The US budget deficit is likely to surge under the new Trump administration, sparking concerns about bond market stability and potentially affecting equities and cryptocurrencies. The new administration plans to lower taxes, reduce regulations, and increase deficit spending, which could flood the market with cash.
As money prints the key tool for boosting growth, the administration believes reducing taxes and regulations will boost the economy. However, this approach has shown a negative impact in the past, leading to eventual crashes in bond and stock markets.
A significant portion of Americans do not own stocks or housing, making them vulnerable to lower income after inflation. The expected spike in deficit spending will likely affect those on salaries who are renters and don’t own stocks, exacerbating their financial struggles.
Furthermore, Trump’s policies may harm the bottom half of the population by increasing taxes masked as tariffs on imports and inflating prices. Mass deportations could also lead to wage inflation and reduce agricultural activity.
The US Treasury collects billions in social security payments from immigrants working with fake social security numbers. Reducing immigration will spike wage inflation and potentially crash the economy. Tariffs, such as a 25% surcharge on imports, may benefit US producers but harm voters who elected the administration.
Long-term investors are advised to avoid long-dated US government bonds, speculative tech stocks, and cryptocurrencies, considering gold as a safer option instead.
Source: https://themarket.ch/meinung/charles-biderman-a-storm-is-brewing-in-the-financial-markets-ld.12890