On March 24, the Federal Reserve unanimously decided to launch a program of unlimited quantitative easing to save the current financial system. After that announcement, the President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, told to the CBS program “60 Minutes” hosts:
“There is an infinite amount of cash in the Federal Reserve. We will do whatever we need to do to make sure there’s enough cash in the banking system.”
This infinite amount will benefit a minority of people since it will be destined for financial markets, American banks and businesses.
The American citizens were forgotten until Donald Trump, and the US Senate have agreed on a package to stimulate the US economy. The $2T package will be financed by an increase in the US debt with a check of $1,200 sent to every eligible American.
The goal may not be to support the poorest American citizens but to boost consumption in the US to help American companies. The President said:
“The beautiful thing about our country is $6.2 trillion because it is 2.2 plus 4. It’s $6.2 trillion, and we can handle that easily because of who we are, what we are. It’s our money; we are the ones; it’s our currency.”
At the current level, the Federal Reserve estimates that the unlimited quantitative easing program will surpass $6tn. Any investor who wants to shield themselves in the coming days should think of a Plan B. Bitcoin fits the position as the ideal alternative.
Consider the $6tn
The numbers announced by the Federal Reserve and the US government as a part of their monetary stimulus are considerably high. They plan to inject into the system $6,000,000,000,000.
Interestingly, an author and entrepreneur Sylvain Saurel have calculated the numbers and compared it with some other real-world financial data.
This $6tn amount was:
- US GDP in 1990;
- The M2 Money Stock in USD from 2004;
- 1.6 years of tax revenues in the United States;
- Enough money to acquire 70% of the world’s gold stock;
- Over 53 times the market capitalization of Bitcoin as of March 30, 2020.
The Federal Reserve is independent of the US government, meaning that the American citizens do not elect its leaders. The decision-makers are not representatives of the American people, and all their decisions are entirely arbitrary.
Whenever the Federal Reserve prints money, it increases the amount in circulation. The money supply is represented on the M2 Money Stock Index. Thus, the rapid increase may result in a significant devaluation of the US dollar.
Bitcoin’s Monetary Policy
In the past, there was no other alternative to counter the effects of the actions taken by central banks to implement the easy money policy. But currently, Bitcoin is available to act as a real hedge against currency devaluation.
Satoshi Nakamoto designed Bitcoin at the end of 2008 to rival the centralized monetary and financial systems. The fact that Bitcoin emerged in the wake of an economic crisis is not a coincidence.
Bitcoin is the leader in the crypto markets. It has a monetary policy that is programmatic since it is embedded in its source code. Everything is predictable and automatic with Bitcoin.
There will never be more than 21 million Bitcoins created. Thus, it offers a unique guarantee that 1BTC in 2020 will always be equal to 1BTC in 2090.
Bitcoin’s ability to protect users from currency devaluation is essential currently when the Federal Reserve decided to make monetary stimulus its response to all the ills facing the economy.
Bitcoin May Help Users to Opt-Out of the Fiat System
Individual investors who do not want to sit around and watch central banks devalue everything that they own have an alternative. Bitcoin can be a haven in this new economic crisis that is beginning to unfold.
Bitcoin is a hedge against currency devaluation and an excellent opportunity to escape a fiat system that is still dysfunctional after 49 years. Bitcoin gives power back to the people. Thus, everyone should consider owning some bitcoin in preparation for the future.