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| The president told TIME that some inflation will pay off the national debt, the Fed is raising rates, and the US bitcoin funds had their first day of net selling since September 16. |
Trump told TIME some inflation will pay off the national debt. The Fed is raising rates.
On Thursday TIME published an hour-long interview with President Trump, recorded on Monday. Asked about a national debt of $40 trillion, he gave three ways to pay it down. The first he called "other means" and wouldn't describe. The second was growth. The third was inflation: "Certain levels of inflation will also pay off that debt very rapidly. Very rapidly."
He also said the Fed's fight against inflation "is hurting our country more than inflation is hurting our country." Told the Fed has suggested it may raise rates again by the end of the year, he said: "I don't think they should." He said he doesn't blame Kevin Warsh, the Fed chairman he chose.
He described how he sees the Fed's habit: "Now you announce good numbers, we're going to rock and roll and raise interest rates to try and kill it."
Warsh's Fed raised interest rates a quarter point on September 16, to a range of 3.75% to 4%. All 12 voting members agreed, and most expect one more rise this year. Core PCE, the inflation measure the Fed watches, was up 3.0% over the 12 months to August, against a 2% target.
So the president is describing inflation as a way to repay the debt, and the Fed is raising rates to bring inflation down. Inflation shrinks a debt because the government repays it in dollars that buy less. Higher rates work against that, because the government pays more to borrow.
Bitcoin is $84,786 this morning, about 12% above its close on the day of the rate rise.
Traders on Polymarket now give 24% to another rate rise at the Fed's October 28 meeting, down from 34% in yesterday's issue. If you hold bitcoin, that meeting is the next time the Fed says which way it will go.
Derive plans to move its options exchange onto Ethereum on October 6
Derive, an onchain exchange for options, plans to leave its own blockchain for Ethereum on Tuesday, October 6, after a governance vote that ends this weekend. Options are contracts that give you the right, but not the duty, to buy or sell a coin at a set price by a set date.
Derive's proposal puts the money riding on its open contracts at about $2 billion, against about $40 billion across all crypto options. Its chief executive, Nick Forster, says Deribit, the offchain exchange, holds 70% to 75% of that market.
Under the new design, Ethereum checks a mathematical proof that each batch of trades settled correctly, so other apps can plug into Derive's engine. If you hold ETH and want to protect it against a fall, this would put more of that market on the chain you already use.
US bitcoin funds lost $148.7 million on Wednesday, ending nine sessions of inflows
On Wednesday, September 30, US spot bitcoin funds recorded their first net outflow since September 16. Farside, which tracks the funds, counts $148.7 million leaving, $125.6 million of it from Fidelity's fund. None of the funds took in money.
The outflow ended nine sessions of inflows, from September 17 to 29, worth about $3.08 billion. The daily amounts fell from $999.0 million on September 21 to $66.2 million on September 29. US ether funds lost $59.6 million on Wednesday, their second straight day of outflows. Farside's figures for Thursday weren't out yet.
Bitcoin is $84,786 this morning, up 1.6% in 24 hours, so the price hasn't followed the funds. If you hold bitcoin, the daily fund numbers show whether the buyers behind the September rise are still there.
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🔭 What to Watch
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📈 The Tape
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In Pro today Trump wants inflation. Bitcoin rose and gold fell. President Trump told TIME, in an interview published on Thursday, that "certain levels of inflation will also pay off that debt very rapidly." Two weeks earlier, on 16 September, the Fed he appointed raised its main rate a quarter point, to a range of 3.75% to 4%, by 12 votes to none. That's the case for bitcoin, made on the record by the man who picks the Fed's chair. A government that owes $40 trillion, the figure TIME put to him, can pay it back in cheaper dollars. Nobody can do that with bitcoin, whose supply is fixed at 21 million coins. Two groups had reason to listen. People who lend to the government get repaid in those cheaper dollars. People who hold bitcoin are meant to be the ones who come out ahead. The lenders are easy to read. On Thursday the ten-year Treasury yield touched about 5.34%, its highest in 24 years, before closing at 5.233%. The average thirty-year mortgage rate had its biggest weekly jump since October 2022, and the Wall Street Journal put the bond sell-off down to inflation, a surge in government debt and heavy borrowing for AI. Yields were rising before the interview came out, so we can't say he moved them. The people holding his debt are charging more to keep holding it. Bitcoin looks easy to read too. It closed the day of the rate rise at $75,731 and yesterday at $84,769, up 11.9%. Gold closed at $4,266.80 an ounce and yesterday at $4,183.40, down 2.0%. Read quickly, that's traders picking bitcoin as their protection against the president's inflation and leaving gold behind. So we went back through our daily closes for both, one weekday at a time. We have both prices for ten weekdays since the rate rise. On eight of them, bitcoin and gold moved in the same direction.
The rest of this one is for Pro readers. It picks up where this stops. |
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The Fed meets next on October 28, and the president says its inflation fight is hurting the country.
TC
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| We read one interview and learned what a president hopes for, not what the Fed will do. What you do with your money is entirely your call. |
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