With victory in Georgia, the Democrats assume total power in the U.S. What could happen?
The Democrats gain control of the U.S. Senate in a surprise turn of events. The Republicans lost the White House, the House of Representatives, and now the Senate. The dramatic Democratic victory in Georgia caused this setback. Initially, it was believed that the Senate would remain in Republican hands. However, things are different now. Everything changes in this life. And in politics, nothing is certain. Despite the unfortunate fact, the assault on the Capitol did not worry the markets. A Democratic Senate, however, does worry a bit. Why?
In the past, it has been proven more than once that mixed governments are better. In other words, the balance of power works. Legislative power is much more useful when it curbs the excesses of executive power. In other words, the mixed formula works as a kind of balance. With the Democrats in the White House and the Republicans in the Senate, one might expect limited government. The Democrats tend to increase public spending too much, and a conservative Senate would have served as a counterweight, putting everything in its proper place. Now, things are changing.
Historically, the U.S. economy works much better with a Democrat in the White House and a conservative Congress. The stock markets have traditionally favored, at least in the short term, the victory of Republican candidates. Probably because of the tax and regulation issue. However, it has been proven many times that the Democrats are better for the economy in the long run. On the other hand, it is not a good idea to leave a Democrat in the lurch.
The current Democratic Party has a radical wing that wants to impose many changes very quickly. That extreme left left left free and unchecked would be a great danger. Why? Well, it’s not a problem of content. Certainly, the progressive agenda has its good points. The problem is one of form. Too many reforms in too little time. In a country as divided as the United States, unbridled progressivism could create a major social crisis. As a result, there would be a huge governance problem.
Regulation is good, but too much regulation is fatal. And regulation generated from resentment would be terribly destructive. Too much change generates too much resistance. Every measure has its drawbacks. Many measures at the same time would generate more harm than good. This is the root problem with messiahs. Everything in theory sounds very nice, but once they come to power they make a mess. The truth is that reality is complex. So changes must be made gradually and with great care. Much medicine can kill the patient.
Of course, we’re not talking about total Senate domination either. The Democratic majority is very fragile. 50%+1. That’s a big advantage. Above all, for assigning committee chairs and working tables. And, of course, a lot of things can be approved more easily. However, we are not talking about absolute power. Not everything in the Senate passes with a simple majority.
The end of Republican rule does not mean that Biden’s powers will be unlimited. The institutionality in the United States is not that weak. On the other hand, we cannot forget that the Democratic Party is not very homogeneous. It is not a monolithic political agenda. In fact, there are many divisions in the progressive camp. The opposition to Trump has long functioned as a unifying element. But Trump is leaving soon. The Democrats won. With the common enemy gone and now in power, the various factions within the left could begin to fight each other.
What does the Democratic victory in the Senate mean to Bitcoin? Initially, the change is positive. Because we’ll probably have more generous stimulus and increased fiscal spending. In other words, there will be a lot of liquidity in the market. This liquidity will have an impact on the price of Bitcoin. Or, at least, it will create the ideal conditions for the bullish season to continue to prosper.
During the 2020 stimulus debates, the amounts proposed by the Democrats were always much higher than those planned by the Republicans. Even Trump’s own proposed amounts were always well above his party’s proposals. In the end, the amounts chosen ended up being somewhere in between. Fiscal and monetary austerity is a deeply held Republican doctrine. The austere position would lose much strength with the Democrats in the House, Senate, and White House. That’s not bad for Bitcoin. In fact, it’s not bad for asset appreciation in general.
The tax increase is a matter of concern for many investors. In fact, Wall Street tends to favor the candid conservatives basically because of this issue. However, Biden’s proposal regarding taxes is not particularly unwise. In fact, it is quite moderate. It has nothing to do with the ideas of Elizabeth Warren or Bernie Sanders. Besides, this is one of those issues that cannot be approved with a simple majority.
In my frank opinion, the Democrats don’t worry me much about the economy. I even think the economy will be in better hands under Democratic scrutiny. My fears revolve around the regulatory issue. We may see a witch-hunt targeting the technology industry. And crypto space could be harmed in the fervor of the fight. Any aspiring Democrat could launch an investigation against Big Tech to be the hero of the film. Here we could have an irrational demonization of the industry for theatrical effects by an ambitious politician or official.
Here I am not saying that the big tech companies are charity nuns. Fair investigations are welcome and necessary. The problem is overkill. That is, that the thing becomes fashionable. Attacking just for the sake of attacking. Nothing stops the natural growth of a great company more than an eternal judicial process. In many cases, nothing concrete is achieved. But the damage is already done. Microsoft and IBM are examples of this. An attack from all sides on the technology industry could generate a lot of damage. It seems to me that this would not be very convenient.
Fair processes are positive. A proper and well thought-out regulation is necessary. But a witch-hunt, initiated by ambitious politicians or officials, who simply want to cut off heads to show strength and get a trophy, is something very different. We need to be vigilant about how the radical left wing within the Democratic Party reacts to the seizure of the Senate. Let’s hope they don’t go crazy.