When the Fed went insane, Bitcoin was the answer

A sudden pandemic proved just how pathetic the global financial system was. The Fed (Federal Reserve) is implementing a series of policies such as printing money from nothingness, buying corporate and government securities.


United States central bank pump $ 1 million per second

Even before COVID-19 broke out, the US financial system had been looking for fissures somewhere. In September last year, the Fed started pumping money to control overnight repo mortgage rates, up more than 1% at the time. The central bank said it was only a temporary measure to bring repo rates closer to low interest rates, but they continue to this day.

Moreover, the major crisis caused by the Corona virus outbreak forced the US government and the Fed to take unprecedented measures to save the economy. What is happening right now will be history's "save" events.

The Fed has taken the following measures to inject money into the economy:

  • Cut interest to zero, although the same tactic was used after the 2008 financial crisis.

  • Buy unlimited number of government bonds and mortgaged securities. This is the first time in history that Fed has committed to unlimited stimulation.

  • Fed declare will start buying local government bonds.

  • For the first time, Fed said will buy corporate bonds.

No term can accurately describe the huge amount of money the Fed is making right now to buy everything. It seems that the central bank will switch to buying shares of the company and even make direct transfers to individuals.

Accounting balance sheet The Fed is currently at a record 5.3 trillion dollars.

“One million dollars per second.

That is amount of money Federal Reserve is printing.

The balance sheet increased by $ 586.1 billion last week with a total record of $ 5.24 trillion. $ 84 billion a day and $ 60 million printed every minute. ”

In short, what the Fed is doing now is issuing cash from nowhere and buying government and corporate debt.

The Fed turned to buying bonds from abroad, which could also buy stocks

On another day, the Fed announced an "emergency loan program". The US central bank said it had launched a "temporary acquisition agreement facility, targeting international monetary agencies (Repo FIMA Facility)".

In other words, the Fed will create money to buy US Treasury securities from central banks and other monetary agencies that can use US dollars in their jurisdiction.

Economists think this is the first time the Fed has been able to intervene in the stock market. However, the central bank will need permission from the US Congress.

Quincy Krosby, chief market strategist at Prudential Financial, comment:

“If there is any major deviation, it is obvious that they will go into every corner of the market starting to suffocate. We know that when you suffer stranded in many places market, The problem will occur. As soon as you cross that line, you're now faced with something else you can imagine buying. ”

It's funny when JPMorgan CEO Jamie Dimon to speak 3 years ago,

"Friend is not there could be a business where people invented a currency from nowhere and think that the people who buy it are really smart. It is worse bong ball Tulip and will eventually explode. It was a scam? ”

You are talking about Bitcoin, but why apply this to the US dollar? The US dollar is becoming a big bubble right now. Although the Fed's emergency measures may reduce short-term damage, it only causes long-term problems for the United States.

KNot only the Fed, the US government is also involved

If you thought the US government would handle the bubble, you were wrong. The Fed has been treated as a private entity that is not regulated by any government entity. However, assessing the newly launched credit facilities and financing, it means that Feb cooperated with the US Treasury simply because it has no right to buy corporate bonds, stocks and its own bonds. local rights. Does that mean it is taking over the US government or vice versa?

In one interview former, former Fed chief Alan Greenspan commented:

"First of all, the Fed is an independent body and that means no government agency can control the actions the organization takes."

Though, Fed currently working in tandem with the US government. Specifically, the central bank will finance special vehicles (SPVs) for each credit activity (buying government bonds, corporate bonds, commercial paper, etc.). The US Treasury will invest capital in each SPV through the Exchange Stabilization Fund to effectively buy all securities. The Fed only acts as a banker, providing financing. Recently, they hired BlackRock to buy securities and manage SPV on behalf of the Treasury.

As such, the US government is nationalizing financial markets. This plan unifies the Fed and Treasury into one organization, at least so far. So the money-printing button is in the hands of US President Donald Trump and who can guarantee he won't use it after the pandemic disappears?

The cryptocurrency market will explode in the coming years because the Fed is pumping unlimited cash right now.


Minh Anh

According to Bitcoinist

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About My name is Nguyen Manh Cuong. I was born in a poor village in Ba Vi district, HA NOI province - windy and sunny land. Currently. https://www.nguyendiep.com/. Mr Cuong.
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