After Biden took the stage, the scale of the money was getting bigger and bigger.
On May 28, Eastern time, the United States announced the 2022 fiscal year's federal government budget with a total of 6 trillion U.S. dollars. At the same time, the federal budget deficit for the new fiscal year is about 1.83 trillion U.S. dollars. In addition, since March last year, the cumulative scale of a series of fiscal stimulus plans in the United States has reached US$5 trillion, and Biden has recently proposed a US$2 trillion infrastructure plan and a US$1.8 trillion family plan.
The United States is lavishly releasing water, and the U.S. dollar is becoming less and less valuable.
Dollar index chart
The U.S. dollar is faltering, and discussions about "who can replace it" are also rising.
Recently, Dalio (founder of Bridgewater Fund, the world's largest hedge fund), who was once profoundly suspicious of cryptocurrencies, revealed that he had bought Bitcoin and repeatedly mentioned inflation concerns.
According to Dalio, current inflation expectations are high, and the depreciation trend of the U.S. dollar is difficult to reverse. The U.S. dollar crisis in 1971 may repeat itself. In this context, cash is like rubbish, and he "prefers to hold Bitcoin rather than bonds," and "Bitcoin, which has gold-like properties, is becoming more and more attractive as a way of storing value."
Not only Dalio, Bitcoin, which has been advancing all the way this year, has attracted the attention of investors from all walks of life, and voices of bullishness continue to appear in the market.
Recently, billionaire hedge fund manager Stanley Druckenmiller said in an interview with CNBC's Squawk Box that the ledger system derived from cryptocurrency might surpass the U.S. dollar to become a global reserve currency. He pointed out that if there is an alternative to the U.S. dollar, it "will be some ledger system invented by some students from the Massachusetts Institute of Technology or Stanford University or other engineering schools, and it can replace the U.S. dollar on a global scale."
Citigroup's Global Perspectives and Solutions Group released a 108-page report in early March titled "Bitcoin at the Tipping Point." The report points out: "Bitcoin's advantages in global payments include decentralized design, no foreign exchange risk, fast (and possibly cheaper) capital flow, secure payment channels, and traceability. These attributes are in line with Bitcoin's global The combination of influence and neutrality may make it the currency of choice for international trade."
Chamath Palihapitiya, chairman of Virgin Galactic, said that Bitcoin is triggering a revolution, exposing the fragility of the traditional financial system. Take the quantity and scale of the M2 money supply as an example. The problem is that if Bitcoin becomes the de facto world reserve currency and replaces gold, then some stable currency will replace the U.S. dollar.
However, the sharp rise and fall of
also made the opposition obvious.
Recently, James Bullard, chairman of the Federal Reserve Bank of St. Louis, said in an interview that the U.S. dollar will still dominate for the foreseeable future as far as the Federal Reserve is concerned. He said that considering the Fed's policy, it would be a dollar economy in the foreseeable future. Whether the price of gold is rising or falling and whether the price of Bitcoin is rising or falling does not affect this. Since strong fiat currencies such as the European Union Euro and Japanese Yen have failed to replace the role of the U.S. dollar as the global reserve currency, it would be astounding to see cryptocurrencies accomplish this task. Therefore, there will be no changes in the future.
Marc Chandler, a chief market strategist at Bannockburn Global Forex, said that Bitcoin is unlikely to replace the U.S. dollar and become the global reserve currency in the short term. He explained: "The world's largest, deepest, and most transparent government bond market supports the U.S. dollar. So from this perspective, I don't know how Bitcoin can replace the U.S. dollar."
Nobel Prize winner Krugman wrote in an article that it is said that virtual currency can one day enter our daily lives and replace the legal tender issued by governments. However, at least so far, virtual currency has not been able to do so, and it has not shown that it can Signs of doing it. But I still hear from time to time people claim that Bitcoin, Ethereum, or other weird virtual assets will quickly replace the U.S. dollar and become a global currency. Of course, this is even more extreme and impossible to become a reality because virtual currencies cannot even perform the duties of ordinary currencies, so how can they be counted on to become global currencies? However, it is entirely conceivable that the dominance of the U.S. dollar will one day be replaced by some other regular currency.
The wealth management company Bessemer Trust pointed out in its "Quarterly Investment Prospects" report that due to the price fluctuations of Bitcoin, it will not replace the U.S. dollar or even become an essential part of the current traditional asset allocation.
In addition, some relatively neutral voices believe that Bitcoin will not replace the U.S. dollar but may be regarded as a reserve currency. For example, economist and former Canadian Prime Minister Harper once said: Bitcoin may be regarded as a reserve currency, but it will not replace the U.S. dollar's international role. BlackRock CEO Larry Fink holds a similar view. In his view, cryptocurrency may become a great asset class, but it cannot replace the U.S. dollar.
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