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Joe Biden’s plan. Part II

August 18, 2020

Change means uncertainty and markets love continuity. American citizens will choose change or continuity in the next presidential election. This November 3rd, Donald Trump will meet Joe Biden. In a country divided like never before, these elections are seen as a battle for life. After intense primaries, the Democrats finally elected Joe Biden, known as Barack Obama’s Vice President, as their warrior in the battle for the White House. What is Joe Biden’s plan? What would their victory mean for the economy? And what would that mean for Bitcoin?

In this article, we’re going to talk about candidate Joe Biden. In a previous article we talked about the candidate Donald Trump. Similar to Trump, this time we will focus exclusively on the economic plan and ignore the other aspects. In other words, we will devote ourselves to studying the plan and its possible effects. Joe Biden is not the Wall Street nominee and his possible win could cause a fall. But why? What does that mean?

Read Next: 2020 U.S. Elections (And Their Impact On Bitcoin): Donald’s Possible Re-election. Part One.

Joe Biden’s plan. Part IIJoe Biden’s plan. Part II

It is true that many of those who are going to vote for Biden are voting against Trump, not for him. In other words, we are facing a candidate who does not arouse much enthusiasm. Of course, that’s not necessarily a bad thing. After all, he wins the polls. But Biden is not a radical. He’s an old guard progressive who leans more towards the center. That said, it’s not part of the super-progressive wing of Elizabeth Warren, Bernie Sanders, and Alexandria Ocasio-Cortez, but it’s progressive enough to unite the party and many independents on a common front.

Democrats always rank relatively well in polls and are usually favored by the popular vote on election day. However, because of the electoral college, they do not always win elections. The West Coast (California) and Northwest (New York, Massachusetts), which are large population centers, usually vote Democrats. Republicans dominate in the South and the Midwest.

These republican states have fewer populations, but overall they have more jurisdictions. The United States was formed as an association and the electoral college was specifically designed to give states more power. In the referendum, the countries with the smallest population would have no vote. And some states would always elect the president, leaving the rest of the union with no real participation. It would be like China and India making all the decisions in the world to get more voters.

That is the big detail in the presidential election in the United States. It is not enough to win the referendum at national level. Democrats are present in big cities. And they are supported by women, young people and minorities. Democrats do very well at universities and among the educated. In suburbs and rural areas, however, Republicans dominate by far. Religion is a very influential element. Family, children, tradition, individual rights, etc. These are republican values. Democrats are socially liberal and their values ​​are more collectivist. The blue (democratic) states are fewer, but more populous. And the red states (republicans) are more, but with fewer populations.

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The elections are defined in the swing states. These are the states that for one reason or another are not showing a clear trend. Florida, Arkansas, Nebraska, Virginia, Michigan, Pennsylvania, etc. In many of them, according to recent polls, Biden has a clear advantage. Trump supporters say the polls are fake but it would be wrong to reject them outright.

So what is Joe Biden’s business plan? And why doesn’t Wall Street see it kindly? In general, there are plans to revitalize the economy with spending on infrastructure and social programs. Money is invested in health, transportation and renewable energy. In other words, we are talking about help and investment to create new jobs. This is very positive for the economy. What’s the problem with Biden?

Joe Biden wants to raise the minimum wage and taxes. It also supports regulations in the finance and energy sectors. Here’s the point of contention. And that’s why Wall Street favors Donald Trump. This is a perpetual debate in the United States. It is said that companies are suffering from increases in the minimum wage and taxes. And when business suffers, the economy suffers. However, experience has shown that this is not entirely true in practice. Indeed, democratic governments were better for the economy. Apparently it is better for business to have a strong middle class than to keep the rich happy. With progressive measures, companies do not suffer so much because their income increases. There are more complaints than evidence.

In this case, the two candidates add to the deficit. But unlike Trump, Joe Biden will invest the money. That means you will be buying in the United States. Trump prefers cash injections and gives the big business a blank check. But Joe Biden is inclined to spend bottom-up. In other words, there are plans to put money into the economy to stimulate production. In Trump’s case, the plan is to put money into the capital markets in order to inflate the markets and indirectly stimulate the economy. One proposes a rain of money and the other a seed of money.

Although he will focus on consolidating the manufacturing apparatus in the United States, Joe Biden does not promote economic nationalism like Trump. Biden doesn’t want to close the country. She wants to build international alliances to compete with China. Biden’s proposal is more open to globalization.

Read on: US Presidential Elections: What Do Candidates Think About Bitcoin?

We are faced with a dilemma here. Biden’s victory could topple the financial markets (in the short term) as it would mean the end of the Wild West. This means, the end of the greed period. In that case, the markets would try to be more concerned with the economy. In fact, the formula proposed by Biden is not new and has worked like a charm before. So we could have a government like Obama’s when he took over after the 2008 crisis. I mean, He’s not the Wall Street candidate per se, but he is the candidate for economic recovery.

As for Bitcoin, I fear the correlation to the SP 500 will persist. The end of the year might not be as bright if Biden wins, but it’s not the end of the world. It would be short term. However, the United States would be part of the world again. And its global image improved. Democrats are good at business. And recovery could be less traumatic with Biden in power. Will Congress approve your plan? That is the great difficulty.

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