The government is known to rely heavily on printing as many fiat currencies as necessary to curb inflation. Inflation is curbed to ensure that the economy is kept in check. The US government is not left out in this matter. Notably, there has been excessive printing of fiat currencies in 2020 in the wake of the COVID-19 crisis.
Many other countries have also issued stimulus packages but the US has by far issued the most. Inflation-curbing activities may not subside any time soon and the creation of long-term favorable conditions for the economy will also persist.
Last May, the Federal Reserve admitted that it had issued excessive production of cash to help in the enhancement of the value of fiat currencies while keeping recession away. The US was hit hard by the health crisis forcing the Federal Reserve to take the measures. According to the Fed, economic recovery will not end in 2020 instead it may stretch until the end of next year.
Jerome Powell, the Fed Chair termed the current state of things as the “biggest shock that the economy has had in living memory.” To help in smooth recovery, Powell said that the pumping of Fiat currencies is necessary for now.
The US looks For Other Methods Of Increasing Cash Flow
The acquisition of treasury bills and several other securities by the government is another strategy that the government is using to increase the supply of cash in the economy. All the implemented mechanisms are continuously reiterating the limitations of fiat currencies which may be overpriced or devalued according to a constant increase in the circulating supply.
That is not the case with Bitcoin. The flagship cryptocurrency is well-designed to hedge against the inflations that arise with a limited number of circulating supply. Continuous printing of fiat currencies is likely to happen for a long time to come.
Nancy Pelosi, U.S. House of Representative Speaker recently confirmed that trillions of dollars will eventually be printed to help in the provision of another COVID-19 relief fund in another bill. The bill proposes a maximum of $3 trillion needed for the finish off of the stimulus to the economy.
The Federal Reserve May Increase Bitcoin Investment Amounts
The effect of this unlimited currency pump may result in a new wave of institutional investors flocking into the crypto space. That will concurrently enhance the narrative that Bitcoin is a haven asset; as it happened in the first phase of 2020.
Paul Tudor Jones is a key example of one of such instances; where the investors acquired Bitcoin as a hedge against inflation. Q1 2020 saw an influx of new institutional investors who relied on Bitcoin as a fitting substitute over Fiat; and several other assets.
As the endless cycle of Fiat production continues; the second half of 2020 may see another wave of new institutional investors coming into the sector. Since inflation is a recurring event, the US government is expected to continually employ the pattern in the future. If that remains the case, Bitcoin is assured to channel in more institutional investors as time goes by.