As a result of the pandemic, the US economy, and that of the world in general, has suffered serious repercussions. Around the world, there are many government plans that seek to counteract this fact.
With this in mind, Biden proposed a bill that would lead to a $ 1.9 trillion economic stimulus package. The great victory resulted last Saturday when the Senate approved the bill (primarily thanks to the vote of the Democrats). According to Chuck Schummer, Democratic leader in the Senate: “This law will provide more help to more people than anything the federal government has done in decades.”Reported Chronicler.
For its part, the Republican wing maintains that it is an "excessively expensive" rescue, very followed by the previous aid in December, whose funds, by the way, have not yet been disbursed, he said. Expansion.
What will be the end of such stimulus? The package includes the delivery of checks for 1400 dollars to millions of Americans with incomes below 80k annually, as well as the delivery of 350,000 million dollars to states and municipalities in need. Similarly, a budget has been allocated for the investigation of the treatment and diagnosis of coronavirus.
What is the impact on bitcoin? It happens that, right after its approval, the price of bitcoin climbed to USD 51,000.
What is the reasoning behind this?
(i) the approval of this stimulus has the effect of “relaxing financial conditions”, which represents an increase in the desire of investors to buy risky assets (such as cryptocurrencies), he said. Cointelegraph. The same thing happened in April of last year, when then-President Trump approved the first economic stimulus bill.
(ii) The US economy has shown signs of the devaluation of the purchasing power of the dollar. In this sense, Peter Brandt (trader), pointed out: “the devaluation of the purchasing power of the US dollar has just begun. That is why Bitcoin, US real estate, stocks and commodities will continue to trend upward when expressed in US dollar fiat terms.".
Is the dollar devaluing? According to Stephen Roach, a professor at Yale and former chairman of investment bank Morgan Stanley in Asia, the answer is yes, and indeed, we are yet to see more signs of it. According to Roach, there are three important reasons to support his assertion: (i) there is an increase in the US current account deficit (that is, the country pays more to countries that sell goods, services and transfers, than it earns due to its sales abroad), (ii) the rise in the euro, (iii) the policies of the Federal Reserve focused on the massive and excessive issuance of banknotes, show the absence of an alternative plan to avoid the weakening of the dollar, reported with the BBC.