President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, recently proclaimed that the Federal Reserve has an “infinite amount of cash.” He was responding to concerns about the stock market’s recent downturn.
In an interview with 60 minutes, Kashkari declared, “There’s enough cash in the financial system, and there’s an infinite amount of cash at the Federal Reserve. We will do whatever we need to do to make sure there’s enough cash in the banking system.”
For those in the Bitcoin space, think this is fascinating.
“Bitcoiners have always known that fiat detached from some kind of peg (i.e. gold) always ends up with the abuse of money printing. Governments can’t help themselves; and the current crisis just brought front and center that money printing is one of the few tools they have left. The trillions of USD that will be printed will be unprecedented in history,” Alan Silbert, managing director at INX, told the pro-Bitcoin website Decrypt.
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“I think once the dust settles of liquidations, margin calls, and outright panic, Bitcoin will start to show its strength against unlimited fiat printing,” he continued.
Mati Greenspan, founder of Quantum Economics, concurred. “This is basically the reason Bitcoin was created,” he stated. “One of Bitcoin’s main objectives is to counter the notion that money creation can be inexhaustible.”
Bitcoin is limited to 21 million Bitcoin, where the amount of newly minted Bitcoin goes down by half every four years until microscopic amounts are produced. This entire process is better known as Bitcoin halving.
Curiously, an extract from the Times newspaper alluding to the 2008 global financial crash was hard coded into Bitcoin’s genesis block—the first Bitcoin block ever created. Such a message is still relevant in present times
Will Heasman of Decrypt offered a sobering overview of the current state of the market:
Traditional markets are in dire straits. The S&P 500 has dropped to levels not seen since 2017, and the Dow Jones has fallen to levels not seen since 2016. In response, the Fed is doing all it can to try to stop the carnage, promising $1 trillion in daily repo operations (loans to banks) and further quantitative easing—putting more money into the system.
Saying central banks have an infinite amount of cash sounds insane, but this is not absurd for those who understand the true nature of central banking.
“Fiat has always been infinite,” Shapeshift CEO Erik Voorhees told Decrypt. “Central banks never stop creating it, and this is why it loses value every year, forever. What changed now though is the rate of creation. They’ve decided to create as much fiat money as they can fathom.”
“If people want to hold fiat in such a world, god help them,” he continued.
As of now, Bitcoin’s price has responded positively to the unveiling of the latest stimulus packages. As the stock markets have continued to plummet, Bitcoin’s price is slowly climbing back up. It has increased by 37 percent since its low point last week.
Although Bitcoin is still a long ways away from hitting last month’s high, the Fed’s easy money policies will likely make Bitcoin’s price continue to rise in the coming months.