The Federal Reserve had Bitcoin supporters screaming at their televisions yesterday when the President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, announced that there was an “unlimited amount of cash” on hand to help the economy during the coronavirus pandemic. This very concept is the antithesis of Bitcoin’s principle and is in many ways the reason for its creation, and increases the risk of the US economy heading towards hyperinflation.
The Federal Reserve says there is an “INFINITE AMOUNT OF CASH”
This is quite literally the reason bitcoin was created. pic.twitter.com/JTE9TVoSr0
— Vis (@Vis_in_numeris) March 23, 2020
Winding the Clock Back
Bitcoin, as anyone in the space knows, began life on the day that the UK was on the verge of handing out a second huge bailout to banks following the 2008 credit crisis. A little over 11 years on, and various governing bodies are promising a similar, and in many cases more worrying, course of events:
Federal Reserve, “we have infinite cash”
Bank of England, “unlimited quantities of money”
European Central Bank, “there are no limits”
Those are literal quotes from the three largest central banks in the world, and they are exactly why Bitcoin was created.
— Vis (@Vis_in_numeris) March 23, 2020
Kashkari was appearing on 60 Minutes, during which he also shared how the Fed will operate during this money printing party:
That’s the authority they [congress] have given us, to print money and provide liquidity into the financial system. We create it electronically and we can also print it, with the Treasury Department, so you can get money out of your ATMs.
Setting aside the fact that the fact that its being ‘electronically printed’ is one of the reasons why Bitcoin detractors denigrate the cryptocurrency, the fact that the Federal Reserve is boasting about its ability to print money indefinitely should be worrying for the future of the American economy.
There is a reason why gold and Bitcoin, both currency hedges, jumped yesterday – the indefinite printing of money has a dilutionary effect on the strength of the dollar, something that some were quick to point out:
Fed’s Kashkari tells @60Minutes that the Federal Reserve can print ‘infinite’ amounts of money to stem covid19 crisis.
Soon, how many wheelbarrows of cash will it take to buy a roll of toilet paper? #Hyperinflation
— jason lorenz (@jasonlorenz14) March 22, 2020
Yeah, and they burned infinite cash in fireplaces during the Weimar Republic because they made wood into sawdust to make bread. Neel sounds like an out of touch bubblehead.
— Creemer (@Creemer14) March 23, 2020
Of course, this kind of talk is put out to reassure big businesses and banks as well as individuals that the country and the banks won’t run out of money, and the printing of more money does give a short term boost to the economy – a very useful measure for a president who is up for reelection in eight months.
However, the potential for hyperinflation gets more and more real with every extra dollar that is printed. It won’t happen overnight, but the seeming disregard by those in charge of the principles of the laws of mass production is a concerning step, and one that emphasizes the importance of hedges like Bitcoin more than ever.
