As the world plunges into an economic crisis stemming from the rapid spread of the coronavirus around the world, the Federal Reserve boasts that it can print the dollar at will. That’s what it’s doing with its $ 6T plan to support the US economy. This profusion of American dollars which continues to decrease its value highlights the scarcity of Bitcoin whose maximum supply will remain frozen at 21 million whatever happens. Dit’s hard to deny it, it’s a serious hour now The world finds itself in the midst of a pandemic with a magnitude better known for decades. More than two billion people are confined to their homes to limit the spread of the coronavirus.
This forced shutdown of most of the world’s economies has far-reaching economic consequences. This is a necessary evil, but the fact is that the post-coronavirus crisis already promises to be very difficult with a recession likely in most of the world’s major economic powers.
The economic crisis starts before our eyes
In this context of crisis, the American economy is not doing well. The financial markets have literally collapsed since the beginning of March, and the latest unemployment figures raise fears of the worst. In the past week, a record number of 3.3 million people have filed claims to assert their unemployment rights in the United States.
A unemployment crisis catastrophic is starting. Unfortunately, in the coming weeks, it can only increase. Many are even beginning to fear that unemployment figures will reach record levels of those of Great Depression that hit the United States in the early 1930s.
To try to respond as best as possible to this emerging economic crisis, the Federal Reserve and the United States government has taken extraordinary measures. The latter thus entered into an agreement with the American Senate for a package supposed to stimulate the American economy. At the heart of this package is a check for $ 1,200 which will be sent to each American.
The goal is to boost consumption in order to support in fine American companies that have been hit hard by the slowdown in consumption.
Various measures have been taken on the side of the Federal Reserve. It all started on March 3, 2020 with an already historic drop of 50 basis points in interest rates. Faced with the accelerating fall of Wall Street, the Federal Reserve had then decided to cut interest rates squarely by 100 basis points in order to put the target between 0 and 0.25%.
The zero interest rate taboo had just been broken by the Fed.
A few days later, on March 15, 2020, the Federal Reserve announced a program of Quantitative Easing of $ 700 billion with a lowering of the reserve rate requirement for banks to zero.
These measures – already out of the ordinary – however, were not enough to reassure Wall Street with a Dow Jones who even went so far as to go below the threshold of 19,000 points. Circuit breakers became the norm during several consecutive sessions.
The Federal Reserve goes from bazooka to nuclear weapon
The March 23, 2020, the Fed therefore decided to switch from bazooka to nuclear weapons. No more limitation in the injection of liquidity, the Fed unanimously voted the immediate application of a program of quantitative easing unlimited. The signal sent is clear:
The message is clear: the current monetary and financial system must be saved no matter what.
Following this announcement, Neel Kashkari, the chairman of the Minneapolis Federal Reserve Bank, was interviewed for the program “60 Minutes” on CBS. He then made an even more incredible statement:
“There is an infinite amount of liquidity in the Federal Reserve. We will do whatever it takes to make sure there is enough liquidity in the banking system. “
You read correctly. Neel Kashkari boasts that the Federal Reserve can print an infinite amount American dollars.
Whatever it costs, the fiat system will be saved.
Unfortunately, he does not specify that this ability to produce endless cash from the Federal Reserve comes at the expense of what American citizens have.
Currently, the money supply in circulation, represented by the index M2 Money Stock, is already close to $ 16T. From 2010 to 2020, this money supply almost doubled. This sharp increase in just ten years obviously implied a sharp monetary devaluation of the American dollar.
The purchasing power of the Americans has therefore declined over the past ten years. And it’s exactly the same in Europe.
Many believe that to face this economic crisis, the Fed will have to inject at least $ 6,000,000,000,000 in the system. If it had taken ten years for M2 Money Stock to increase by $ 8T, it will only take a few weeks for it to increase $ 6T this time.
At this rate, the $ 30T will be greatly exceeded well before 2030.
The rarity of Bitcoin is highlighted by this infinite amount of dollars available
While the Federal Reserve boasts of having an infinite amount of American dollars, Bitcoin continues to see its maximum supply set at 21 million which gives it an incredible rarity. Even better, this maximum offer was already 21 million in 2010, and it will be again in 2030, and even in 2050:
Bitcoin has a clear monetary policy that does not depend on any arbitrary human decision.
Bitcoin monetary policy is defined within the Bitcoin source code. It is automatic and predictable. Whatever happens, there will only be 21 million Bitcoins available at most. Likewise, the creation of new Bitcoins will continue to decrease every 210,000 blocks of validated transactions.
Whatever happens, the third Bitcoin Halving will take place after block 630,000 which will increase its rarity.
Most incredible is that this long-awaited event comes at a time when the supply of US dollars is clearly described as infinite by the Federal Reserve. So, while Bitcoin will undergo a real supply shock in May 2020 which will play on its scarcity, the US dollar will continue to be devalued.
At best, the difference between the fiat system and the Bitcoin system will jump out in the eyes of the world.
This scenario is so perfect for Bitcoin that you could almost believe that someone wrote it in advance to promote the creation of Satoshi Nakamoto. Her scarcity will strengthen even more in the eyes of the world thanks to the devaluation of the value of the American dollar, the supply of which has become endless.
Bitcoin will therefore greatly benefit from this exposure in the coming months to show that its rarity is an absolute force. I am still very optimistic for a very strong bull market which will take place as planned in the 18 months following its third Halving.
The coming months will be exciting for Bitcoin. In addition to its traditional role as a safe haven, Bitcoin will also take on that of bulwark against currency devaluation. And as if things were written in advance, it has never been more evident that Bitcoin was created for the situation we are going to experience.
A developer by training, I discovered Bitcoin in 2014 but I did not immediately understand the importance it could have for the world of tomorrow. I got into it more deeply from the start of 2017 and since then I haven’t given up on the business.
Passionate about Bitcoin and the new system it is trying to build for the future, I decided to participate in its evangelism at my modest level by writing on Bitcoin, Blockchain and crypto currencies on different supports.
It is with pleasure that I publish some of my texts in French on The Coin Tribune.
I also write a lot about personal development and self-improvement.
Do not hesitate to exchange with me via social networks or in comments on my articles if you have questions about my articles.