The economies of the world are starting to slow down and they are being dragged down by the largest of them all – the USA. Bankers that have been so vehemently against decentralized digital finance such as Bitcoin are injecting billions of new dollars back into the financial system to keep it afloat.
Fed ramps up repos
The Federal Reserve (Fed) is increasing the amount it injects into the system to support overnight lending markets.
According to Bloomberg, the Fed injected over $270 billion into securities repurchase or ‘repo’ markets so that banks can meet their liquidity demands.
This is more than the entire cryptocurrency market capitalization for all current digital assets.
Fed officials and bankers have been quick to dismiss any concerns that an economic storm is looming, but then they said the same in 2008.
That financial crisis was also caused by banks over-lending to support the profitable sale of their hedge fund derivatives.
Back then the Federal Reserve and Treasury Department tried – and failed – to prevent the collapse.
It is clearly evident that banks simply cannot be trusted which is partly why Bitcoin was created in the first place.
The elusive Satoshi Nakamoto once wrote:
“The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.
“Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”
Bitcoin needed now more than ever
Bitcoin was largely born out of a distrust of the banking system which is starting to manipulate financial markets once again.
This week the repo payments have been ramped up again, much to the chagrin of President Trump, who previously referred to policymakers as ‘boneheads’ and ‘pathetic’ in another of his Twitter tirades.
Starting Thursday, the repo operation offerings will escalate to $120 billion from the current $75 billion according to reports.
Industry observer @Rhythmtrader did not miss the irony that the total just this week has been more than the Bitcoin market cap.
“In order to keep the financial system working, the Federal Reserve had to “inject” the equivalent of bitcoin’s entire market cap into the repo markets.”
The Fed just injected $134.2 billion in liquidity.
Bitcoin's market cap is $135 billion.
In order to keep the financial system working, the Federal Reserve had to "inject" the equivalent of bitcoin's entire maket cap into the repo markets. Everything is fine though. ????
— Rhythm (@Rhythmtrader) October 24, 2019
Other investors, such as goldbug Peter Schiff, have also been highly critical of the Trump administration and the galloping national debt in the US.
“The U.S. National Debt now exceeds $22.9 trillion, up close to $3 trillion since Trump took office. My guess is that after 3 full years in office the national debt will have risen by $3.5 trillion and that by the end of Trump’s term it will have risen by well over $5 Trillion.”
The U.S. National Debt now exceeds $22.9 trillion, up close to $3 trillion since Trump took office. My guess is that after 3 full years in office the national debt will have risen by $3.5 trillion, and that by the end of Trump's term it will have risen by well over $5 Trillion.
— Peter Schiff (@PeterSchiff) October 21, 2019
It is clear that the economic storm in America is worsening and a financial crisis redux may be unavoidable.
This only strengthens the narrative that Bitcoin truly is a safer store of value which by design is immune from central bank and state meddling.