The United States’ Federal Reserve announced at the end of last week that it would be injecting a minimum of $425 billion to the national economy in “printed” or non-existent money and that it will be doing so by the middle of January 2020.
The U.S. central bank made the announcement through a statement. In the text, the Fed also said that it will be accelerating the “repo”, or repurchase operations on specific dates around the New Years’ time.
As things stand today, the Fed will print three times the market cap of Bitcoin, the world’s most influential digital asset, in a matter of weeks. The repo operations have apparently schemed, so they can serve as support for banks’ daily operations. According to the Fed, the time of the year called for additional assurances for financial institutions.
From December 31st to January 14th, 2020
The statement explains that “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 Fed also confirmed that “in accordance with the most recent FOMC directive, the Desk will conduct repo operations to ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures around year-end that could adversely affect policy implementation.”
On New Year’s Eve and January 2nd, the repo offerings will be $150 billion. However, by the time the proposed January 14th deadline comes along, the Fed expects to generate at least $425 billion.
Sizable Liquidity with No Backing
These moves are not uncommon, but they usually conjure sizable liquidity while having no backing. In other words, it can be considered money printing without actually having to physically print any bills.
The move hasn’t lacked critics, and they mainly come from Bitcoin circles and communities. They state that the decision is a perfect example of the failure of central banks in coping with and managing economies in different locations.
That thought creates a bigger current, discussed in Saifedean Ammous’ popular book, “The Bitcoin Standard.” He defends the notion that the fall of countries and empires can be blamed for the fall of a currency that can’t operate in a manipulation-free manner.
In a previous repo peak, the community-made similar calls in favor of BTC. It happened during the month of September.
Three Times Bitcoin’s Market Cap
A noted Bitcoin defender known as Rhythm on Twitter pointed out the fact that the $425 billion that are being talked about are three times the size of BTC’s current market cap. The user said, with notorious sarcasm, that “everything is fine.”
The debt of the United States reached $23 trillion in November and is now at $23.12 trillion, per information from U.S. National Debt Clock. It is an astonishing amount that keeps on growing.
By Andres Chavez