The Breakdown - Who Is Better for Bitcoin, Trump or Biden?

Episode Date: November 3, 2020

Today on the Brief: The digital euro is closer than ever Checking in on European COVID-19 lockdowns Economic events this week that aren’t the election Our main discussion: Which U.S. election outcome is better for bitcoin?  Poll: https://twitter.com/nlw/status/1320884275110137863 After a surprisingly close Twitter poll with more than 1,600 respondents answering the question “Is Trump or Biden better for bitcoin?”, NLW breaks down the most common themes, including: The Senate matters more  Anti-encryption history  And of course… Honey Badger Don’t Care

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by crypto.com and nexo.io and produced and distributed by CoinDes. What's going on, guys? It is Monday, November 2nd, and today we are talking. You've got to know we were going to do this. Is Trump or Biden better for Bitcoin? First up, however, let's do the brief. First up on the brief today, the digital euro is closer than ever. Yesterday, Christine Lagarde, the head of the ECB, tweeted this.

We've started exploring the possibility of launching a digital euro. As Europeans are increasingly turning to digital in the ways they spend, save and invest, we should be prepared to issue a digital euro if needed. I'm also keen to hear your views on it. So this is the user reporting period, the consumer surveying period. So we've talked about this before, but you can see that there's more and more emphasis on this. And it's interesting to me and why I think this matters. Someone tweeted at me that they think it's silly, basically, that I say things are narrative battles rather than just debates or discussions, because I said that there was a narrative

battle heating up around central bank digital currencies. But when I use that phrase, I actually mean something specific. I have seen this tweet from Christine Lagarde shared dozens of times in my feed alone, and they're not debating as they share this or discussing a digital euro in general, the pros and cons. They're trying to lay claim to the narrative of digital currencies, which means that they're trying to frame how others see them on a conceptual level. They see central bank digital currencies as a tool of central bank power consolidation, of this already powerful institution getting more power. That is a narrative frame. Another narrative frame, certainly one that's closer to what the central banks want, is that this could be a tool for convenience, something that makes people's lives

easier. The debate around the narrative isn't a debate about the specifics of the central bank digital currency. It's the underlying cause and goal of it that people want to discuss. It's a layer deeper than just the features of the thing. And I think right now, the conversation that we do need to have is on the narrative level, on this conceptual level, because it could have really different outcomes about how digital currencies are designed. So yes, this is a narrative battle, and I think it's an important one. Next up on the brief today, the Euro lockdown politics check-in. Of course, it's not entirely coincidental that these ECB digital euro discussions are happening just as a European second wave of lockdowns are happening, given that they've said explicitly

that one part of a motivation for a digital euro would be around stimulus distribution. We also saw this use case in the U.S. Over the weekend, lockdown came to England as well. Here's a Bloomberg piece about it. England virus lockdown may be extended beyond December. Less than a day after Prime Minister Boris Johnson announced a month-long lockdown for England, one of his top ministers and closest allies signaled the measure might have to be extended if they fail to contain the spread of the coronavirus.

Now, interestingly, more people than I thought in the public in England support this. Almost three quarters of English people support the government's latest lockdown restrictions, according to a snap poll by international research and analytics firm, UGov. Now, while this is lower than the 93% support level during the first lockdown, it's still really high. That said, of course, everything is sampling bias. I don't know much about UGov or where they're surveying, so take it with a grain of salt. Still, I think that it's important to point out that right now, the lockdown debate isn't really happening in the U.S. largely because of a focus on the election.

Should there actually be a conclusive result, one direction or another tomorrow? expect it to come back with a vengeance. Last up today on the brief, a quick preview of things happening this week that aren't the elections. So this is partially from the Wall Street Journal's week ahead and the economy type feature. On Monday, that's today, the Institute for Supply Management Survey of Purchasing managers at factories has shown expansion in October. The PMI went from 59.3 versus September's 55.4. It's driven by demand for consumer goods and capital equipment.

On Tuesday, well, we know what's happening on Tuesday. On Wednesday, we're supposed to get a report on the U.S. trade deficit, which is expected to narrow after a rebound in goods exports with a small drop in goods imports. Thursday is a big one. The Bank of England is expected to increase its bond purchasing program by up to $100 billion in the wake of these no lockdowns. The U.S. weekly jobs claims are expected to continue to fall, and the Fed will complete its two-day policy meeting. And really no one expects anything new from them on monetary

policy, but people do expect that the Powell Presser will be all about fiscal policy. Finally, on Friday, we will see unemployment numbers for the previous month, and they're expected to fall again. The trick, of course, with all of these indicators, is the lagging data as cases are on the rise. Now, before we dive into our main discussion, is Trump or Biden better for Bitcoin? A quick note on the rest of the week. I am actually going to be traveling for most of this week. And instead of leaving you guys with no shows, I decided to do a bunch of different interviews, different kind of explorations. So we're going to have shows with Jacob Goldstein, one of the hosts of Planet Money, which is a really fun history of money in a very compressed period. I'm talking to Jim Epstein,

who produced a great documentary on the Cypher Punks for reason. I've got shows on Egypt and Nigeria, a little bit of a global focus. I've got a Longreed Sunday. about MMT and why it might not be good for emerging markets. And then on Monday, we will be back to our regular shows. And I imagine, given that it's the week after the U.S. presidential election, that we will have lots to talk about. Anyways, guys, I'm really excited for these shows coming up. And I'll be off and on on Twitter. So feel free to hit me up. Let me know what you think is going on. This episode is brought to you by crypto.com, the crypto super app that lets you buy, earn, and spend crypto all in one place

