Fed and Bitcoin

Steve Brown

The Fed does not view Bitcoin with disfavor, and it’s frustrating in my effort to get anti-BTC people to see this. On the other hand, Bitcoiners think they are fighting the Fed by putting $ in BTC and that’s understandable but totally wrong. There are two aspects; one is sterilization (first) and the other is regulation (second). Lets’ look.

Put simply, the Fed finds Bitcoin useful for keeping inflationary dollars locked up in BTC and out of the pockets of ordinary people. That’s called ‘sterilization of capital’. Because BTC is purely speculative and is not primarily used for payment processing, Bitcoin aids the Fed in sterilizing capital and calculating money supply M2, to hide many billions in inflationary dollars that would otherwise appear in M3 (“all money”) if M3 were were still calculated. (It’s not, by design.)

Fact is, BTC is not used like currency in any true sense, is not currency, and is not used as a payment processor. BTC can only process seven transactions per second (maximum) when credit cards can process millions; bitcoin plays only a tangential role in payment processing; and Bitcoin is primarily a speculative vehicle. As such I can write with absolute authority that the Fed has no issue seeing billions in inflationary capital locked up in BTC. In fact, the Fed was more than chuffed when BTC gained popularity to assist the Fed in the task of sterilization of capital and — believe it or not — that’s one reason (in part!) US fund rates are still nominally positive.

Bitcoin’s weakness has been identified by the Fed as being btc’s reliance on “stablecoin” components. Bitcoiners strenuously object to calling stable coins ‘components’ since the only ‘component’ of blockchain is blockchain. Instead, let’s say stablecoins provide the infrastructure and underlying liquidity for the tradeability of Bitcoin. In plain terms, when Bitcoin poses any threat to USD hegemony and/or the USD sinks too low on the DXY (suggest 70-75) the Fed-Treasury can attack stable coins such as USDT to extinguish any proportion of BTC capitalization it so chooses. The US Treasury will then introduce the digital Fed dollar to bring Bitcoin under control, and that’s what will happen. Meanwhile, most BTC people have zero idea they are part of a huge conspiracy to defraud, and only believe they are ‘fighting the dollar’.

Those who know me and my writing know I have been opposed to USd hegemony for eons, because the former United States maintains its aggressive Empire courtesy those dollars. But BTC is not the way to dismantle USd hegemony regardless of what Mex Keiser and Raoul Pal may say..

Understanding the how and why about BTC and when and why it will correct, is another matter and exceedingly complex, as any good proto-ponzi mandates. I’ve been trying to get beyond the polarized fanatics populating both camps “for and against” bitcoin with little success and the emotion in both camps runs very high.

Finally, it’s unclear how the new alleged regime may enforce environmental policy, if at all. If Biden-Harris achieve power they are likely to resume Obama’s agenda on the environment, which will spell trouble for Bitcoin.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s