time instead of going to the wealthy, they sent checks directly to every citizen. Poor people did receive cash in their bank accounts. Apparently, JPMorgan CEO Jamie Dimon makes a lot of money from fees on government transfers...he's been called America's Li Ka-shing, you can't avoid paying him. Poor people are poor because they spend all their money buying goods and services, and during this period, they did. As the velocity of money increased significantly, the economy grew rapidly. That is, $1 of debt generates more than $1 of economic activity. As a result, America's debt-to-nominal GDP ratio magically fell.
Image source: Shenchao TechFlow
However, inflation increases because the supply of goods and services does not keep pace with the purchasing power of people through government debt. Rich people who hold government bonds resent these populist policies. These rich people experienced the worst total returns since 1812. To fight back, they sent in Federal Reserve Chairman Jay Powell, who began raising interest rates in early 2022 to control inflation at a time when ordinary people had hoped for another round of stimulus checks, but such a policy has been banned. U.S. Treasury Secretary Yellen stepped in to offset the impact of the Federal Reserve's tightening of monetary policy. She exhausted the Fed's reverse repurchase facility (RRP) by shifting debt issuance from long-term bonds to short-term notes. This injected nearly $2.5 trillion in fiscal stimulus into markets, primarily benefiting the wealthy who held financial assets; asset markets boomed as a result. Similar to post-2008, government relief for these wealthy individuals did not lead to real economic activity, and the U.S. debt-to-nominal GDP ratio began to rise again.
Has Trump's incoming Cabinet learned any lessons from recent U.S. economic history? I believe so.
Scott Bassett, widely considered Trump's pick to succeed Yellen as U.S. Treasury secretary, has given many speeches about how he will "fix" America. His speeches and op-eds detail how to implement Trump’s “America First” plan, which is similar to China’s development strategy that began under Deng Xiaoping in the 1980s and continues today. The plan aims to boost nominal GDP growth by promoting the reshoring of key industries such as shipbuilding, semiconductor factories, automobile manufacturing, etc. through tax credits and subsidies provided by the government. Qualifying companies will be able to obtain low-interest bank loans. Banks will once again be aggressive in lending to these companies that are actually operating because their profitability is guaranteed by the U.S. government. As companies expand functional operations in the United States, they need to hire American workers. Higher-paying jobs for the average American mean increased consumer spending. These effects will be even more pronounced if Trump restricts immigration from certain countries. These measures stimulate economic activity and the government generates revenue through corporate profits and personal income taxes. To support these programs, government deficits need to remain high, and the Treasury raises funds by selling bonds to banks. Banks can now re-leverage their balance sheets due to the suspension of the supplemental leverage ratio by the Fed or members of Congress. The winners are ordinary workers, companies producing “qualified” goods and services, and the U.S. government, whose debt-to-nominal GDP ratio falls. This policy amounts to super quantitative easing for the poor.
Sounds great. Who could argue against such a prosperous American era?
The losers are those holding long-term bonds or savings deposits, because the yields on these instruments will be deliberately depressed below the nominal growth rate of the U.S. economy. If your wages don't keep up with higher levels of inflation, you'll also be affected. Significantly, union membership is once again in fashion. "4 and 40" became the new slogan, giving workers a 40% pay rise over the next four years, or 10% a year, to motivate them to keep working.
For those readers who consider themselves rich, don't worry. Here's an investment guide. This is not financial advice; I'm just sharing what I do in my personal portfolio. Whenever a bill is passed that allocates money to specific industries, read it carefully and then invest in stocks in those industries. Rather than putting money in fiat bonds or bank deposits, buy gold (as a hedge for baby boomers against financial repression) or Bitcoin (as a hedge for millennials against financial repression).
Obviously, my portfolio prioritizes Bitcoin, other cryptocurrencies, and stocks of crypto-related companies, followed by gold held in vaults, and finally stocks. I keep a small amount of cash in a money market fund to pay my Ame x bills.
