The controversial (Big and Beautiful) bill passed with sufficient votes in the Senate on July 1, and in the House of Representatives on July 4. Now it just needs to be sent to the president’s desk for signing and stamping on July 5.
What does the (Big and Beautiful) bill focus on? What impact does it have on the US economy?
This bill is a comprehensive upgrade of Trump's tax policies from his first term (2017). The core of the bill is: comprehensive taxation and expenditure.
Including a $4 trillion tax cut to be implemented over the next ten years, while also cutting at least $1.5 trillion in spending, and extending tax benefits for the 2017 tax cuts, additional tip income, and overtime tax benefits.
From the above, we can see that although $1.5 trillion in spending has been cut, the tax reduction amounts to as much as $4 trillion. Tax revenue is one of the important sources of income for the country. With so much less income, no matter how much spending is saved, it still increases the deficit.
It's like Zhang San's monthly salary is 10,000 yuan, with fixed monthly expenses of 6,000. Now his income has directly changed to 4,000. Even if he tightens his belt, in the end, it will still be negative.
If we add the US's own debt of up to $36 trillion, the interest payments alone are a huge number, which worries the market. The crisis of US debt could lead to a global financial collapse.
Next, let's talk about the correlation and impact on the cryptocurrency market.
(Big and Beautiful) The bill itself does not have a direct impact on the cryptocurrency market, but the cryptocurrency market is global and highly market-oriented, so it will be indirectly affected.
From the above summary, we can see that the US's fiscal deficit will definitely become increasingly severe in the future, but will the US collapse so quickly?
It won't collapse; although the US is declining, a skinny camel is bigger than a horse. Moreover, pulling one hair can move the whole body. The dollar's penetration into every country and field globally has reached a point where it is 'too big to fail.' Therefore, at least for the next few decades, it is highly unlikely to collapse suddenly, but rather its influence will gradually diminish with the involvement of the East.
So, the dollar won't collapse in the short term, and the huge debt cannot default. As long as the United States exists, the principal may not be repaid, but the interest must be paid. Therefore, is it inevitable to lower interest rates?
It's like if Zhang San owes you money, asking him to repay the principal feels like asking for his life. You can't get your money back, so you can accept paying interest each month. Wouldn't Zhang San try to find ways to reduce the interest payment? The same logic applies.
So, this is the reason I always say that lowering interest rates is a high probability and inevitable choice.
Additionally, the relationship between US debt dollars and the cryptocurrency market.
Many people hear others say that Trump is sucking blood. Does issuing US debt mean sucking blood from the cryptocurrency market? Is the US stock market sucking blood from the cryptocurrency market?
First, we need to clarify who needs whom more in the future: the dollar or the cryptocurrency market (Bitcoin)?
Clearly, in the past, without global recognition, Bitcoin still grew against the trend. Now, with blockchain technology, Bitcoin as digital gold has performed well in hedging and value appreciation, and traditional enterprises are actively integrating with other valuable cryptocurrencies. This has allowed the world to see the value of the cryptocurrency industry.
The reason Trump actively promotes various cryptocurrency policy bills is to quickly bind the past dollars and Bitcoin (cryptocurrency) deeply. In the future, Bitcoin will become the strongest anchor for the dollar.
So, the entire cryptocurrency market now has a market value of only about 3 trillion. How can it bear the 36 trillion debt market? That's a full 12 times difference.
This is equivalent to an ant propping up an elephant. The Americans are not foolish; even if the entire cryptocurrency market were sucked dry, it wouldn't solve the problem of US debt. Therefore, the method lies in letting the ant grow and slowly help the elephant absorb water.
Some friends often tell me about the lack of liquidity, who has sucked blood from the cryptocurrency market, and that the cryptocurrency market has no value and future, worrying that Trump sneezing could affect them.
In fact, these worries stem from one's own understanding of the industry; the underlying logic chain is not connected. All the information is pieced together, but if there is no way to connect them, and the final answer cannot be found, one will remain at the conclusion given by external parties.
In this industry, making money is not that simple. I didn't understand it before; what is happening in this world and how it relates to me.
But the circle can really change a person, change the underlying logic, and provide new perspectives.
There is a saying: The common sense of the upper society is the secret of the lower society.
Is it really like this? Many problems and dilemmas that people can't understand in their lifetime can be resolved with a single statement from capable individuals. It depends on whether they want to tell you.
What I mean by upper and lower levels has nothing to do with how much assets you have but rather your level of thinking.
So regardless of your current economic level, a person can be poor and temporarily trapped, but your thinking cannot be poor.
Once your thinking solidifies, stops growing, and starts to collude with most people in the market, comforting and complaining together, then your life will really only be like this.
