The last months have witnessed the receding and flow of a specific pattern: US President Donald Trump will take some of the objective measures harmful to the American economy, and the markets will be disrupted. Upon seeing this, Trump turns to Jerome Powell, head of the Federal Reserve, and is now calling for a reduction in the price of funds at the Federal Reserve – the average that the Federal Reserve gives banks to banks. “No, Powell El Ayoun will say” No. “
Trump wants to reduce prices because doing this is an effective cash injection in the US economy, stimulates activity and raising the market. This, as he thinks, will make him look successful. Powell wants to follow strict economic standards to determine the prices carefully in the double states that are due to maximizing the maximum and maintaining stable prices.
He also wants to maintain the independence of the Federal Reserve from political pressure, and decisively to preserve the Federal Reserve Bank appearance Independence from political pressure. If the markets believe that the independence of the central bank has failed in the United States, it may become difficult to sell US Treasury bills, the US sovereign debts. This is a problem in the basic sense that the United States will have to push more to borrow money, which makes it poorer – but it is a particularly sharp problem now Because the United States is already He has A huge pile of $ 30 trillion of debt that must be funded periodically.
If you have to refiner at higher rates because the markets are no longer trusting in the United States government anymore, a greater percentage of GDP will be absorbed at the cost of interest, and as children say, the United States will be cooked.
This dance takes us now. Last week, Trump has repeatedly repeatedly he wanted to shoot Powell, and he did not like the market. On Monday, Trump provokes Shatter By describing Powell as the “main loser” on the social truth. In response, Treasury Secretary Scott Payett expressed his concerns about the dangers of Powell firing at Trump, who is currently seeing to fulfill, saying that he will not shoot at the Federal Reserve Speaker.
However, this process looks like a whirlpool than anything else, and many market monitors are waiting for the next shoe to come down. This imposes the question: If Trump is going through his instincts and strength Powell, what is the result? In particular, what is the effect of this on the cryptocurrency industry?
Federal reserve crushing
It is noteworthy that the president is not supposed to be able to launch the Federal Reserve Chair as desired. Section 10 Among the Federal Reserves Law of 1913 stipulates that “every member occupies his position for fourteen years of the end of his predecessor, unless the president removes it soon.”
This language may seem mysterious, but in the case of 1935 Humphrey, the executor against the United StatesThe Supreme Court ruled that the constitution does not give the president a “removable authority”, and therefore the authority to remove the president is limited in the legal language.
This decision is true to the concept of “independent agencies”, which resides in the executive branch, but has an independent authority. While a number of agencies have this feature, including SEC, CFTC and FTC, the Federal Reserve is the most important.
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Economists do not think much about the political control of central banks. Politicians have relatively short -term incentives, thinking about years or sessions. This inherently drives them to prefer short -term policies, which are hot cash injection is elegance. However, fiscal and monetary policy is sensitive arts that often activate painful policy options.
In a classic example, Richard Nixon pressed the Arthur Burns chair at the time Expatriate monetary policy In the period preceding the 1972 elections, believing that it would help re -election. In this election, Nixon won a landslide, but he soon followed the catastrophic “stagnation” that paralyzed the US economy a decade ago. Maybe he still feels In the industries that caught during that period.
Compare this with Paul Volker’s policies, which, after this devastating period of recession, implemented a series of vicious prices between 1979 and 1987, which caused “” “Volker shocks“, A series of painful stagnation. However, the effect of this policy was to eventually suffocate inflation and herald in times of prosperity in the 1990s, facilitating the wonderful fiscal policy of Bill Clinton.
No politician could make these options, nothing in the future, and this is rubbing. Economists – and markets decisively – believe that the Federal Reserve should remain independent, otherwise the entire economic fabric of American society risks collapse. This is not exaggeration – countries with political -controlled central banks such as Weimar Germany, Peronist Argentina and Venezuela have witnessed this obstructive inflation that it has led differently to multiple generations. Geopoliticaland Reports Of citizens starving and eating mice, and Adolf Hitler’s rise. These are dangerous things.
