When it comes down to curbing inflation, the government is known to rely on printing as many fiat currencies as is required, in order to keep the economy in check. The United State’s government is not left out. In fact, excessive printing of fiat currencies has been on the rise in the US this year, more than it has been in many other countries.
These inflation-curbing activities do not seem to be subsiding anytime soon, neither are they creating any long-term favorable conditions for the economy. In May, the US. Federal Reserve admitted to the issuing of excessive production of cash, to help boost the value of fiat currencies while also keeping recession at bay.
The United States was hit hard by the coronavirus pandemic, hence the Federal Reserve explaining that the economic recovery of the country will not come to an end in 2020, but could very well stretch through to the end of 2021. The chairman of the Federal Reserve Jerome Powell qualified the current states of things as the “biggest shock that the economy has had in living memory,” and in order to aid a smooth bounce back, Jerome Powell admitted to the pumping of Fiat currencies as it seemed necessary to do so at the time.
The US. finds other means to increase cash flow
The purchasing of treasury bills and other securities by the government is also another tactic being employed to increase the supply of cash. All of these mechanisms are continually reiterating the limitations of fiat currencies, which are either overpriced or devalued based on the constant increase in circulating supply, this is not the case with Bitcoin, which is designed to hedge against these inflations, with a limited number of circulating supply.
This continuous printing of fiat currencies is probable to occur for a prolonged time frame. In a recently held news conference, Nancy Pelosi, U.S. House of Representative Speaker confirmed that trillions of dollars will be printed to aid the provision of another coronavirus relief fund in a new bill, with a maximum of $3 trillion required for the finish off.
The U.S. Federal Reserve could foster a new wave of Bitcoin investment
The impact of this incessant currency pump could lead to a new wave of institutional investors entering the crypto-space, while simultaneously strengthening the narrative that Bitcoin is indeed a safe haven asset, as it did within the first phase of 2020.
Paul Tudor Jones is a prime example of one of such instances, where investors bought Bitcoin so as to hedge against inflation. The first quarter of the year observed an influx of new institutional investors who were relying on Bitcoin as a fitting substitute over Fiat and other assets.
As the endless cycle of Fiat production continues, the second half of the year may see another wave of new investors pouring into the crypto-space. Because inflation is a reoccurring event, the government is expected to continually employ this pattern in future. If this continues to remain so, Bitcoin is guaranteed to channel in more investors as the years go by.