Coin Stories Jim Bianco: Fed Rate Cuts, ETF Outflows and How Bitcoin Gets to $1 Million
Sep 17, 2024
Jim Bianco, President and Macro Strategist at Bianco Research, dives into the implications of potential Fed rate cuts and market responses. He debates 25 vs. 50 basis points and questions if we'll revert to ZIRP and QE. Bianco offers insights on Bitcoin ETF outflows and outlines the conditions necessary for Bitcoin to reach $1 million per coin. The discussion also touches on the intersection of politics, monetary policy, and the evolving landscape of crypto, including wealth transfer dynamics and the importance of self-custody.
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Fed Rate Cut Debate and Neutral Rate
- The Fed is set to start cutting rates, debating between 25 or 50 basis points this week.
- The key question is where the neutral funds rate lies: under 3% per Fed versus 3.5-4% per market consensus.
Post-Pandemic Economy Changed
- Post-pandemic, economic dynamics have changed with persistent inflation, unprecedented government spending, and population growth.
- Traditional economic assumptions no longer hold, requiring new frameworks to understand the current environment.
Money Printing Limits Due to Inflation
- Printing money only works if there is no inflation; printing during inflation worsens it.
- The Fed cannot return to QE or zero interest rates unless inflation is permanently resolved.