To shoot Powell, Trump will first have to defeat Humphrey, which is the possibility that many legal scholars We most likely believe In light of the formation of the current Supreme Court. This is Rubicon who, as soon as he crossed, represents the point of no return. Not only Trump, but every president will have a general legal authority to direct all executives – including the President of the Federal Reserve – in his will. Most of them believe this will lead to ruin.
But a disaster or not, it will be a exam For encrypted currency. origin White Bitcoin paper It aims to not have financial transactions from “financial institutions that work as reliable third parties.” If the Federal Reserve falls, and the American monetary policy is not immune from the proper rule, the thesis of the first years of the encoded currency will be placed in a blatant relief.
Since Trump has sparked the capital in recent weeks, investors have sought safety in various assets. Traditionally, at any time there was a crisis, the advanced parties fled from the origins of the danger to the US Treasury. Thinking was that these were origins without risks. Well, those days may take place. decade Bond proceeds He approached 5 % during the peak of the customs tariff crisis and has not yet returned to its lowest level. If Trump broke the Federal Reserve, these external flows will be a decrease in a bucket in the river, and these money may be transferred to encrypted currencies.
Historically, the bitcoin price is tightly tracked (albeit with a double). However, since the customs tariff crisis, while US stock prices have been largely depressed, Bitcoin miraculously started pumping them. Some have led to speculation that we have been witnessing a long -term “disengagement”, as encoded costumes will achieve their original purpose and move independently of the central assets.
It is impossible to say whether this will happen or will not happen, but if Trump gives the height of the shoe, we will definitely discover it.
Outside the pan, and in the fire
Of course, global historical collapse cannot be good for encryption, and there will be great pain across a variety of surfaces of this crisis as well. In the first place, Stablecoins will feel dire consequences almost immediately.
In the past decade, two of the US dollars-USDC and USDT-USDCOINs have dominated the market. Both of them are the two sources, the circle and the tumor, important methodological institutions and the main buyers of the US Treasury Secretary, which includes the majority of their obligations in Stablecoin.
It can be an immediate result of the federal reserve crisis. Economist Noah Smith forecast Trump may try to write the US sovereign debts:
“I think Trump will do something similar to what he was doing as a businessman when his debt is bad – look for a cheap rescue plan, and if one does not appear, he declares bankruptcy.”
In fact, the President alluded to the same possibility, in February suggestion They may depend on demonstrating on the occasion of bills:
“There may be a problem – you were reading about it, with the cabinet and this may be an interesting problem … Many of these things may not be counted. In other words, some of these things that we find are very fraudulent, and therefore we may have less debts than we thought.”
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The failure to pay the sovereignty immediately affects the circle and linking by marking the value of its guarantees. This, in turn, can leave stablecoins HiddenWhich may raise the operation of the bank. The markets may ultimately settle, but events can easily turn into the other direction, leading to the collapse of the main Stablecoins.
This, in turn, will have many second -class effects, as the smart contracts that carry stables began to ensure the liquidation of situations, and the infection washed away the rest of the market.
Interestingly, these mechanical consequences may be less clear than the political costs of the Federal Reserve Crisis, because the cabinet is not the only origin that has a methodological importance to encryption. The US dollar was the world’s reserve currency for many years. There are many good reasons for that; It is relatively strong and stable, so it is good to settle trade. But if the government stops being strong and stable, this model is likely to turn.
Since more trade is implemented in the euro or Yuan rejected accounts, the regulatory authorities in the European Union and China, in turn, will control the Fiat currency flows through the encrypted currency. One of the prominent encrypted currency lawyers, who chose not to name for fear of political revenge, exactly speculated this:
“I think China will fill a lot of emptiness and the European Union will fill most of the rest. None of them will be good for encryption in general between CCP and the European Union organized in different ways for different goals. This seems bad.”
This may lead to pushing the journey to unrestricted encrypted assets, but there is basically not a precedent for such assets used on the scale of transactions in the real world. The Stablecoin crisis may be launched for years for years and is hunting its step.
Ultimately, no one knows if Trump will expel Powell, or even if he can. Nobody knows what the consequences that may flow in the direction of the river course from its decisions. But if the butterfly whose wings are fluttering in Argentina can cause a hurricane in Prague, Donald Trump muttered in the western wing may justify or destabilize the Blockchain stability forever.
We like or not, we are all along the ride.
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