Recently, many friends have been discussing a question with the big beauty: why does Trump support crypto?
If it's for votes, will the support be guaranteed after being elected?
If it's for money, the crypto industry doesn't seem to be that wealthy; compared to the traditional financial industry, it still falls quite short.
Today, the big beauty will deeply analyze why Trump supports our crypto industry~
1. The Past and Present of MAGA
Things must start from MAGA.
Everyone should be familiar with Trump's campaign slogan MAGA (Make America Great Again), right?
But many people may not know that Trump is paying tribute to Reagan:
Reagan's campaign slogan when running for president in 1980 was 'Let's Make America Great Again.'
The United States in 2024 is quite similar to the United States in 1980, both facing a fierce challenger in the international arena. Reagan faced the Soviet Union, and Trump faces China.
Initially, Reagan and his successor George H.W. Bush used a continuous 12-year term to bring down the Soviet Union, achieving America's global dominance.
And this time, MAGA is also calculating to use Trump's 4-year term plus Vance's 8 years, hoping to reshape America's leading position again during these 12 years.
2. The Globalization Cycle of US Debt Ends
To know what Trump will do next, we must understand what problems the US is facing.
The core problem of the United States is that there are too many younger brothers, each of whom stretches out their hands for money.
This issue began right after World War II when the United States, with 70% of the world's gold reserves, implemented the Marshall Plan, using gold to back the US dollar, while the younger brothers sent massive amounts of aid to prevent them from turning to communism.
By the time it was 1972, the US gold reserves could no longer sustain, leading to the decoupling of the dollar from gold.
After that, the US entered its second chaotic era since the 20th century, with inflation rates casually soaring above 10%:
Why is it called the second chaotic era? The first was the Great Depression around 1930:
Speaking of the chaotic era of the American empire, it truly happens about once every 50 years.
Every chaotic era needs a great president to step up, formulate a new strategy, and then this strategy can last for about 50 years.
This 50-year cycle is what we previously referred to as the Kondratiev wave.
Reagan made two changes:
Firstly, the younger brothers still need support, but not by depleting their own gold reserves; rather, they will borrow money and issue bonds.
Secondly, this money is not free; you must produce goods or provide services for the US in exchange for this money.
Therefore, the main logic of this era is: distribute America's industries to the younger brothers around the globe, and then the US government prints money through issuing national debt to buy goods and services from these younger brothers.
Doing this has three benefits:
1) Giving to each younger brother is no longer unconditionally aid; instead, the younger brothers exchange it for goods and services, so the US doesn't lose out.
2) The money the US spends is printed through issuing national debt, and repayment is the responsibility of the next generation; for contemporary people, that is quite pleasing~
3) For the US, the younger brothers will still obediently purchase national debt, and the dollars spent will circle back.
The world has been operating like this for less than 50 years, and the time to pay back has come:
If it weren't for the extravagant spending of Obama and Biden during their presidencies, maintaining the era of US debt for 50 years wouldn't have been a problem.
However, by 2024, the United States will spend over a trillion dollars just on paying interest on national debt, which will account for a quarter of US income, more than military and social security expenditures.
3. The New MAGA Era: Raising Taxes, Selling Coins
Trump's think tank certainly sees this pressing issue; continuing to support so many younger brothers endangers their own survival.
If this situation is not handled, it seems like a chaotic era is about to emerge, and hence they are eager to start a new MAGA era.
The so-called essence of MAGA is to no longer support so many younger brothers.
You should know that the US has supported these younger brothers for nearly a hundred years, so it's no wonder that Chairman Xi says the current international situation is a change unseen in a century.
In terms of policy, it means reducing the trade deficit, or simply put, the big brother's house also needs to find ways to save money.
1) Reducing expenditure means decreasing imports, and the most effective way is to raise tariffs.
2) Increasing revenue means expanding exports.
At this point, Trump's policies become very clear:
During Trump's first term, it can be said that the trade war of raising tariffs was mainly targeted at China, as over 70% of the US trade deficit came from China at that time, meaning that the money printed from national debt all went to China.
However, now China's deficit is only over thirty percent, so in his new term, Trump can be said to be declaring war on the whole world: whether you are in Europe, America, or Asia, it's all going to be increased!
But raising tariffs is actually a double-edged sword; as the US raises tariffs on other countries, those countries will also raise tariffs on the US.
This time, Trump is about to unleash his big crypto move.
The essence of this big crypto move is to have American companies sell coins.
Especially if the coins issued by these American companies are still under CFTC regulation, classified as commodities, then selling a coin to someone outside the US counts as an export for the US!
Moreover, it is very difficult for other countries to impose additional tariffs!