In the remainder of this article, I will explain how quantitative easing by both rich and poor affects economic growth and the money supply. Next, I predict how exempting banks from the Supplementary Leverage Ratio (SLR) could once again make unlimited QE possible for the poor. In the final part, I will launch a new index tracking the supply of bank credit in the United States and show how Bitcoin outperforms all other assets after adjusting for the supply of bank credit.
money supply
I have sincere admiration for the high quality of Zoltan Pozar’s Ex Uno Plures series. During my recent long weekend in the Maldives, I read all of his works while enjoying surfing, Iyengar yoga, and fascial massage. His work will appear frequently throughout the remainder of this article.
Next, I present a series of hypothetical accounting accounts. On the left side of the T are assets and on the right side are liabilities. Blue entries represent increases in value, red entries represent decreases in value.
The first example focuses on how the Fed's bond purchases through quantitative easing affect money supply and economic growth. Of course, this example and the ones that follow will be slightly humorous to make it more interesting and engaging.
Imagine you are Powell in March 2023 during the US regional banking crisis. To decompress, Powell headed to the Racquet and Tennis Club at 370 Park Avenue in New York City to play racquetball with an old friend worth hundreds of millions. Powell's friends were worried.
This friend, who we'll call Kevin, is a veteran finance guy, and he said, "Jay, I might have to sell my house in the Hamptons. All my money is in Signature Bank, and apparently my balance is over The federal deposit insurance limit is exceeded. You have to help me. You know how hard it is when rabbits have to spend a day in the city."
Jay responded: "Don't worry, I'll figure it out. I'm going to do $2 trillion in quantitative easing. That will be announced on Sunday night. You know the Fed always has your back. Without your contributions, who would have known what the U.S. What would it be like? Imagine if Trump came back to power because Biden had to deal with the financial crisis. I still remember Trump stealing my girlfriend in Dorsia in the early 1980s. It was really annoying.”
The Fed created the Bank Term Financing Program, which is distinct from outright quantitative easing, to address the banking crisis. But please allow me to get a little artistic here. Now, let’s look at how $2 trillion of QE affects the money supply. All figures will be in billions of dollars.
Source: Maelstrom
The Fed purchased $200 billion worth of Treasuries from Blackrock and paid for it from reserves. JP Morgan acted as an intermediary in the transaction as the bank. JP Morgan secured $200 billion in reserves and credited Blackrock with $200 billion in deposits. The Fed's quantitative easing allowed banks to create deposits, which eventually became money.
Blackrock, which lost its Treasury bonds, needed to reinvest the funds in other interest-bearing assets. Blackrock CEO Larry Fink, who usually works only with industry leaders, is interested in the technology industry. A new social networking application called Anaconda is building a community of users to share photos uploaded by users. Anaconda is in a growth stage and Blackrock is happy to buy their $200 billion worth of bonds.
Anaconda has become an important player in U.S. capital markets. They succeeded in attracting male users between the ages of 18 and 45, who became addicted to the app. As these users spend less time reading and more time browsing apps, their productivity drops significantly. Anaconda finances stock buybacks by issuing debt for tax optimization so they don't need to repatriate overseas retained earnings. Reducing the number of shares not only increases the share price, it also increases earnings per share because the denominator is reduced. Therefore, passive index investors like Blackrock are more inclined to buy their stocks. The result was that the aristocrats had $200 billion more in their bank accounts after selling their stocks.
Anaconda's wealthy shareholders have no immediate immediate need to use the funds. Gagosian threw a huge party at Art Basel Miami. At the party, the aristocrats decide to purchase the latest works of art to enhance their reputation as serious art collectors, while also impressing the beauties at the booth. The sellers of these artworks are also from the same economic class. As a result, the buyer's bank account is credited and the seller's account is debited.
At the end of all these transactions, no real economic activity was created. By pumping $2 trillion into the economy, the Fed is really just increasing the bank account balances of the wealthy. Financing even one U.S. company generates no economic growth because the funds are used to drive up stock prices without creating new jobs. A $1 of QE results in a $1 increase in the money supply but does not result in any economic activity. This is not a wise use of debt. Thus, from 2008 to 2020, the debt-to-nominal GDP ratio rose among the wealthy during QE.
