Over the past few weeks, the U.S. government and the Federal Reserve have shocked the world through their actions to keep the economy afloat, to keep society from degrading.
But it’s getting worse, just hours ago it was announced that unemployment claims in the U.S. were at 6.6 million yet again, suggesting double-digit unemployment figures, and society remains on lockdown all over the world.
As a result, the powers that be, especially in the U.S., have started to react… again, making Bitcoin bulls even more bullish than they were before.
Fed Cranks Up Facilities, U.S. Debt Tops $24 Trillion
According to Jim Bianco of Bianco Research, the Federal Reserve announced Thursday morning that it will be participating in $2.3 trillion worth of buying of bonds to support liquidity by taking the following actions:
- Will allocated $500 billion to purchase municipal bonds through a new Special Purpose Vehicle
- Will buy bonds entering the “junk” category, which includes Ford
- Will buy loans from the Paycheck Protection Program (PPP) and Coronavirus Aid, Relief, and Economic Security Act
- Will “ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans through the Main Street Lending Program”
- Will expand current operations.
The Fed just threw another "kitchen sink" at the markets. Another $2.3T in buying.
* new SPV to buy $500B of munis
* Will buy junk now (if downgraded after March 22)
* will buy junk ETFs (now HYG)
* will buy PPP and CARES loans
* expanded existing SPVshttps://t.co/40dZq3K7pn
— Jim Bianco (@biancoresearch) April 9, 2020
Notably, this comes after the Federal Reserve’s balance sheet has already increased by some $1.7 trillion in the past three weeks, going vertical as liquidity in all markets starts to die down.
With the increased Federal Reserve spending, approved in the $6 trillion coronavirus bill that passed the other week, the U.S. national debt just yesterday surpassed $24 trillion, just five months after passing the $23 trillion mark.
Chances are $25 trillion is in the near-term scopes of the U.S.
Just the Start
What’s crazy is that the spending from the government and the asset-purchases by the Federal Reserve we’ve seen over the past few weeks is just the start of a deluge of printing.
The International Monetary Fund — an international organization promoting economic growth and monetary stability around the world — just today announced that it is anticipating the world economy will have its “worst economic fallout since the Great Depression.”
Chances are, governments and central banks will try and stave off the fallout by going into monetary overdrive.
JUST IN: IMF says it anticipates the world economy will have the 'worst economic fallout since the Great Depression'
— The Spectator Index (@spectatorindex) April 9, 2020
The fallout, some fear, could be a deflationary cycle, which would be somewhat unprecedented in modern times.
Where Does Bitcoin Fit In?
According to many analysts, these decisions to print money like there is no tomorrow only validate the case for Bitcoin.
Case in point: in the April edition of the newsletter “Crypto Trader Digest” BitMEX CEO Arthur Hayes wrote that while Bitcoin has the potential to retest $3,000 yet again if global markets roll over, his year-end price target “remains $20,000,” which is a 180% from the current price.
As to why he thinks this is the case, he cited that the monetary and fiscal solutions that governments and central banks are enlisting to stave off precision:
“Everyone knows the shift is upon us, that is why central bankers and politicians will throw all of their tools at this problem. And I will reiterate, that is inflationary because more fiat money will chase a flat to declining supply of real goods and labour. There are only two things to own during the transition to whatever the new system is and that is gold and bitcoin.”
This thought process is extremely similar to that of Dan Morehead. As reported by Blockonomi previously, Morehead explained that the increase in the quantity of paper money will by simple supply-demand dynamics will cause “things that have fixed quantities [to settle] above where they would settle absent an increase in the amount of money.” Morehead also claimed that a $20,000+ Bitcoin price will arrive very soon.
Some have been even more optimistic than Bitcoin passing $20,000.
In a recent interview, Chamath Palihapitiya, CEO of venture fund Social Capital and a former Facebook exec, remarked that there’s a potential for fiat money-printing to push Bitcoin to a price of “millions.”