Blog - Federal Reserve to print 425 Billion

Federal Reserve to print 425 Billion

Written by Luke Larsen

Posted on 14th Dec 2019

FED printing money

The United States financial organization can inject a minimum of $425 billion of nonexistent cash into the economy by the middle of next month. In a statement Dec. 11, the Fed confirmed it'd increase questionable repurchase, or “repo,” operations on key dates over the year.

Fed to “print” 3x Bitcoin market cap in weeks
This time of year needed further assurances for banks, the Fed claims, with repo operations designed to support their regular operations. “The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo) operations for the monthly period from December 13, 2019, through January 14, 2020,” the statement reads. The Fed then confirms: “In accordance with the foremost recent FOMC directive, the table can conduct repo operations to make sure that the availability of reserves remains ample and to mitigate the chance of cash market pressures around year finish that would adversely have an effect on policy implementation.” Repo offerings on Dec. 31 and Jan. a pair of are going to be $150 billion. By the Jan. fourteen-point in time, the minimum the Fed expects to give is $425 billion.

It's all normal
While common, such moves involve invocating immense new liquidity supported by zero backing — basically cash printing while not physically printing any cash. Critics, particularly in Bitcoin (BTC) circles, have long highlighted the policy as examples of the failure of central banks to “manage” economies. The argument forms a central gospel of Saifedean Ammous’ widespread book, “The Bitcoin commonplace,” during which he argues that the autumn of states and empires stems from the autumn of a currency. Similar calls in favor of Bitcoin surfaced in Sept throughout a previous repo spike. Commenting on the foremost recent Fed announcement, Bitcoin advocate called Rhythm on Twitter noted that $425 billion is over 3 times the scale of Bitcoin’s market cap. “Everything is ok tho',” he ironically summarized. As Cointelegraph antecedently reportable, U.S. debt reached $23 trillion in a Gregorian calendar month — around $12 million for each Bitcoin that will ever exist. That figure is currently at $23.12 trillion, in step with online observance resource U.S. debt Clock.

What does this mean?
All of this information means that the United States Federal Reserve is printing more money and making each dollar worthless then it was before. The difference between bitcoin and the United States Dollar is that bitcoin uses a deflationary system vs the US dollar using an inflationary system. A deflationary system rewards users for saving money whereas an inflationary system rewards users for spending money.

What is the difference between a deflationary system and an inflationary system?
A deflationary system is based on a money supply that is decreasing meaning that in the future getting the same amount is going to be harder than it was before. In the case of bitcoin, every few years the supply decreases. Whenever this occurs the value of the current bitcoins goes up because of supply and demand principles. This rewards the saver and punishes the spender. These incentives hoarding of bitcoin which can be a problem in of its self. In reverse to this is an inflationary system that punishes the save and rewards the user. An inflationary system is created when the money is printed. In the case of the United States Dollar, the money is printed whenever the federal reserve buys bonds from the government. When this occurs the value of every individual dollar decreases. This rewards the spender but harms the saver. These two systems have their ups and downs, and it will be up to the future to see which comes out on top.