A Bank of America report on Friday, May 22, 2020 reveals that central banks around the globe have been ramping up their purchase of bonds and other financial market assets.
With over $4 trillion funneled to prop the global economy still under the grip of the highly contagious coronavirus, estimates have it that central bankers have shelled out $2.4 billion of money printed out of thin air to various financial assets around the globe.
The Federal Reserve creates trillions of dollars out of thin air. The Fed is not elected by the people, not a member of the government, not a government agency, yet decides the monetary life of 100s of millions of people in the US. You can’t make this stuff up! #Bitcoin pic.twitter.com/bRjrbZW6VO
— Gabor Gurbacs (@gaborgurbacs) March 28, 2020
Is FED and Other Central Bankers Creating A Facade?
This action, the Flow Show report states, risks driving the market higher, creating a false impression of a relieving V-shaped recovery at a backdrop of a possibly irrecoverable economy at the hands of a COVID-19.
Due to lockdowns in certain regions, virtually all economic activities bar essential services including the pharmaceutical sector—which is only perhaps one of the few industries which has benefited immensely from this pandemic, has been halted. This calls into question the true state of the economy and how consequential free money being floated about will affect the market and the lives of ordinary investors.
From Tokyo to Washington, over $4 trillion has been injected as the Fed and other central banks rush to buy various types of bonds and mortgage debt.
— Pierce ✌? (@crosbyventures) May 18, 2020
From March, the stock market has unexpectedly ballooned despite grim statistics from the labor market. Millions of Americans have already lost their jobs and the unemployment rate is expected to soar to over 25 percent by H1 2020.
The Rush To Safe Havens Including Bitcoin
Interestingly, over the last few months, focus has been on safe haven assets. The USD being the reserve currency has strengthened, crashing currencies from emerging economies but gold’s performance has been comparatively dismal. This is despite the report revealing a $3.5 billion injection in the last week.
The yellow metal is the preferred store of value asset and used over the years. However, with capital flight from the traditional market, other fitting alternatives like Bitcoin and large cap cryptocurrencies may also rally. Specifically, the declaration of infinite quantitative easing by some central banks has reaffirmed the need of a reliable asset which can’t be subjected to manipulation. Bitcoin fits the bill.
Following the recent halving, commentators are confident that like gold, Bitcoin—should the global economy collapse or inflation rise, prices will rise and by the end of the year register a new all-time highs.
One month out from the Bitcoin halving and the Fed is injecting trillions of dollars into the economy.
Satoshi is smiling somewhere.
— Pomp ? (@APompliano) April 11, 2020
This is highly likely since Bitcoin is technically an improvement of gold and exists in the digital realm. Unlike fiat money, it can’t be manipulated and coins are secured by math.
You know how the Fed is printing trillions right now? Did you vote to have them do this? Did you consent in any way?
Our money system is not democratic. It's authoritarian.#Bitcoin is the monetary red pill.
— Jimmy Song (송재준) (@jimmysong) April 13, 2020