Bitcoin Supporters Scoff at Fed’s “Infinite Cash” Claim

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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.

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:

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:

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.