I must say that Trump's team has a clear understanding of the crypto industry; tokens are the ultimate product of most AI projects.
If all the major high-tech companies in the US that tell stories issue coins, how much income can this bring to the US each year? And this money doesn't even need to be paid back.
For example, the Balance node project we introduced recently will be one of the first projects to implement this strategy.
But Balance might just be Trump's appetizer, similar to Solana's early marketing Bonk; in Trump's plan, it may still be considering coins issued by major AI companies.
In the past, when we put AI and crypto together, there were always people saying that our crypto circle was riding on the heat of AI.
Recently, the newly appointed crypto czar of the United States, David O. Sacks, has the full title of 'White House AI and Crypto Czar'.
The reason for putting AI and crypto together is also very profound.
The most powerful AI platform in the US right now, ChatGPT, only has an annual revenue of 4 billion dollars, mainly from user subscriptions, with each user paying 20 dollars a month, totaling 240 dollars a year.
But if, I mean if.
OpenAI has issued a coin, and each interaction with ChatGPT requires consuming this coin as a gas fee; how much would you buy?
Certainly not just charges of 240 dollars; Liangzi, I would at least invest tens of thousands of dollars!
Speaking of which, why does Trump support CFTC regulation of crypto instead of the SEC?
Because if this cryptocurrency is classified as a commodity, selling it to foreigners counts as an export, which can earn dollars and reduce the trade deficit!
Moreover, by selling coins, it's very difficult for other countries to impose tariffs!
So how can we ensure that US companies maximize their profits from selling coins? It's simple; just provide policy support.
Moreover, this move might even save the AI industry, which is on the brink of a serious income crisis:
Currently, the major AI unicorn companies in the world are all in the US:
If these AI giants can issue coins, it will undoubtedly attract global investors to take over; these coin sales can not only be counted as sales revenue, not dilute the rights of these AI giants' investors, but also help the US retrieve a large amount of dollars.
4. Producing Class vs Allocating Class
Some may still ask, why doesn't Biden implement such a good plan like MAGA?
Could it be because Biden's think tank is not capable?
At this point, Liangzi must remind everyone not to forget class struggle!
Many things in this world are determined by interests.
For example, the big beauty eats through crypto; I support whoever benefits crypto.
The main class struggle in this world is not between the working class and capitalists, because we can stand on the same front by buying stocks.
But it is a struggle between the producing class and the allocating class.
What is the producing class? Whether you are a farmer or a landlord, a capitalist or a worker, as long as your wealth is created through production, you belong to the producing class.
What is the allocating class? Generally, it refers to bureaucrats/government and various privileged classes.
The main characteristic of the allocating class is that they hold the power to distribute the cake but do not participate in making the cake.
From Obama to Biden, the reason these individuals could form a bureaucratic group is that they actively participate in cake distribution and represent the allocating class.
And their supporters are often those who get a slice of the cake: for example, Hollywood stars who can get various appearance fees; professors in schools who can receive various research funds; and of course, officials at all levels.
Trump, as a businessman, is naturally an elite of the working class.
In his new term, Trump no longer trusts establishment officials and heavily relies on business leaders to unite the elites of the working class.
For example, Vice President Vance comes from an investor background:
Treasury Secretary Scott Bessenet was once a partner at Soros Fund Management and is also the founder of global macro investment company Key Square Group.
There's no need to mention Musk and Vivek from the dog department; they are both solid business elites.
5. The Future World: Hell on Earth or Great Harmony?
In the first few years of the new MAGA era, the world will definitely be quite chaotic.
Cryptocurrency will also play a very important role in the future world.
If the future world truly unfolds as Trump's plan suggests, with the mass production of goods and services flowing back to America, and a significant reduction in the US deficit, which regions will be most affected?
Let's first take a look at this picture:
In the future, focusing solely on China in the trade war is becoming less meaningful; looking at the above picture, Canada and Mexico are also subject to a 25% tariff increase, so that shouldn't come as a surprise, right?
But from a longer-term perspective, most of the world's population is still concentrated in poorer regions like Asia and Africa.
These countries have consistently failed to become export countries for the United States due to cross-border payment restrictions.
Once crypto payments are popularized in the future, most countries' foreign exchange controls will disappear just like the internet's impact on speech control.
Only China in the world has the capability to continue resisting through blockade.
Hmm, I must say that Trump is quite shrewd with his calculations.
However, just like Reagan's globalization benefited multinational corporations' stocks, the crypto industry should be able to ride the fast track of development for the next 50 years.
As for what will happen 50 years from now, the big beauty suggests that everyone should not think too much about it and leave it for the next generation to consider; who knows, by then, they might even be colonizing Mars.
Our generation should just invest in cryptocurrencies!