Ripple CEO Brad Garlinghouse in a tweet he shared on his Twitter account on August 28; He shared his views on the Fed’s historic decision, stating that the 2 percent target in inflation could be abandoned.
Garlinghouse believes this unprecedented monetary policy change has paved the way for more dollar declines in the “near term”, benefiting the cryptocurrency industry.
Jerome Powell Makes History
On August 27, Fed Chairman Jerome Powell caused turmoil in the markets with his virtual speech, which ended the long-term quantitative tightening policy that kept inflation at bay by raising interest rates.
Powell made clear that the central bank is willing to keep interest rates at 0.25 percent for the coming years.
The 2 percent threshold, the legacy of former Fed chairman Ben Bernanke, no longer applies to the Fed trying to stimulate the economy struggling with the epidemic.
Bitcoin and gold news rose sharply after this announcement, but the gains were quickly lost. Both of these assets are green today.
Japanization of the USA
Earlier this month, Garlinghouse noted that the global population is losing confidence in the US dollar and creating a need for diversification:
“As the global population continues to lose confidence in fiat currencies, they will choose to diversify (as we see with the dollar). Our future global financial system will do the same. ”
Credit Suisse’s Jonathan Golub recently told the Financial Times that he expects the world’s largest economy to “go to Japan”:
“We have implemented a very, very aggressive policy in Japan for 30 years and there is neither inflation nor growth there. Why do we believe we will be different? ”
Despite maintaining its extremely loose monetary policy for years, a debt-stricken Japan fails to increase inflation and bring back its stagnant economy.
Key Advantages of Bitcoin
The Federal Reserve has dual powers to protect the labor market and keep consumer prices at bay. The problem is that the two goals are often opposed, and in a world that is increasingly focused on populism, central banks will choose to put the labor market ahead of meeting inflation targets. This means that the currency is losing.
This statement from the Fed is good for Bitcoin, as it can encourage people to own the largest cryptocurrency:
- Bitcoin has a predictable printing time and a limit of 21 million for the coins to be issued.
Monetary policy follows the rules encoded in the Bitcoin protocol and cannot be changed by a small group of people making decisions behind closed doors. Any changes are made with broad consensus.
- The price of bitcoin will fluctuate due to free market forces, but will not be devalued as a central institution decides that more coins will start to fill the market.
- Decentralized finance; It is about an alternative monetary infrastructure based on global, distributed, transparent and open networks. Ethereum is a layer for most of the more complex financial applications, but one should not forget the role of Bitcoin in this area. Bitcoin stands out as the solid money of crypto coins. It attracts more and more people every day as an alternative to the often populist and unpredictable, corrupt and always centralized financial systems.
Famous Author’s Reactions to the FED
There are many investors who are still hesitant to join Bitcoin. It is difficult to become an investor in cryptocurrencies, as there are even those who are criminals in advance of purchasers of Bitcoin and other cryptocurrencies.
But a leading financial educator and entrepreneur; He says that owning bitcoin, silver and gold is a wise decision. We’re talking about bestseller writer Robert Kiyosaki. According to Robert Kiyosaki, an American entrepreneur and author of the book “Rich Dad, Poor Father”, “Rich Father”, that is, the “Federal Reserve”, died.