The outcome of next month’s U.S. presidential election may not matter much for bitcoin’s price: Economic stimulus in the trillions of dollars is likely no matter who wins, bolstering the largest cryptocurrency’s appeal as a hedge against inflation.
President Donald Trump over the past week has reversed his opposition to another big government-spending bill following April’s $2 trillion coronavirus-aid package. He signaled his eagerness to strike a deal with leaders of the opposition Democratic party, who have proposed a $2.2 trillion stimulus bill. According to Axios, he told senior lawmakers in his own Republican party that he wants “a big deal.”
If Trump wins in November, he’s likely to continue supporting stimulus spending or easy monetary policy from the Federal Reserve, given his four-year track record of jawboning the U.S. central bank to cut interest rates whenever signs of weakness appear, while boasting about U.S. jobs growth and stock-market increases. He also could push for a new round of tax cuts.
Trump’s Democratic challenger, former Vice President Joe Biden, has already rolled out his own $5.4 trillion agenda that includes increased budget allocations for education, housing, health care, paid leave and fixing crumbling infrastructure, according to the Wall Street Journal. The Biden campaign has pledged to cancel a substantial portion of Americans’ $1.5 trillion in federal student debt.
Such expenses would come on top of what already seems like an unending sea of red ink: The U.S. government’s budget deficit for the 2020 fiscal year tripled to $3.1 trillion. And economists say the Federal Reserve is likely to keep printing money in coming years to help finance the budget gap.
“Because the economy’s hands are tied and policymaker’s hands are tied, the wiggle room that any party in power is going to have is limited,” said Chris Wallis, chief investment officer of Vaughan Nelson Investment Management,…