In recent months, US President Donald Trump will take objectively harmful actions in the US economy and the market will fall. Seeing this, Trump returns to Jerome Powell, chairman of the Federal Reserve, and requires lowering the federal interest rate for the Fed’s borrowing money to the bank. And Powell with steel eyes will say “no”.
Trump wants to lower interest rates because it is an effective cash injection for the US economy. He believes that this will make him look successful. POWELL tries to set interest rates to carefully balance the Fed’s double commands that follow strict economic standards, maximize employment and maintain a stable price.
He also maintains independence from the Fed’s political pressure and decisively. figure Independence from political pressure. If the market thinks the independence of the central bank has failed in the United States, it may be more difficult to sell the financial bill, which is the US sovereign debt. It made it poor in the basic sense that the United States had to pay more money to borrow money. But it is a particularly serious problem. now Because it is already the United States have A huge $ 30 trillion debt, you need to re -loan periodically.
If the market is no longer trusting in the US government, if you have to re -loan at a higher rate, the more GDP’s proportions will be absorbed by interest costs, and as the children say, the United States will be cooked.
The dance now takes us. Last week, Trump repeatedly suggested that he wanted to call Powell, and the market did not like it. On Monday, Trump caused an accident by calling Powell a “main loser” about the truth society. In response to this, the Minister of Finance Scott Bessent has expressed concern about the risk of firing PoWell to Trump.
Nevertheless, this process feels more spiral than anything else, and many market watchers are waiting for the next shoes to fall. It forces a question. What is the result if Trump is experiencing his basic instincts and peeks? In particular, how will this affect the cryptocurrency industry?
Break the Fed
The president mentioned that the Fed should not be dismissed. According to Article 10 of the Federal Reserve Act in 1913, “each member must have a term for 14 years from the expiration of the full -time period, unless the president is removed as the cause faster.”
This language may seem ambiguous, but in 1935, in Humphrey’s executor of the United States, the Supreme Court ruled that the president’s authority was limited by the legal language because the Constitution did not give the president a “malicious removal authority.”
This decision ratified the concept of an “independent institution” that exists in the administration but has independent authority. Many agencies, including SEC, Product Futures Trading Committee and Federal Trade Commission, have this characteristic, but the Fed is the most important.
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Economists don’t think much about the political control of the central bank. Politicians have a relatively short -term incentive and think on the election cycle for several years. This is essentially forced to prefer short -term policy, and hot cash injection is the purest form. But financial and monetary policies are often delicate arts that often discount painful policy choices.
In a classic example, Richard Nixon believed that it would help his re -election by putting pressure on the chairman of Arthur Burns at the time to pursue the expanded monetary policy until the 1972 election. Nixon won the election in the landslide, but it can still be felt in the Chinese industry during that period, according to the deadly “stainplate” that broke down the US economy for 10 years.
In contrast to the policy of Paul Volcker, which embodies a malicious series between 1979 and 1987 after this tremendous deer period, it caused a series of painful recession “Volcker Shocks”. But the influence of this policy was to promote Bill Clinton’s amazing fiscal policy by stroking inflation and herald in the 190s’ boom.
No politician could make this choice. There is no one in the future, that is rubber diameter. Economists, and decisively, we believe that the Fed is independent or that the overall economic structure of American society must collapse. This is not a hyper ball. Countries with politically controlled central banks such as Weimar Germany, Ferronist Argentina and Venezuela have experienced a terrible super inflation like this, leading to a report on the report on multi -generation reforms, reports of citizens eating rats and rats, and raising adolf. This is serious.
To call Powell, Trump will first defeat Humphrey’s execution. This is a rubicon that displays a point that does not return once crossed. Not only Trump, but all the presidents will have the legal authority to direct all officers (including the Fed). Most believe that this will lead to ruin.
But it’s not a disaster test For Cryptocurrency. The first bitcoin white paper aimed to stop financial transactions of “a financial institution that serves a reliable third party.” If the Fed collapses and the US monetary policy does not fall from a sound judgment, the initial paper of Cryptocurrency will be completely relieved.
As Trump has created capital flights in recent weeks, investors have pursued safety in various assets. Traditionally, whenever a crisis occurs, the elaborate party fled with risky assets as a US treasure. The idea was that this is an asset that is not dangerous. Well, those days can be over. In the peak of the tariff crisis, the 10 -year bond yield reached 5%and it has not yet returned to the previous lowest. If Trump breaks down the Fed, this leak is a drop in lecture and that money can move to cryptocurrency.
Historically, the price of Bitcoin (BTC) has strictly tracked NASDAQ (although has multiplier). But after the tariff crisis, US securities prices remained greatly depressed, but Bitcoin miraculously pumped. As a result, some speculated that we are witnessing the “decipuling” that has been deployed for a long time, and encryption will meet its original purpose and move independently of centralized assets.
It is impossible to say that this will not happen, but if Trump gives PoWell boots, you will definitely know.
Fire pan to fire
Of course, the world-historical collapse cannot be all good for encryption, and there will be significant pain in the various surfaces of this crisis. Firstly, Stablecoins will almost feel terrible results immediately.
Over the last decade, USDC (USDC) and Tether ‘S USDT (USDT) have dominated the market. Their issuer, Circle and Tether, is an important systematic institution and a major buyer of the US treasure, which compensates for most of the duties of the Tablo.
The immediate consequences of the Fed Crisis can be a financial default. Economist Noah Smith speculated that Trump would try to record US sovereign debt.
“I think Trump will do the same thing as what he used as a businessman when he was in debt. I look for cheap bailouts and declare bankruptcy if it doesn’t happen.”
In fact, the president suggested a dark view in February.
“There may be a problem. You’ve been reading with the Treasury and an interesting problem. (…) Many may not matter. In other words, some of them are very fraudulent, and maybe less debt than we thought.”
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The default sovereign value indicates the value of the collateral and immediately affects the circle and tethers. This can eventually leave Stablecoins VisionaryIt can cause banking. The market can be ultimately stabilized, but the case can be easily turned in different ways, leading to the collapse of major Starble Lecos.
Smart contracts will have a lot of secondary effects because smart contracts with collateral as collateral begin to liquidate positions and infectious diseases sweep the rest of the market.
Interestingly, these mechanical results can be less serious than the Fed’s political costs because the Treasury is not the only asset that is systematically important to encryption. The US dollar has been the world’s preliminary currency for many years. There are many reasons here. It is relatively powerful and stable, so it is better to solve the transaction. But if the government is not strong and stable, this paradigm will change.
And as more transactions are executed with a famous euro or comfort account, regulatory authorities in the EU and China can be much more control of the currency flow through cryptocurrency. The famous cryptocurrency lawyer who chose not to be nominated as a fear of political retaliation has been guessed as follows.
“I will fill a lot of voids in China and the EU will fill most of the rest. In general, it is not good for creeps between excessive regulations in different ways between CCP and EU. This looks bad.”
This may result in unbeated password-similar assets, but it is essentially unprecedented in the assets used on the actual transaction. When a stable crisis catches the stride, you will be able to kneel the industry for several years.
Ultimately, no one knows whether Trump will fire Powell or even if he can do it. Nobody knows what the result can flow down in his decision. But if you flutter your wings in Argentina, if you can cause a torno in Prague, Donald Trump, who murmures the western wings, can prove or unstable the blockchain forever.
Whether you like it or not, we are all together to ride.
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