In recent weeks, actions by the U.S. government and the Federal Reserve have taken the world by surprise as they work tirelessly to keep the economic engine running and prevent societal deterioration.
However, things aren't looking up. Just hours ago, it was reported that U.S. unemployment claims have reached 6.6 million once more, implying potential double-digit unemployment rates, while much of the world remains under lockdown.
This ongoing situation has prompted key decision-makers, particularly in the U.S., to respond once more, fueling even more optimism among Bitcoin enthusiasts.
As the Federal Reserve cranks up investment facilities, the U.S. national debt has surged past an astounding $24 trillion.
According to Jim Bianco of Bianco Research, On Thursday morning, the Federal Reserve outlined its ambitious move to invest $2.3 trillion in bond purchases aimed at ensuring liquidity, detailing the steps as follows:
- $500 billion will be earmarked for purchasing municipal bonds through a new Special Purpose Vehicle created for this purpose.
- Bonds slipping into the 'junk' category, like those of Ford, are on the buying list.
- The Fed will also acquire loans from the Paycheck Protection Program and the Coronavirus Aid, Relief, and Economic Security Act.
- To maintain the flow of credit to small and mid-sized enterprises, the Fed will allocate up to $600 billion in loans via the Main Street Lending Program.
- Will expand current operations.
In an emphatic move, the Fed just loaded the markets with another monumental $2.3 trillion, taking decisive action once again.
* new SPV to buy $500B of munis
* Junk bonds are now up for grabs, provided they were downgraded post-March 22.
* will buy junk ETFs (now HYG)
* will buy PPP and CARES loans
* expanded existing SPVs https://t.co/40dZq3K7pn— Jim Bianco (@biancoresearch) April 9, 2020
This move follows a dramatic $1.7 trillion surge in the Federal Reserve’s balance sheet over the past three weeks, going off the charts as a liquidity shortage becomes apparent.
Increased spending by the Fed, as approved in the $6 trillion coronavirus relief legislation passed recently, has pushed the U.S. national debt to surpass $24 trillion, a mere five months after exceeding $23 trillion.
Given the current trajectory, it wouldn't be surprising if the U.S. national debt hits $25 trillion in the near future.
Just the Start
A noteworthy aspect of this financial whirlwind we're witnessing from federal actions and the Federal Reserve's massive asset purchases is that it's just the tip of the iceberg.
The International Monetary Fund made headlines today by predicting the world economy is on the brink of experiencing its gravest downturn since the Great Depression.
It's highly likely that governments and central banks worldwide will rev up monetary policies to counteract the economic fallout.
BREAKING NEWS: The IMF announces its expectation that the global economy is headed for the 'worst economic downturn since the Great Depression.'
— The Spectator Index (@spectatorindex) April 9, 2020
The fallout, some fear, could be a deflationary cycle , which would indeed be extraordinary in the modern era.
Where Does Bitcoin Fit In?
Many experts argue that this relentless money printing underscores the rationale for investing in Bitcoin.
For instance, the April edition of the 'Crypto Trader Digest' newsletter BitMEX CEO Arthur Hayes wrote that while Bitcoin points to the potential for Bitcoin to revisit the $3,000 level if global markets take a nosedive, yet forecasts its year-end value to price target stay strong at $20,000, representing a significant 180% increase from its current standing.
When asked for his reasoning, the proponent pointed to the fiscal and monetary policies adopted by governments and central banks to stave off financial grind:
The general consensus is that the shift is unavoidable, which explains why policymakers are pulling out all the stops. This approach inevitably leads to inflation as more paper money chases a static or decreasing pool of real assets and labor. During this transition to whatever future system emerges, the only two assets worth holding are gold and Bitcoin.
Dan Morehead shares remarkably similar views. As reported by Blockonomi previously Morehead elaborated, due to basic supply-demand principles, the expansion of money supply will naturally cause 'things with fixed quantities [to settle] at values higher than they would have without such monetary increase.' Morehead has also forecasted that Bitcoin reaching over $20,000 is on the horizon.
There are even those with more ambitious outlooks than Bitcoin surpassing $20,000.
In a fresh interview, Chamath Palihapitiya, CEO of venture firm Social Capital and previously at Facebook, mentioned that the unparalleled printing of fiat currency could propel Bitcoin prices into the 'millions.'
