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Federal Reserve’s Money Printing is Digital Currency Creation — And this is Concerning

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Even before the Covid-19 pandemic spurred the global reaction to try and prop up economies and stop any major recession, or even depression ,there was already big evidence of quantitative easing and dovish policies, as well as mass money printing. 

Money printing is seen as a necessary evil in times of financial uncertainty and worry as it is intended to help incite more spending and increase liquidity for the economy, but the negative side of this is that it can lead to inflation, and even the ever dangerous hyperinflation, which devalues the value of a currency. 

At the same time, while this money printing is going on, and the Federal Reserve especially has said it is not afraid to print unlimited money — Bitcoin is currently cutting its inflationary direction as it is now under the two percent mark — something that the central banks look for in healthy currencies. 

However, the printing of money is not what many invade, with massive printing machines pushing out pages of dollars, it is far easier than that, and is actually a creation of digital currencies. More reason to worry about inflation in terms of how easily this digital money can be created, and how little accountability or transparency there is — and this shines a big spotlight on Bitcoin’s potential. 

Creating digital currencies

There has been talk of creating what are known as central bank digital currencies, which would be blockchain based, but before this consideration comes to be — which will probably only be years down the line — the creation of money is currently digital (rather than virtual)

In an interview, Chair of the United States Federal Reserve Jerome Powell, said the Fed had essentially flooded the economy with money printed in response to the Dow Jones falling in March and investors turning away from US Treasuries.

According to Powell, the Fed can print US. dollars digitally in addition to creating physical bills:

“As a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.”

When asked if the Fed could do more during the pandemic, Powell said it was “not out of ammunition by a long shot,” stating the bank would enlarge its existing lending programs for “as long as we need to.”

Painting Bitcoin in a better light

The notion of digital currencies and having the possibility to use currency in the digital realm are obviously clear and obvious to the Fed and others that makes Bitcoin all that more enticing. But what is really essential for users of currency would be the transparency and clarity that blockchain offers. 

While Bitcoin is not going to take over the dollar in popular usage, the potential of making currency on the blockchain would seem like a good alternative to the two arguments. 

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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