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12 Reasons Why Fed’s Money Printing Policy Won’t Change Under Biden

All 12 Fed regional bank presidents have been given new five-year terms.

Republished by Plato

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In brief

  • The Federal Reserve controls US monetary policy.
  • The Fed reappointed all 12 Reserve Bank presidents to five-year terms.
  • The central bank has embraced an expansionist monetary policy and higher inflation targets.

The US Federal Reserve, the nation’s central bank, has reappointed all 12 Federal Reserve Bank presidents and their current deputies to fresh five-year terms, according to a press release today. The process was overseen by Federal Reserve Governor Lael Brainard.

Reserve banks don’t only carry out the monetary policy of the Fed. Their leaders also feed into those policy decisions. That means that the people behind the monetary policy instituted by the Fed during the Trump administration should carry over into the Biden era.

As a result, from 2021 to 2026, the Fed may again resort to printing US dollars in a bid to stimulate the economy during a downturn. Though it may face new pressures from Democratic lawmakers, especially on the issue of economic inequality, there’s no reason to think it will discontinue its policy of keeping interest rates low as it targets higher inflation targets.

Those strategies have been critiqued by Bitcoin enthusiasts, who generally loathe government-induced inflation (though are thus far tolerant of price volatility), as it represents the ability of those in power to devalue the money people have.

In the span of two days last March, as the stock markets slumped in response to looming coronavirus pandemic lockdowns, the Fed printed $1 trillion for short-term loans. Before the year was through, it had printed over $3 trillion total, increasing its balance sheet by around 75%.

That large influx of cash, however, has yet to impact inflation, mainly due to a jump in unemployment rates; when many people have less money to spend on goods and services, prices tend to stay depressed.

But, under Fed Chair Jerome Powell, the bank last summer announced a plan to actually target higher inflation rates—above 2%—after inflation has consistently fallen short of that mark. Powell explained the “counterintuitive” reason for boosting inflation in an August speech. If inflation remains too low, he said, the Fed “would have less scope to cut interest rates to boost employment during an economic downturn, further diminishing our capacity to stabilize the economy through cutting interest rates.”

In other words, the Fed would have fewer tools to manage future crises like this one.

Mainstream economic thought on inflation holds with Paracelsus’ famous adage: “The dose makes the poison.” Too much inflation is bad, but just enough can be good for the economy overall.

That’s a point that even Binance seems to agree with. In an article on inflation, it wrote: “The effects of inflation are such that we witness prices increase over time, causing the cost of living to rise. It’s a phenomenon that we’ve come to accept—after all, if it’s controlled correctly, inflation can be beneficial to the economy.”

Yet many Bitcoin enthusiasts don’t trust governments to control it correctly because the power to money-print out of catastrophe is too tempting.

Speaking to Decrypt in March, Shapeshift CEO Erik Voorhees said, “Fiat has always been infinite. Central banks never stop creating it, and this is why it loses value every year, forever. What changed now though is the rate of creation. They’ve decided to create as much fiat money as they can fathom.”

“Bitcoiners have always known that fiat detached from some kind of peg (i.e. gold) always ends up with the abuse of money printing,” INX Managing Director Alan Silbert told Decrypt. “Governments can’t help themselves.”

The latest (same) batch of Federal Reserve Bank presidents—and the bulk of the Board of Governors in Washington—have another five years to prove them wrong.

Blockchain

Craig Wright Sues Bitcoin Developers Over Stolen BTC Worth $5 Billion

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The self-proclaimed Satoshi Nakamoto, Craig Wright, has filed yet another lawsuit within the cryptocurrency industry. This time, he has targeted the developers of BTC, BCH, BSV, and BCH ABC requesting that they retrieve access to BTC stolen from his personal computer worth about $5 billion.

CSW Sues BTC Developers Because he was Hacked

Wright has publicly claimed that he is the person behind the Bitcoin network for years – Satoshi Nakamoto. This narrative, which lacks any conclusive evidence, has been highlighted once more by the latest law firm that will represent him in his most recent lawsuit against representatives of the cryptocurrency space.

Ontier, a UK-based litigation law firm, has published a press release asserting that it has informed the developers of Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), and Bitcoin Cash ABC (BCH ABC) of the lawsuit.

