News that Biden wants to ask Congress for $1.9 trillion to fund relief for the U.S. economy failed to lift markets. The indexes dropped in the week of the news. While the direct payment will pay $1,400 to everyone, boosting stocks.
In the stimulus package before that, which paid out $600, consumers could have either saved the money or invested that in stocks. Buying electric vehicle stocks like Tesla (NASDAQ:TSLA) would have added an easy 30% return. So, another $1,400 check would give those who do not need the money more funds to invest in stocks.
The U.S. need not worry about its ballooning debt. The country may let it grow, while other countries like China and Japan lack another reserve currency to invest in. Still, the rise in Bitcoin is a notable development. If Bitcoin continues to get more investors and users of the digital currency, the U.S. banks may notice.
Banks are already facing shrinking profit margins. For example, Wells Fargo (NYSE:WFC) posted poor net interest income. Markets do not expect rising interest rates for years, further pressuring this line item. And, if inflation increases and forces the Fed to raise rates, consumers may acquire digital currency as a hedge.
The Biden stimulus is nothing new. It is a non-event for stock markets for now. Until interest rates rise, the government may continue spending more.