Now, let’s look at President Trump’s decision-making process during COVID. Back in March 2020: In the early days of the COVID outbreak, Trump’s advisers advised him to “flatten the curve.” They advised him to shut down the economy and allow only "essential workers" to continue working, often those who were paid low wages to keep the lights on.
Trump: "Do I really need to shut down the economy because some doctors think this flu is serious?"
ADVISOR: "Yes, Mr. President. I must remind you that it is primarily older people like you who are at risk from complications from COVID-19 infection. I would also like to point out that if they become sick and require hospitalization, treatment for the entire It's going to be very expensive for the 65+ group. You need to lock down all non-essential workers."
Trump: "This is going to crash the economy, and we should be sending checks to everyone so they don't complain. The Fed can buy the debt issued by the Treasury, which will fund these subsidies."
Next, let's use the same accounting framework to step through how quantitative easing affects ordinary people.
Source: Maelstrom
Just like in the first example, the Fed used its reserves to engage in $200 billion in quantitative easing by buying Blackrock's Treasuries.
Unlike the first example, this time the Treasury is also involved in the flow of funds. In order to pay the Trump administration's stimulus checks, the government needs to raise funds through the issuance of Treasury bonds. Blackrock chose to buy Treasuries rather than corporate bonds. JP Morgan assisted Blackrock in converting its bank deposits into Federal Reserve reserves, which could be used to purchase Treasury securities. The Treasury Department receives deposits similar to a checking account in the Treasury General Account (TGA) at the Federal Reserve.
3. The Treasury Department is sending stimulus checks to everyone, primarily the general public. This resulted in a decrease in TGA balances, and at the same time a corresponding increase in the reserves held by the Fed, which became ordinary people's bank deposits at JP Morgan.
Regular folks are spending all their stimulus checks on new Ford F-150 pickup trucks. Ignore the trend of electric vehicles, this is the United States, they still love traditional fuel vehicles. Regular people's bank accounts were debited, while Ford's bank account was swelled with deposits.
Ford did two things when selling these trucks. First, they paid the workers, which moved bank deposits from Ford's account to the employees' accounts. Ford then applied for a loan from the bank to expand production; the granting of the loan created new deposits and increased the money supply. Finally, ordinary people plan to go on vacation and get personal loans from banks, which are happy to provide them given the good economy and their well-paying jobs. Bank loans to ordinary people also created additional deposits, just as Ford borrowed money.
The final deposit, or currency, balance was $300 billion, $100 billion more than the $200 billion the Fed initially injected through quantitative easing. As can be seen from this example, quantitative easing for ordinary people stimulated economic growth. Stimulus checks from the Treasury Department encouraged ordinary people to buy trucks. Because of the demand for its goods, Ford was able to pay its employees and take out loans to increase production. Employees with well-paying jobs received bank credit, allowing them to spend more. A dollar of debt generates more than a dollar of economic activity. This is a positive outcome for the government.
I would like to explore further how banks can provide unlimited financing to the Treasury.
Source: Maelstrom
We'll start with step 3 above.
The Ministry of Finance has begun distributing a new round of economic stimulus funds. To raise these funds, the Treasury Department auctions bonds, and JPMorgan Chase, as the primary dealer, uses its reserves at the Fed to purchase the bonds. When the bonds are sold, the balance in the Treasury's TGA account with the Fed increases.
As in the previous example, checks issued by the Treasury Department are deposited into JPMorgan Chase accounts by ordinary people.
When the Treasury Department issues bonds purchased by the banking system, it converts otherwise useless Fed reserves into deposits for ordinary people, which can be spent on consumption, thereby boosting economic activity.
Now let’s look at a T legend. What happens when the government encourages businesses to produce specific goods and services by providing tax breaks and subsidies?
Source: Maelstrom
In this case, the United States ran out of bullets while filming a Persian Gulf shootout inspired by Clint Eastwood's westerns. The government passed a bill promising to subsidize the production of ammunition. Smith and Wesson applied for and received a contract to supply ammunition to the Army, but they were unable to produce enough bullets to fulfill the contract and applied for a loan from JPMorgan Chase to build a new factory.
