AMERICANS should invest their $1,200 second stimulus check into BITCOIN to stave off inflation and a stock market crash, an expert claims.
Republicans have unveiled a new $1trillion coronavirus rescue package after the White House dropped its request for a cut to Social Security payroll taxes.
Entrepreneur Tatiana Koffman has suggested investing the payment into crypto-currency Bitcoin rather than saving it despite unemployment in the US remaining over 11 per cent.
More than 1.4million American workers filed for state jobless benefits last week, marking the first uptick in three months.
The Federal Reserve’s balance sheet already stands at $3trillion since the beginning of March and is predicted to increase by up to $5trillion before the end of the year, according to Forbes.
Inflation would mean that the $1,200 payment would depreciate in value over the coming years.
Because there’s a limit to 21million bitcoin in circulation, the cryptocurrency is not vulnerable to inflation, unlike money where governments can print more of it.
Since its creation in 2009, one Bitcoin is now equivalent to over $9,600.
However the cryptocurrency comes with its own risks and is vulnerable to extreme volatility in its value, swinging between highs of $9,000 and lows of $4,000 in March
The currency suddenly plummeted by 80 per cent in November 2018, reported the Wall Street Journal.
Bitcoin is considered a “hedge” as the current state of the US economy implies a crash is forecast in the near future, Ms Koffman claimed.
The value of the American stock market is approximately $35trillion while US GDP has decreased to below $21trillion.
Investors have been warned that they were over-estimating a quick economy recovery amid the performance of the stock market.
“The market is essentially trading off a view about 2021 that is not going to happen,” Charles Dumas, chief economist at TS Lombard told CNBC in June.
The second stimulus check is a follow-up to the first $1,200 payment which was introduced in late March.
The bipartisan plan will give financial assistance to millions who have been impacted by the pandemic.
‘ANOTHER SHOT OF ADRENALINE’
On the Senate floor, Mitch McConnell said the PPP money will have a “special eye toward hard-hit businesses.”
“The economy needs another shot of adrenaline,” McConnell said. “If we lose control of the virus…everything else will be window dressing.”
The Kentucky legislator said the Republican’s stimulus proposal will include $105billion for reopening schools and an additional $15billion for providing safe environments for kids in child care centers.
Democrats argue the current package doesn’t provide enough aid to destitute cities and states scrambling for funds while facing health crises and record-high unemployment numbers.
McConnell also said there would be tax incentives on hiring and retaining employees, as well as reimbursement for PPE, coronavirus testing, and remodelling for workplaces adapting to the virus.
The senator said the GOP’s bill will also include more money for working on a vaccine and resources for testing, as well as a second round of direct payments to Americans.
“The Senate had led at every step of this process. We need to rise to the occasion one more time,” the senator said on Tuesday.
The Senate Majority Leader did not mention the $600 in additional unemployment benefits that is expiring at the end of July.
House Democratic Caucus Chairman Hakeem Jeffries has said it’s “cruel-hearted and callous” to cut off the extra $600, calling it a “failure of leadership in the Senate and in the White House.”
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Republicans are already facing pressure from within their own caucus.
“As it’s written tonight right, I’m not only a no but a hell now,” Senator Ted Cruz told reporters on Wednesday.
Touting the 40million unemployed Americans as his main concern, he said the measures didn’t go far enough.
“We need to have our priority getting them back to work and getting them able to provide for their families,” he said.