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Who is better for Bitcoin, Trump or Biden? Tomorrow, theoretically, our long national nightmare of not being able to talk about literally anything except the election is coming to an end. Or maybe it's not, but at least we'll be into the next phase of screaming at each other. Either way, having gotten sick of the normal debates, I decided last week to bring it back to a more interesting question, at least to me. What U.S. election outcome is best for Bitcoin? In the end, 1,690 people cast their votes on Twitter, with me.

many adding comments, and so I wanted to analyze what the numbers said, and then what the subjective reaction said. First, the top line numbers. This was incredibly close, in fact, much closer than I would have thought. In some ways, I had assumed that this would just be a popularity contest, and ultimately it would tell me which of my followers were more interested in Trump and which were more interested in Biden, but I don't actually think that's what happened. In the end, Biden ended up winning, taking home 51.9% of the vote, meaning, of course, that Trump was right behind him with 48.1% of the vote. So there was a real split here, which to me makes the next set of questions or comments, rather, all the more interesting. The first big theme was that it wasn't actually

about the president in terms of who was going to have the most impact on Bitcoin. Stagflation USA writes, best outcome depends on control of the Senate. Democrat takeover means more stimulus, better for Bitcoin. Another person wrote Biden but barely matters. Biggest impact is the Senate. Another, depends on the Senate. If Biden wins but Republicans keep the Senate, it will be the worst case for Bitcoin. As you'll see, there's an undercurrent of the theme that ran throughout all of these,

which is this is really a stimulus conversation. Big theme number two, that Trump has spoken negatively about Bitcoin and crypto assets, and we know that. One tweeter responded, Neither have a stance on it, but certain agencies under Trump have still spoken very poorly of it. Domingo Guerra wrote,

I don't know what Biden thinks on Bitcoin, but we know Trump doesn't like it. I think this is a pretty reasonable thing to bring up, right? The only thing we've ever seen President Trump say about Bitcoin and crypto is that he does not like it. That said, that seemed clearly to be in a tweet that was much more aimed at Libra, but still, the evidence is right there in front of us.

Here's now a small theme number three, which I didn't see very often, but which I think is worth mentioning, which has to do with Biden's anti-encryption stance. From another respondent, just imagine thinking you're well-informed and it's good for Bitcoin that a puppet like Biden wins when the exact same guy had three decades ago tried to make illegal and criminal email encryption. This one's a little harder. I think it is worth noting past decisions about encryption, but the reality is that the entire U.S. government establishment on both sides of the aisle have been very against encryption for some

time. In fact, later this week, you're going to hear from Jim Epstein, who produced a recent documentary on YouTube about the cypherpunks, and you'll see just for how long this battle has been going on. And of course, if Trump wins, the person who's the Attorney General, William Barr, is probably the greatest enemy of encryption that exists right now. So this has got to be at least a toss-up here. Big theme number four. Both outcomes can be good for Bitcoin but for different reasons. This was just a single comment, but I thought it was pretty acute. Voters probably think Biden equals more stimulus, equals greater inflation risk, equals rise in Bitcoin value. Trump equals more chaos,

equals more likely economic meltdown, equals rise in Bitcoin value. On the question of the rise of Bitcoin, it looks good either way but for different reasons. Big theme number five, and this was by far the most common response, some version of it's going to be the same regardless, and that in terms of the predestination of U.S. politics, it's all just a stimulus game. Jacob Nelson tweeted, I think either way they're going to go for that big reset. Trump might try to stop it, but don't see how unless he returns to a gold standard. Very difficult to see how either way'd play out. Someone else tweeted doesn't seem like it matters. Both parties are committed to burr. The hold up right now seems to be the Democrats' unwillingness to allow checks to be sent with Trump's name on them right before the

election. The other points of disagreement are all noise. Another? Doesn't matter. Both want and need stimulus. Another. Legacy markets will surely prefer higher stimulus, i.e. abide and win. When was the last time anything else mattered? Bitcoin, on the other hand, has much more going for it, although a blue wave stimulus plan might pampe it faster. And then finally, Natoshi tweeted, won't matter because neither of them will change U.S. fiscal policies, the weaponization of the U.S. dollar, and other nations' determination to leave the dollar-peg system. And those are the prime factors that push demand for Bitcoin. Government being government is best for Bitcoin. Which I think leads perfectly to the other big theme that you might have expected, Honey, Badger, don't care. And in point of fact, this is probably the response I got most. And I intentionally did not have an option

three, Honey Badger Don't Care, because I wanted to really see between these two real options who people thought. So what's my take? I am in the camp of the die is cast, the base case is stimulus, and I think that in either case, Democrats want it, Republicans might not want it, but they feel trapped by it. We are simply put entering a new era of monetary and fiscal policy that is going to experiment with running higher deficits, giving out more money, a whole new era of direct patronage of people from the government, like it or not? There's a lot of reasons that this makes a ton of intellectual sense to people. On Tuesday, you're going to hear from Jacob Goldstein, one of the hosts of Planet Money,

and we talk explicitly about how a decade of extremely low inflation has created intellectual credibility for some of the MMT arguments. Not that they're right, but that they're at least more reasonable to many people. who are hearing them. And my belief is that the more that MMT mainstreams, and I think it's just going to continue to mainstream, the stronger the pressure there will be for a competing alternative. Of course, in this system, in the world that we have now, there is no clearer alternative than Bitcoin. So who's better for it? Honeybadger don't care, and who knows what's going to happen next. But it's going to be fascinating to watch. Thanks for listening, and I hope you're enjoying all of this

election coverage and probably moreover, looking forward to it being over. So until tomorrow, be safe and take care of each other. Peace.