Ocasio-Cortez's Green New Deal: is it bullish for Bitcoin (BTC) ?

08 Feb, 2019 | Updated: 08 Feb, 2019
by David Robb
Analysis
Ocasio-Cortez's Green New Deal: is it bullish for Bitcoin (BTC) ?

Alexandra Ocasio-Cortez has recently explained her stance on fiscal policy, and described her plans for a Green New Deal. Her proposal could bring about higher levels of inflation, which could be a good thing for BTC adoption.

In an interview with NPR, AOC says that she wanted to challenge the idea that all state spending is funded by taxes, claiming that "government projects are often financed by a combination of taxes, deficit spending and other kinds of investments - you know, bonds and so on". She wants to increase deficit spending in order to pay for her ambitious Green New Deal plan, which aims to make the U.S. carbon-neutral within 10 years.

As well being necessary to avoid future environmental catastrophe, she claims that her plan will create jobs as well as reducing economic externalities, allowing the economy to recover in the long-term.

According to the Green New Deal's FAQ, the "Federal Reserve can extend credit to power these projects and investments and new public banks can be created to extend credit. There is also space for the government to take an equity stake in projects to get a return on investment". So in the short-term, an increase in deficit spending is likely to be funded by printing more money, leading to an increase in inflation.

The crypto community's aversion to inflation, as well as its reluctance to deal with the environmental impact of crypto mining, mean that they might be unwilling to get on board with AOC's vision. However, escalating inflation could see an increase in adoption of Bitcoin, whose deflationary elements are lauded as one of the factors that make it and other cryptos so appealing.

So could AOC's growing popularity be bullish? It's worth considering that the next halving of Bitcoin's block rewards is due in 2020. This would further reduce BTC inflation around the time that the economic effects of her proposal could come into effect, with the possibility of a pro-deficit spending Democratic candidate being elected not long after. What Venezuela's economic collapse has suggested is that increased adoption of crypto is met with enthusiasm, no matter how it comes about.

Read more: Its probably already time to start preparing for 2020's halving; Cryptocurrency and Climate Change: How bad is crypto for the environment?

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