Friday, Feb 9, 2024

budget deficits, fiat depreciation, BTC moves

“We demand rigidly defined areas of doubt and uncertainty!” – Douglas Adams ||

Hello everyone, and happy Friday!!!

Since many of you are new here (welcome!), I should introduce myself again. My name is Noelle, I’ve been writing crypto newsletters with an institutional focus for almost eight years now, first for CoinDesk as MD of Research (among other roles) and then for Genesis Trading as Head of Market Insights. I left there in September 2022 to focus on better understanding how crypto is shaping the broader economic and geopolitical outlook.

You’re reading the daily premium Crypto is Macro Now newsletter, where I look at the growing overlap between the crypto and macro landscapes. There’s also usually some market commentary, but I don’t give trading ideas, and NOTHING I say is investment advice. For full disclosure, I have held the same long positions in BTC and ETH for years, and have no intention to either buy more or sell in the near future.

If you’re not a subscriber, I do hope you’ll consider becoming one! It would help enable me to continue to share what I learn as I work on figuring out where we’re going.

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I had a great chat with Real Vision’s Maggie Lake yesterday on the Real Vision Daily Briefing show – we managed to go around the world in what we talked about! You can see that interview here.

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Note: I’m speaking at BlockWorks’ upcoming Digital Asset Summit conference in London on March 18-20. Normally I say no to conferences, but this is one of the very few worth travelling for. If you’re thinking of going, it’d be great to say hi, and here’s a discount code you can use: CIMN10.

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IN THIS NEWSLETTER

• About that budget deficit…

• BTC on the move

WHAT I’M WATCHING

About that budget deficit…

On Wednesday, the Congressional Budget Office (CBO) released its forecasts for the evolution of US federal spending and the budget deficit for the next ten years.

There are many startling predictions in there, made even more stark by the strong likelihood that the CBO is underestimating the coming expenditures and overestimating the revenue. I’ll talk more about the CBO’s track record in a moment, but here are just a few of the eye-openers from the report:

• This year, net interest expense is expected to be higher than defence spending.

• More than one third of expected individual income tax revenue this year will go toward paying interest on the government debt.

• By 2034, in just 10 years, the US will be paying out more in interest payments than the whole of the 2023 budget deficit.

• US government debt as a percentage of GDP was 48% on average between 1974 and 2023. This year, the percentage is expected to be more than double that.

Here is the published table with more detail: