$ 8.35 trillion on the Fed’s balance sheet is driving crypto adoption

This week the US Federal Reserve (Fed) balance sheet hit a new all-time high (ATH). Will the Fed’s fast-growing assets at a staggering $ 8.35 trillion boost crypto adoption?

fed announced updates its balance sheet data every seven days. This week’s report was grim, revealing that another $ 8 billion in assets were purchased during the reporting period.

The US Federal Reserve was busy hoarding mortgage-backed securities and newly printed dollar government bonds at its own discretion.

Fed balance sheet reaches new ATH

The Fed’s balance sheet is at an all-time high. Is a dollar bubble forming? Cryptocurrency advocate Anthony Pompliano comment: “The Fed’s balance sheet knows no bounds”.

Source: Federal Reserve Board of Governors

New money that is printed indiscriminately flows into the US institutional financial infrastructure, causing interest rates to stagnate near zero.

In the Fed’s parlance, this is intended to help achieve price stability and maximize employment.

Credit as a money economy

But in reality the goal is to increase prices steadily and easily so that people have an incentive to spend their dollars sooner instead of holding them and waiting.

Monetarists want commodities and cash to change hands more often and use quantitative easing to keep the market wheels running.

They also fear deflation, with warning by Jerome Powell on the economic downturn caused by deflation during and before the Covid-19 pandemic.

Borrowing a loan at 0% interest is a really amazing thing, unthinkable. Nobody can create their own supply of money to lend without interest. It is an artificial construct of the monetary system that does not make sense for personal or business finances.

So who pays for it? Because of this, everyone buys more expensive things. Higher food and raw material prices offset the 0% interest rate. Stock and property prices are higher, and tuition fees are higher, with all the low-interest student debt that has to be paid.

Are central banks pushing for crypto adoption?

Yes, there is for sure. Investors – who see the currency’s expansion stemming from what was left of 2008 – are hedging their savings and investing in cryptocurrencies and other digital investment vehicles. Like Nasdaq report recently:

“Inflation concerns are very evident as the economic contraction and government incentives increase the global money supply. Bitcoin has positioned itself as the perfect protection against inflation. Unlike fiat currencies, Bitcoin is not regulated by a central bank. “

The Nasdaq report underscores investor confidence in Bitcoin and confirms its performance against the dollar. On September 10, Benzinga warned:

“With the US consumer price index (CPI) rising above 5.4%, inflation has become very real … investors who do not consider asset portfolio allocation may see a decline in long-term purchasing power going forward.”

While the Fed is essentially taking people’s money and lending it to them with no interest, investors on the DeFi crypto lending platform borrow money for a high annual percentage return. , sometimes two numbers. Meanwhile, others are putting their savings into deflationary digital assets like Bitcoin.

In general, central banks inject liquidity into decentralized banks every time they print money.

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