After J.P. Morgan's loan officer received the government contract, he felt comfortable lending Smith and Wesson $1,000. With this act of lending, $1,000 of capital was created out of thin air.
Smith and Wesson built factories, which generated wages that eventually became JPMorgan Chase's savings. The money created by JPMorgan Chase becomes the deposits of those most inclined to spend, the average person. I have already explained how the spending habits of ordinary people drive economic activity. Let's tweak this example a little bit.
The Treasury Department would need to issue $1,000 of new debt through auction to fund the Smith and Wesson subsidies. JPMorgan went into auctions to buy debt but didn't have enough reserves to pay it down. Since there are no longer any downsides to using the Fed's discount window, JPMorgan has used its Smith & Wesson corporate debt assets as collateral to obtain the Fed's reserve loan. These reserves are used to purchase newly issued Treasury debt. The Treasury Department then paid the subsidy to Smith and Wesson, which in turn became a deposit at JPMorgan Chase.
This example shows how the U.S. government, through industrial policy, pushed JPMorgan Chase to create loans and use the assets formed from the loans as collateral to purchase more U.S. Treasury debt.
The Treasury Department, the Federal Reserve, and the banks seem to operate a magical "money-making machine" that can perform the following functions:
Increases financial assets for the wealthy, but these assets do not generate real economic activity.
Injecting money into the bank accounts of poor people, who typically spend the money on consumption of goods and services, drives real economic activity.
Ensuring the profitability of some enterprises in certain specific industries enables enterprises to expand through bank credit, thus driving real economic activity.
So, are there any restrictions on such operations?
Of course there is. Banks cannot create unlimited funds because they must prepare expensive equity for every debt asset they hold. In technical terms, different types of assets have risk-weighted asset fees. Even government bonds and central bank reserves, which are considered "risk-free", require outlays of equity capital. Therefore, banks at a certain point cannot effectively participate in bidding for U.S. Treasury bonds or issuing corporate loans.
The reason banks need to provide equity for loans and other debt securities is that if the borrower goes bankrupt, whether it's a government or a business, someone has to bear the losses. Since a bank chooses to create money or buy government bonds in order to make a profit, it makes sense for its shareholders to absorb these losses. When losses exceed the bank's equity, the bank fails. It's bad enough that banks fail not only when depositors lose their deposits, but what's even worse from a systemic perspective is that banks can't continue to expand the amount of credit in the economy. Since a fractional-reserve fiat financial system requires continued credit disbursement to stay afloat, a bank failure could cause the entire financial system to collapse like dominoes. Remember – one man’s asset is another man’s liability.
When banks run out of equity credit, the only way to save the system is for the central bank to create new fiat currency and exchange that currency for the banks' nonperforming assets. Imagine if Signature Bank only lent to Su Zhu and Kyle Davies of the defunct Three Arrows Capital (3AC). Su and Kyle provided false financial statements to the bank that misled the bank as to the financial health of the company. They then withdrew cash from the fund and transferred it to their wives, hoping the funds would save them from liquidation. When the fund fails, the bank has no assets to recover and the loans become worthless. This is a fictional plot; Su and Kyle are good people and they wouldn't do something like this ;). Signature has donated significant campaign funds to Senator Elizabeth Warren, a member of the U.S. Senate Banking Committee. Using their political clout, Signature convinced Senator Warren that they were worth saving. Senator Warren contacted Fed Chairman Powell and asked the Fed to exchange 3AC's debt at par through the discount window. The Fed complied, and Signature was able to trade 3AC's bonds for newly issued dollars, thereby countering any deposit outflows. Of course, this is just a fictitious example, but the moral is that if banks do not provide adequate equity capital, eventually society as a whole will suffer the consequences as a result of currency devaluation.
