Trump's Lifeline Bill Gambles on America's Future
Trump's high-profile signing of the 'Great Beautiful Act' marks the first major achievement, providing a sense of reassurance to Trump's political base. As the fastest fulfillment of his campaign promises, this move undoubtedly solidifies the conservative base and may even become a core asset in the 2024 re-election campaign. However, while the political calculations are precise, the economic calculations raise questions. The short-term market reaction has been tepid, with U.S. stock futures only slightly up by 0.3%, and Bitcoin falling back after a spike, indicating that capital is 'voting with its feet'—what they want is not slogans, but real monetary reforms.
The bill claims to address the deficit crisis, but a closer look reveals that the tax reduction policies are extended until 2035, which is expected to reduce fiscal revenue by $1.8 trillion over the next decade. The so-called spending cuts are concentrated in essential areas like healthcare. This operation resembles the 2017 Tax Cuts and Jobs Act, which led to a 25% surge in federal debt. Moody's has already warned that if this script continues, by 2030, U.S. government interest payments will account for 3.2% of GDP, approaching pre-Greek crisis levels.
The most absurd aspect is the bill's self-congratulatory attempt to restore confidence in the dollar. On one hand, the Federal Reserve's balance sheet reduction plan has been forced to slow down, while on the other hand, foreign investors continue to sell off U.S. Treasuries. Musk bluntly stated: when the growth rate of debt is three times that of GDP, any bill is merely a more expensive deck chair for the Titanic. Ironically, the day after the bill was passed, the yield on 10-year U.S. Treasuries rose instead of falling, as the market votes with its feet.
A credit crisis cannot be resolved by a single bill, so I think we should be cautious about whether it can lead to a significant increase in the price trend of $BTC !
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