What would be the impact of a Trump or Hillary presidency on cryptocurrencies? Politics, banking, and money are all related. Major changes to a country’s governance have huge implications on monetary policy.
Trump is the king of debt. He is no stranger to bankruptcy and financial leverage. His presidency would be about America First. He is attempting to pitch himself as a 21st century Franklin Delano Roosevelt (FDR). FDR is famous for the New Deal, which encompassed massive infrastructure spending. While FDR is credited by many for lifting America out of the Great Depression, in reality it is much easier to rebuild your economy when your competition is being Blitzkrieged.
Trump is intensely disliked by politicians of all stripes. However, no politician either Republican or Democrat will shy away from a chance to bring pork back to their districts. If Trump wins on a mandate of increased government spending, congress will participate enthusiastically.
During the most recent debate, Trump promised to upgrade America’s airports, roads, bridges, and walls. That would cost a lot of money. Where will this money come from? Trump’s spending projects will require increased issuance of US Treasury bonds.
In the same debate, Trump voiced concerns that the Fed has not raised interest rates. He implied that the Fed has kept rates too low for too long, and that a day of reckoning will soon occur. Trump would not want to begin a massive round of infrastructure spending when the 30 year US Treasury yields push north of 5%.
The king of debt will want the cheapest borrowing costs possible. Which means a continuation of the Fed’s easy monetary policies.
Hillary promises more of the same. She has been wheeling and dealing in the beltway since the 1970’s. Her pitch is a continuation of the policies of the past eight years. She even served as Secretary of State for a portion of that time.
More of the same means more government spending. More taxes and more goodies for everyone both rich and poor. Contrary to the image she tries to project of a down to earth good ol’ gal, Hillary is quite comfortable eating at Dorsia with Oliver Peoples’-wearing “Finānciers” (long A vowel).
The financial institutions are big supporters of Hillary, and she will not disappoint them. Her husband didn’t, and nor will she. Government transfer payments for the poor and middle class, and money printing for the asset rich elites. That is what will be on order with Hillary.
Government spending similar to Trump will accelerate. The Fed will need to keep the printing presses humming.
The Devil you know (Hillary), and the Devil you don’t (Trump) both promise to increase government spending. These bonds will be monetised by the Fed lest interest rates spike higher. The Fed will actually welcome an increased supply of government bonds to buy. As it stands, the US government is not borrowing enough to accommodate the Fed’s appetite for debt securities.
For Bitcoin, and other cryptocurrencies this is positive. The inflation brought upon by increased Fed largesse will continue to bleed into assets free from central bank manipulation. For what they can giveth, they can taketh away. And you don’t want to be cavity searched by a TSA officer looking for your precious gold coins.