Perhaps there is some truth in my hypothesis; here is a recent news item from (The Straits Times):
The wife of Zhu Su, co-founder of failed cryptocurrency hedge fund Three Arrows Capital (3AC), has managed to sell one of her Singapore mansions for $51 million despite a court freeze on some of the couple’s other assets. .
Assuming the government wanted to create unlimited amounts of bank credit, they would have to change the rules so that Treasuries and certain "approved" corporate debt (e.g., investment-grade bonds or debt issued by specific industries like semiconductor companies) would be exempt from the supplemental leverage ratio (SLR) limitations.
If Treasuries, central bank reserves and/or approved corporate debt securities were exempted from the restrictions of the SLR, banks would be able to purchase unlimited amounts of these debts without taking on expensive equity capital. The Fed has the authority to grant such exemptions, and they did so between April 2020 and March 2021. At the time, U.S. credit markets were at a standstill. The Fed took action to get banks back into Treasury auctions and lending to the U.S. government, which plans to dole out trillions of dollars in stimulus but doesn't have enough tax revenue to support it. This exemption measure had a significant effect, and banks purchased large amounts of Treasury bonds as a result. The trade-off, however, was that when Powell raised interest rates from 0% to 5%, the prices of these Treasuries plummeted, leading to the regional banking crisis in March 2023. There is no free lunch in the world.
In addition, the level of bank reserves also affects banks' willingness to purchase government bonds at auctions. When banks feel that their reserves with the Fed have reached the minimum comfortable level of reserves (LCLoR), they will stop participating in the auction. The exact value of LCLoR will only be known in hindsight.
Image source: Shenchao TechFlow
This is a chart from a presentation on financial resilience in fiscal markets released by the Treasury Borrowing Advisory Committee (TBAC) on 29 October 2024. The chart shows that the banking system's holdings of Treasuries as a proportion of total outstanding debt are shrinking and are approaching the lowest comfortable level of reserves (LCLoR). This poses a problem because as the Fed engages in quantitative tightening (QT) and central banks in surplus countries sell or no longer invest their net export earnings (i.e., de-dollarization), marginal buyers in the Treasury market become unstable of bond trading hedge funds.
Image source: Shenchao TechFlow
Here's another chart from the same presentation. As you can see from the chart, hedge funds are filling the void left by banks. However, hedge funds are not essentially buyers of money. They profited from the carry trade, buying low-priced cash Treasury bonds while shorting Treasury futures contracts. The cash portion of the transaction was financed through the repo market. A repo transaction involves exchanging an asset, such as a Treasury bill, for cash over a period of time at a certain interest rate. When the repo market uses Treasury bonds as collateral for overnight financing, its pricing is based on the available capacity of commercial banks' balance sheets. As balance sheet capacity is reduced, repo rates will rise. If the cost of funding Treasuries increases, hedge funds can only buy more if Treasuries are cheap relative to futures prices. This means Treasury auction prices need to fall and yields rise. This goes against the Treasury's goals, as they want to issue more debt at a lower cost.
Banks are unable to buy enough Treasuries due to regulatory restrictions and cannot finance hedge funds' Treasury purchases at reasonable prices. Therefore, the Fed needs to exempt banks from SLR again. This would help improve liquidity in the Treasury market and allow unlimited quantitative easing (QE) to be directed toward productive sectors of the U.S. economy.
If you're still not sure whether the Treasury Department and the Fed realize the importance of loosening bank regulations, TBAC clearly states this need on slide 29 of the same presentation.
Image source: Shenchao TechFlow
Tracking metrics
If Trump-o-nomics works as I describe it, then we need to focus on the potential for bank credit growth. From the previous example, we know that quantitative easing (QE) for the rich works by increasing bank reserves, while QE for the poor works by increasing bank deposits. Fortunately, the Fed provides both data on the entire banking system every week.
I created a custom Bloomie Index that combines reserves with other deposits and liabilities <BANKUS U Index>. This is a custom index I use to track the amount of U.S. bank credit. In my opinion, this is the most important money supply indicator. As you can see, sometimes it will be ahead of Bitcoin, like in 2020, and sometimes it will be behind Bitcoin, like in 2024.
