U.S. presidential candidates release "Opportunity Economy" policy framework, which may impact the crypto market

This week, the market has entered a calm period ahead of the Jackson Hole meeting, with all parties focusing on Powell's interpretation of the latest employment and inflation data, as well as guidance on future monetary policy. This will undoubtedly serve as an important reference for the interest rate decision in September.

It is noteworthy that an important piece of information did not attract much attention in the crypto market last Friday. A Democratic presidential candidate officially announced the first economic policy framework - "Opportunity Economy." This is an extremely left-leaning economic plan aimed at reducing the living costs of the American public in four areas: housing, healthcare, food essentials, and childcare through government policies. If implemented, this plan could potentially drive the cryptocurrency market to regain the upward trend seen in 2021, but it may also reignite inflation in the United States.

1.7 trillion subsidy program

With the official nomination of the candidate, their momentum has significantly increased under the promotion of major investors and media, with poll data at one point surpassing that of other candidates. Although poll results often have subjectivity, they also reflect to some extent the strength of their campaign team, which should not be underestimated.

The candidate has previously faced scrutiny for a lack of clear economic policy preferences. However, the economic policy document titled "Reducing Costs for American Families Agenda" released by the campaign team on August 16 has sparked significant controversy. This proposal, referred to as the "Opportunity Economy," aims to stimulate overall economic vitality by reducing costs for American families, thus providing more job and entrepreneurship opportunities for the middle class.

The policy mainly includes the following aspects:

1. Housing: Build 3 million new housing units, provide down payment subsidies for first-time homebuyers, and crack down on the misconduct of corporations and major landlords.

2. Healthcare: Limit costs of insulin and prescription drugs, accelerate negotiations for health insurance, and enhance industry competition and transparency.

3. Food and daily necessities: Prohibit price fraud and establish rules to prevent large companies from excessively exploiting consumers.

4. Parenting: Tax reductions for middle-class families with children, providing parenting tax credits.

These proposals promise to be implemented within 100 days of taking office. However, they have also sparked considerable controversy, primarily focused on housing and food essentials policies, as well as overall budget issues. Opponents argue that the radical housing subsidy policy will increase government financial pressure and exacerbate the debt crisis. The food essentials policy may violate market principles, leading to supply and demand imbalances and a new round of inflation.

The Nonprofit Responsible Federal Budget Committee estimates that this plan will increase the government deficit by $1.7 trillion to $2 trillion over the next 10 years. This could exacerbate the U.S. debt crisis, raise inflation, and intensify social conflicts due to adjustments in the tax structure.

Impact on the crypto market

The bill mainly benefits the middle-class group in the United States. If implemented, it could significantly reduce the living costs of most middle-class American families in the short term, increasing residents' disposable income. This will create conditions for the rise of risk assets, especially technology assets with high EPS.

A similar situation occurred in 2021. At that time, the $1.9 trillion COVID-19 relief bill promoted by the Biden administration caused a surge in disposable income for American households in the short term, triggering a wave of increases in the crypto market led by Bitcoin. However, this was followed by rising inflationary pressures, ultimately forcing the Federal Reserve to undergo a monetary tightening cycle lasting more than two years.

Therefore, if economic policies of a similar scale are implemented, there may be a positive impact on crypto assets in the short term. However, in the medium to long term, one must be wary of the monetary policy risks brought about by a return of inflation. Of course, all of this also depends on whether the candidate can win the election and whether the policies can be effectively implemented.