The world’s central banks are scrambling to keep their respective economies afloat, and the weapon of choice appears to be the manufacture of more money.
Bitcoin was born in the fallout of the last financial crisis. Meanwhile, this one is shaping up to be even bigger, so its status as a finite and immutable form of finance and store of value is stronger than ever.
Fed to Inject Another $2.3 Trillion
The US central bank is planning to pump another $2.3 trillion into the US economy as it ramps up fiscal stimulus measures while COVID-19 ravages the country. Reports suggest that the Federal Reserve will offer up to $500 billion in loans to states and municipalities through the purchase of municipal bonds.
Additionally it will be taking on riskier debts with the expansion of an existing corporate lending program. According to usdebtclock.org, the national debt is already at record levels of $24.2 trillion, and the United States appears hell bent on increasing it as fast as possible.
Last week the Fed announced that it will also offer financing to banks making loans through a Paycheck Protection Program as a further 6.6 million workers filed new unemployment claims.
Meanwhile, Bitcoin advocates and crypto community commentators have been extolling the virtues of the world’s most popular digital asset as it has been created to act as a hedge against such monetary madness.
Others observed that the US central bank is not the only one printing money. The ECB has printed $1.3 trillion, while in China $455 billion has been pumped into the economy by the PBoC.
Satoshi Called it a Decade Ago
When Satoshi envisioned Bitcoin in 2008, it was at a time that economies were floundering following the US bank-initiated sub-prime mortgage and financial crisis. The following year he said: [P2P Foundation]
“The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
What is happening at the moment is a massive debasement of the currency which could result in hyperinflation if things continue on the same path. Much of South America has already suffered such a fate as their fiat currencies have been devalued to the extent that new notes with more zeros are needed.
The population has flocked to Bitcoin in times of economic turmoil in Latin America, and the same could happen to the larger economies if the fiat flood continues. Bitcoin was born out of a banking calamity, and it is clear that the banks have not learnt by their mistakes but instead are destined to repeat them.