Image source: Shenchao TechFlow
More critical, however, is how assets perform when the supply of bank credit shrinks. Bitcoin (white), S&P 500 (gold), and gold (green) are all adjusted for my bank credit index. Values are normalized to 100, and it can be seen that Bitcoin has been the strongest performer, rising more than 400% since 2020. If there was only one thing you could do to protect against fiat currency devaluation, it would be to invest in Bitcoin. The mathematical data is indisputable.
Image source: Shenchao TechFlow
future development direction
Trump and his economic team have made it clear that they will pursue policies that weaken the dollar and provide the necessary funds to support the resurgence of U.S. industry. Because Republicans will control the three major branches of government within the next two years, they can advance Trump's entire economic plan without hindrance. I think the Democratic Party will also join this "money printing party" because no politician can resist the temptation of giving benefits to voters.
Republicans will take the lead in passing a series of bills to encourage manufacturers of critical goods and materials to expand domestic production. These bills will be similar to the (Chip Act), (Infrastructure Act) and (Green New Deal) passed during the Biden administration. As companies receive government subsidies and obtain loans, bank credit will grow rapidly. For those who are good at stock picking, consider investing in listed companies that produce products needed by the government.
Eventually, the Fed may ease policy and at least exempt Treasuries and central bank reserves from the SLR (Supplementary Leverage Ratio). By then, the road to unlimited quantitative easing will be smooth.
The combination of legislatively driven industrial policy and SLR exemptions will trigger a surge in bank credit. I've shown that this policy moves money much faster than the Fed's traditional quantitative easing for the rich. Therefore, we can expect that Bitcoin and cryptocurrencies will perform at least as well as between March 2020 and November 2021, and possibly even better. The real question is, how much credit will be created?
The coronavirus stimulus has injected about $4 trillion in credit. This time the scale will be even bigger. Defense and health spending have grown faster than nominal GDP. These expenditures will continue to grow rapidly as the United States increases defense spending in response to a multipolar geopolitical environment. By 2030, people over 65 will peak as a share of the U.S. population, meaning health care spending will accelerate between now and 2030. No politician dares to cut defense and health care spending, otherwise they will be quickly eliminated by voters. All this means is that the Treasury will continue to inject debt into the market just to keep the lights on. I have shown before that QE combined with Treasury borrowing has a money velocity above 1. This deficit spending would boost America's nominal growth potential.
The cost of achieving this goal will be trillions of dollars in driving U.S. businesses back home. Since the United States allowed China to join the World Trade Organization in 2001, the United States has proactively shifted its manufacturing base to China. In less than three decades, China has become a global manufacturing center, producing high-quality products at the lowest cost. Even companies planning to diversify their supply chains outside China into purportedly lower-cost countries have found the deep integration of many suppliers on China's east coast to be highly effective. Even with lower labor costs in countries like Vietnam, these companies still need to import intermediate products from China to complete production. Therefore, relocating supply chains back to the United States will be a difficult task and, if politically necessary, very costly. I'm talking about the need for trillions of dollars of cheap bank financing to move production capacity from China to the United States.
Source: UNIDO
Reducing the debt-to-nominal GDP ratio from 132% to 115% cost $4 trillion. Assuming that the US reduces this further to 70% as of September 2008, linear extrapolation would require credit creation of $10.5 trillion to achieve this deleveraging. This is why the price of Bitcoin could reach $1 million, because the price is determined at the margin. As the circulating supply of Bitcoin decreases, a large number of fiat currencies around the world will compete for safe-haven assets, not only from the United States, but also from investors in China, Japan and Western Europe. Buy and hold for the long term. If you are skeptical about my analysis of the impact of QE on the poor, just look back at the history of China's economic development over the past thirty years and you will understand why I call the new Pax Americana economic system "American capital with Chinese characteristics" doctrine".
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reproduced with permission from: (Shenchao TechFlow)
Original author: Arthur Hayes
“Trumpomics is coming? BitMEX founder: Starting a new model, Bitcoin will reach one million. This article was first published in "Crypto City"
