5th September 2024 > > US politics.

tl;dr

US politics, US fiscal incontinence, and the abject failure of central banks to display any iota of competence, form the macro background to current and future BTC price trends.

Market Snap

Market Wrap

US recessionary fears have hit all risk assets, though stocks didn’t take that much of a pummelling, presumably because the worse the economic news, the greater the forthcoming stimulus will be.

Curious Cryptos’ Commentary – US politics

We are now less than one week away from the Trump/Harris debate which might make-or-break this election for one or other of the candidates. Trump’s shameless crypto pivot, and Harris’ reticence to criticise the damning approach towards cryptos taken by her still current boss means that this might be a market moving event in one direction or the other. Pop it in your diary for next Tuesday night so that any price action on Wednesday morning doesn’t surprise you.

Curious Cryptos’ Commentary – Arthur Hayes & US fiscal incontinence

https://cryptohayes.substack.com/p/boom-times-delayed

Arthur and I agree on many things. I do recommend you read his essays for a deeper dive into some of the macro-economic issues around cryptos.

Arthur’s base case is that the Fed will soon turn on the dollar liquidity taps for political reasons if nothing else, for no central banker is independent of its political masters:

“The Fed has done nothing to reign in the most significant contributor to inflation: government spending. The government will only spend less or tax more when it becomes too expensive to finance the deficit. The Fed’s so-called restrictive policy is all talk, and its independence is a cute story taught to gullible economist acolytes.”

The US banking system is clogged up with unrealised losses on long-term US government bonds. Banks were forced by regulation to buy ten-years and out with miniscule yields, a trade that would never have happened without extreme manipulation of markets by the central bankers and by governments. When yields exceeded 4% last year, giving rise to a near 50% loss if bond portfolios were to be sold, the US banking system was once again teetering on the edge:

“Why is a 5% yielding 10-year Treasury bond so dangerous to the health of the Pax Americana fugazi financial system? To answer the question, it is because that is the level where Bad Gurl Yellen believed it necessary to step in and inject liquidity last year. She knows more than I about how f***** the banking system is as bond yields bear steepen; I can only guess at the magnitude of the problem given her actions.”

Arthur also discusses some rather more arcane aspects around the issue of liquidity transmission into markets, but I suspect most of you are not really that interested in the sterilising properties of the Reverse Repo Program. Suffice to say that Yellen has created yet another problem for herself, for which the only answer will be to print more dollars.

There is no end in sight to the ever-growing annual deficit and the subsequent debt pile in the US. Neither of the presidential candidates has any intention of addressing this core problem. BTC remains the quality means of escape from the fallout that these problems will induce.

Curious Cryptos’ Commentary – A bit more US politics

John Deaton has won the primary to stand against Senator Elizabeth Warren in November’s elections, pitting one of the highest profile pro-crypto advocates against the very embodiment of illiberalism in Warren and her anti-crypto army.

It’s a tough gig for John though.

The voting went Ronald Reagan’s way in 1980 and 1984, but for all other elections since 1960 it has been a blue stronghold. Polymarket has John at just 2% with Warren at 98%. It is a shame that this battle is over before it has even begun.