The judgement of this column about bitcoin has been consistently wrong.
A recommendation from a mini-cab driver that I should buy crypto from an East End newsagent, when the price was below $100, was off-putting.
My views that crypto was a fad which would pass were reinforced by such luminaries as departing Morgan Stanley boss James Gorman and former Fed chairman Alan Greenspan.
The collapse of FTX and the prosecution and 25-year sentence for founder Sam Bankman-Fried convinced me that crypto was nothing but a fraud and a way for terrorist organisations, such as Hamas, to circumvent money laundering rules.
Crypto boom: Bitcoin has now soared by a dizzying 30% since Donald Trump earned a second term in the White House
In the last year alone Wall Street enforcer the Securities & Exchange Commission (SEC) has imposed fines of £3.5billion on crypto scammers. In spite of the legacy of wrong doing, distrust and abuse by terrorists, bitcoin traders and backers have become very rich.
One imagines that my taxi driver is now a multi-millionaire living on a country estate.
The dizzying 30 per cent rise in the value of bitcoin towards the $90,000 mark since Donald Trump earned a second term in the White House makes spectacular gains in the S&P 500 and other asset classes look modest.
Owners and buyers of crypto are betting on a Trump Administration normalising bitcoin as an asset class. At present, only a limited number of exchange traded funds and alternative investment specialists trade regulated crypto.
But with a different, less hostile SEC regime and Justice Department in place, crypto bulls believe bitcoin and the Elon Musk favourite dogecoin are here to stay.
Whether this justifies bitcoin’s rise and rise is a moot point. Unlike gold and fiat currencies backed by governments, there is no anchor for bitcoin.
In the era of climate change, bitcoin is indirectly a huge emitter because of the computing power required to ‘mine’ new crypto.
For all the riches it may have generated, bitcoin risks being the 21st Century equivalent of the 17th Century mania for Dutch tulip bulbs.
Fed jitters
Firing Jay Powell, chairman of the Federal Reserve, may be more trouble than it is worth. The market and political backlash for Donald Trump would be destabilising and unnecessary given that the Fed chief’s term ends in 2026.
Trump, however, holds Powell responsible for allowing inflation to get out of hand (even though it may have been a driver of his election victory) and holding rates too high for too long.
The situation at the US central bank is very different from 1979 when then president Jimmy Carter took the fateful decision to replace G William Miller as Fed chairman after just a year in office.
Consumer prices were surging, an effort to control them using an incomes policy was failing miserably and the dollar was in freefall.
The US currency was so weakened that the Administration felt it necessary to bolster reserves with a temporary credit from the International Monetary Fund.
Miller was transferred from the Fed to the Treasury and the US’s most respected financial official Paul Volcker drafted into the central bank.
He immediately moved the US on to a monetary approach to dampen inflation, sharply raised official interest rates and imposed a surcharge on credit card borrowing.
The policy change, which drove the US into recession, gave Carter’s 1980 opponent Ronald Reagan an easier path to the White House.
Powell made it plain last week that he would not go voluntarily. Any effort to remove him could lead to a clash, which might go to the Supreme Court.
The President’s right to sack ‘independent’ federal officials, notionally responsible to Congress, is contested. None of this would likely be welcomed on the markets.
Trump’s objective of bringing interest rates down more quickly could be thwarted.
Pharma votes
Fascinating that AstraZeneca chief executive Pascal Soriot is doubling down on new investment in the US.
Britain’s second-biggest listed enterprise is planning to invest $3.5billion (£2.7billion) in new therapies with plants in Maryland, Texas and California. Soriot praised the US for its talent and ‘healthcare innovation’.
After recent troubles, the US obviously looks better than China. AZ’s new enthusiasm for America could be interpreted as a repudiation of Labour’s failure to grasp Britain’s science and pharma agenda.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .