The United States Federal Reserve has taken on a very huge task. The Covid-19 pandemic has sent world economies into a spiral. markets are reeling from the effects of the global shutdowns and restrictions of activities.
President Donald Trump has just signed a $2 trillion stimulus bill into law. This is to try and get funding to those who need it the most at this time. Another $4 trillion asset purchase program is expected by the Fed. In any case, the Fed has hinted that more may need to be done as regards the buying of assets to keep the markets healthy.
Unofficially dubbed “QE infinity”, this program aims to enable the unlimited purchase of assets while the pandemic lasts. The truth is that no one knows when that will be.
As such, the world continues to spiral out of control due to this lack of knowledge. The US Fed though has the required tools to keep pumping the US markets with money and keep credit within the US economy flowing.
The truth is that having such an unlimited amount of money in the economy during normal times will lead to inflation.
Well, these aren’t normal times, with almost zero economic activities occurring within and outside the US, the malaise is expected to continue. This flow of money, however, will help stem sentiment and hold up markets albeit temporarily.
Cryptocurrency markets have the most to gain due to their trustless nature. The “haven” perception held by investors will prevail. This will allow for investors both old and new to take a look at the wonderful innovation called cryptocurrencies and figure out how to use them to profit.
A such, the money pouring into traditional financial markets will most likely end up in the crypto space. And the reason for this is simple: There can’t be transactions in traditional markets without trust. And there are no markets right now. The new trustless society is here: that is where the money will go.