- Jeremy Siegel has warned that there is a danger of Bitcoin “taking over” if the Federal Reserve does not take action
- The Wharton School Finance Professor warned that the Fed had been “very wrong” over its projections
- All eyes are on the FOMC meeting in two weeks time
Jeremy Siegel, Finance Professor at the Wharton School of the University of Pennsylvania, has warned that without strong Federal Reserve action there is a threat of “Bitcoin taking over” the dollar. In conversation with CNBC’s Squawk Box, Seigel said that the Fed needs to “bite the bullet” and engage in strategies to rein in the largesse of recent years and “defend the dollar”. The Fed has promised measures such as quantitative tightening and raising interest rates to tackle inflation, knowing that it threatens to derail asset markets if it goes too heavy.
Fed Has Been “Terrible Wrong” in the Past Year
Siegel pulled no punches when discussing the performance of the Fed during the last 12-18 months, opining that it had been “terrible wrong over the past year” with its projections “way below” what actually happened in terms of inflation, before bringing up Bitcoin in his closing comments:
The Fed has been very wrong and they are going to have to catch up. They are going to have to really admit – we got to bite the bullet. We got to defend the dollar here. We talk about Bitcoin taking over. We got to defend the dollar.
Bitcoin Would Benefit From Fed Caution
Much has been made of the next Federal Open Market Committee (FOMC) meeting on March 15-16, where the Federal Reserve will decide on whether to raise interest rates and by how much, as well as putting in place measures for quantitative easing. A sharp raise would be bad news for asset markets and Bitcoin, although the worst news may be priced in by the time of the meeting.
The Ukraine conflict has the potential to derail these plans the longer it goes on, which has some, Siegel included, worried that these plans will now be pushed back, allowing inflation to creep higher…and allow Bitcoin to triumph in the process.
