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Investor Luke Gromen argues that the U.S. must consider Bitcoin as a neutral reserve asset due to national security concerns following recent geopolitical events. He suggests that elevating Bitcoin could revitalize American manufacturing and stabilize the economy, similar to the oil market's impact in the 1970s. Gromen believes this shift could help finance national defense without impoverishing citizens, as the Treasury explores using stablecoins to support T-bills.
The U.S. Treasury Department recognizes Bitcoin (BTC) as a 'digital gold' and highlights the advantages of asset tokenization, which could transform the financial landscape. The report emphasizes tokenization's potential for fractional ownership, streamlined asset management, and automated processes through smart contracts. However, it also calls for updated legal and regulatory frameworks to keep pace with these advancements.
Tens of thousands of wealthy Americans are evading tax filings, exploiting a legal loophole that makes failing to file a return a misdemeanor, while filing false returns is a felony. Despite IRS efforts, only a fraction of high-income non-filers have complied, with significant revenue still uncollected. The Treasury proposes increasing penalties for chronic non-filers to enhance compliance and reduce the tax gap.
The US budget deficit increased significantly at the start of the fiscal year, reaching $121 billion in October, a staggering 89% rise from the previous year. This surge is primarily attributed to higher health and defense spending, while debt-interest costs have moderated. After adjusting for tax revenue fluctuations, the deficit is 22% higher than last year.
Tensions surrounding the debt limit are easing as the prospect of a unified US government increases the likelihood of reaching an agreement to suspend or lift the ceiling before the Treasury's borrowing authority runs out. The debt cap will be reinstated at the start of next year, prompting the Treasury to take necessary measures to avoid breaching the limit until Congress acts. Strategists previously estimated that the government could run out of funds by August 2025 at the latest.
The US Treasury Department has announced a new Series I bond rate of 3.11% for the next six months, effective from February 22, 2024. I bond rates consist of a variable rate, which is tied to inflation and remains fixed for six months post-purchase, and a fixed rate that does not change after purchase. Rate adjustments occur every May and November, with the variable yield shifting to the next announced rate after the initial six-month period.
The Treasuries market is grappling with uncertainty as the US government's ability to maintain stable debt sales comes into question amid ongoing economic resilience and large fiscal deficits. Since May, the Treasury Department has indicated it will keep auction sizes unchanged for several quarters, with the next quarterly refunding announcement expected on Wednesday.
Global public debt is projected to exceed $100 trillion by the end of 2024, with the U.S. and China significantly contributing to this rise. The IMF warns of an "optimism bias" in government debt calculations, highlighting a fiscal policy trilemma faced by nations, particularly in sub-Saharan Africa, where the need for spending clashes with limited tax capabilities. Unsustainable debt levels could trigger market sell-offs, affecting borrowing costs globally, as evidenced by the U.S. budget deficit reaching $1.833 trillion, the highest outside the pandemic era.
Solar wafer manufacturing projects in the US are set to benefit from a new Treasury rule that grants a 25% tax credit, aimed at boosting domestic production of crystalline silicon wafers for solar panels. This extension of the investment tax credit, originally part of the US Chips and Science Act, also includes semiconductor manufacturing, potentially unlocking significant investment in both sectors.
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