Bitcoin, a reserve currency of the United States

The United States will have to leave the excessive privilege of the dollar if the goal is to actually become an industrial power. Good sign for bitcoins.

Remove business deficit at all costs

Stock markets are struggling with the ambition of President Trump to reduce the huge trade deficit, if necessary, according to customs tariffs.

The dollar is also hard, but this is necessary evil to revive production and export. In other words, the United States seems to be ready to mourn over their monetary hegemony.

Several higher officials of the United States government are not very favorable to the dollar reserve. This is the case of Stephen Mirana, the President of the Small Economic Council of the White House. For him, a strong dollar weighs the production industry by the fact that US exports will be more expensive.

Vancer Vanance has the same opinion. In Maga circles, this idea is that the state of the reserve is a double sword that ends with an unbearable debt. Where there is a reverse that this new approach has not returned the rates of loans back, to confuse the Secretary of the Ministry of Finance Scott Bessnt.

The explanation is due to the massive sale of China, which does not see why it would continue to buy US debt if the US market closes its door.

Overall, foreign government in US treasury has approximately $ 8,500 billion. Not to mention those who hold private foreign investment funds. It’s a serious Damocles sword. Loan rates would fly if the rest of the world alleviated their dollars. The US government will then have a choice but to reduce its budget with regard to its debt, which will reach 124 % of GDP.

Soon qe?

It should be understood that an increase of 1 % of loans leads to an invoice representing 1.24 % of GDP, which is to be paid either by increasing tax or by reducing the budget. It means $ 360 billion.

Knowing that the government currently pays almost $ 1,000 billion. Compare tax revenues of $ 5,000 billion for a $ 7,000 billion budget.

Repetition of double trade and budget deficit will not be easy. It is even a safe bet that the Fed will have to run tickets to reduce rates by purchasing treasure accounts.

We are talking about “quantitative eating” (QE) in Žargon. As a result, the Fed transmits perceived interests to the government. And because the Fed still has $ 4,650 billion in cash register accounts, it means that the US government does not pay interest on 1/7 of the entire US debt.

QE is obviously inflation because it allows the government to continue debt. This means that the aim is to reduce spending by $ 2,000 billion, QE would not be inflation.

Donald Trump clearly wants support from the Fed. Reducing rates would be welcome. The problem, Jerome Powell is opposed to inflation that could soon fly due to customs taxes.

Donald Trump will be able to appoint the new President of the Fed next year. Will he wait until then?

Dusk of the imperial currency

The end of the dollar as a dominant international reserve currency is no longer smile. Deutsche Bank at the beginning of the month said that “The properties that the dollar is a refugee currency erod.”

The capital economy added a few days later: “It’s no longer a hyperbola that says the state of the dollar reserve is at least somewhat questioned”. Former Minister of Economy Bruno Le Maire also feels that the wind turns around:

We are talking about massive selections from Chinese and Japanese investors of US treasury accounts. (…) For Europeans, it is a question: What to do? They can come to rescue the dollar, in a desperate effort to save the International Order from 1945 in ruins. The demand comes directly from the White House, which invented this idea of ​​smoking accounts of the Ministry of Finance aged 100 years and without interest. The agreement is clear: you finance our debt in exchange for which you will escape the customs prices. It is surprising this new way of Americans to put a gun on the temple of its allies. Amazing and rebelled. (…) For the first time since 1945, Europeans have a unique opportunity in their hands to become a global reference currency.

Bruno Le Maire, a former Ministry of French Economy

To this end, Bruno Le Maire suggests that European countries bite together. The idea is that China will be more willing to make the euro its reserve currency if they can buy “European” obligations rather than Greek or Portuguese obligations.

Another solution would be to simply return to gold, or better accept your competitor: Bitcoin. We explained this in our article Should you buy gold or bitcoins?

The main bitcoin card

America has a big debt problem and the only reason why they can afford it is that the world’s dollar trade. This thinks Benn Steil, the economist of the Council for Foreign Relations. “At one point people will seriously consider alternatives to the dollar” …

The CEO of Blackrock, Larry Fink, said nothing else in his annual letter to shareholders. “If the deficits continue to inflate, the dollar may lose the status of reserve in favor of bitcoins.”

Bitcoin is an international reserve currency in power. Even White House advisors say they want to accumulate as much as possible. The Secretary of the Ministry of Finance Scott Bessnt knows that Yuan will appreciate strongly if China stops receiving the dollar. Beijing, however, does not want a strong Juan, so he would rather accumulate gold.

Therefore, the American strategy that is formed is selling gold shares for the purchase of bitcoins. Washington would kill two strokes with one stone: they weaken their opponents and seizure reserve currencies much larger than gold.

Don’t miss our article: How many bitcoins can the US buy?

Renunciation

The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.