- Federal Reserve Bank has an "infinite amount of cash" says Minneapolis President.
- Crypto experts argue "this is why Bitcoin was created."
- Bitcoin price continues to build back up after big drop.
President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, said that the Federal Reserve has an “infinite amount of cash”—in response to worries over the stock market collapse.
Speaking on 60 minutes, Kashkari said, "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."
There are ♾ dollars 💵
There are 21 million #Bitcoinpic.twitter.com/iIXjZfNM6o
— ricburton @ 🏡 (@ricburton) March 23, 2020
And those in the Bitcoin industry, 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 Decrypt.
"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 added.
Mati Greenspan, founder of Quantum Economics, agreed. "This is basically the reason Bitcoin was created," he said. “One of Bitcoin's main objectives is to counter the notion that money creation can be inexhaustible.”
Bitcoin has a limit of 21 million Bitcoin, where the amount of newly minted Bitcoin halves every four years until miniscule amounts are produced. This process is known as the Bitcoin halving.
In fact, hard coded into Bitcoin’s genesis block—the first Bitcoin block ever made—was an extract from the Times newspaper referencing the 2008 global financial crash. And what was relevant then is still relevant now.
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.
Leaked Fed document pic.twitter.com/igcnRXKpVA
— Erik Voorhees (@ErikVoorhees) March 20, 2020
But saying an infinite amount of cash takes things one step further. Although, this didn’t come as a surprise to everyone.
"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 added.
So far, the price of Bitcoin has responded positively to the latest announcements of fiscal stimulus. While the stock markets have continued to fall, Bitcoin’s price is working its way back up. It is now up 37% since its low last week.
If it wants to reach last month’s highs, there’s a long way to go. But at least the Fed has Bitcoin’s back.