With these “ground-breaking legal proceedings,” the firm acts on behalf of Tulip Trading Limited (TTL) – a Seychelles-based company with a primary beneficial owner – Craig Wright. The nature of the lawsuit is somewhat controversial, to say the least.

“In February 2020, Dr. Wright’s personal computer was hacked by persons unknown and encrypted private keys to two addresses, which hold substantial quantities of Bitcoin belonging to TTL, were stolen. These assets were, and continue to be, owned by TTL. The theft is the subject of an ongoing investigation by the Cyber Crime division of the South East England Regional Organized Crime Unit.”

Consequently, the lawsuit has requested that the developers “enable TTL to regain access to and control of its Bitcoin on the grounds that they owe Bitcoin owners both tortious and fiduciary duties under English law as a result of the high level of power and control they hold over their respective blockchains.”

Per their estimation, the sizeable amount has a value of over £3.5 billion or about $5 billion.

More to Follow?

Paul Ferguson, a Partner at Ontier, commented that Wright, the supposed creator of BTC, has “always intended Bitcoin to operate within existing laws.” Moreover, he believes that the Bitcoin developers have the power and obligation to deploy code to “enable the rightful owner to regain control” of his assets.

Should Wright’s lawsuit succeed, others in a similar position could follow suit, added Ferguson.

Craig Wright is no stranger to initiating lawsuits against crypto industry representatives. In his previous one, his lawyers requested two Bitcoin-related websites to remove the BTC whitepaper, which received quite adverse reactions from the community.

Featured Image Courtesy of TheConversation

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Source: https://cryptopotato.com/craig-wright-sues-bitcoin-developers-over-stolen-btc-worth-5-billion/

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All of the Federal Reserve’s wire and ACH systems are down

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All of the services available through the Federal Reserve’s online portal have been down for more than an hour.

According to the Federal Reserve Bank Services’ website, the bank is experiencing a disruption in its account services, central bank, Check 21, check adjustments, FedACH, FedCash, FedLine Advantage, FedLine Command, FedLine Direct, FedLine Web, Fedwire Funds, Fedwire Securities, and National Settlement — all services typically available — which started at 6:18 PM UTC today. In addition, all the access solutions that the Fed offers, with the exception of FedMail, are also offline.

Washington Post reporter Rachel Leah Siegel reportedly received an alert from the Fed saying its staff were “currently investigating a disruption to multiple services” and would “continue to provide updates as soon as they are available.”

“A Federal Reserve operational error resulted in disruption of service in several business lines,” said Jim Strader from the  Federal Reserve Bank of Richmond. “We are restoring services and are communicating with all Federal Reserve Financial Services customers about the status of operations.”

This story is developing and will be updated.

Source: https://cointelegraph.com/news/all-of-the-federal-reserve-s-wire-and-ach-systems-are-down

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Why it’s critical to monitor Bitcoin miners’ position over the next 2 weeks

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The narrative of a bear-led correction is always around, even during the headiest of bull runs. A similar situation is unraveling at the moment, with many still expecting Bitcoin’s performance to take a more calamitous turn.

At press time, while Bitcoin had recovered to climb north of $50,000, some key on-chain metrics seemed to suggest that selling pressure might not be done yet, especially on the miners’ side.

Bitcoin Miners’ Outflow Multiple, Volumes on the rise

Source: Twitter

According to Glassnode data, Bitcoin Miner Outflow Multiple climbed to touch a monthly high after BTC’s decline on the charts. The aforementioned metric relates to the period of time when the amount of Bitcoin flowing out of miners’ addresses is higher than the historical average.

Alongside the same, Outflow volumes of Bitcoin miners also climbed to a 1-month high with over $4.5 million on a 7-day average.

Now, while at first glance that may sound concerning over the short-term, the fact of the matter is that the long-term perspective is still in the green.

Source: CryptoQuant

The Miners’ Position Index is a good example. When the market was correcting back in mid-January, the MPI had surged to a high of 12.65, underlining extremely high selling pressure from miners (An Index reading of over 2 suggests that a majority of miners are selling). On the contrary, the latest drop in Bitcoin’s price pushed the MPI only up to 3.50, with the same down to 2.56, at press time.

Further, additional data seemed to suggest that small miner outflows may have contributed to high outflow volumes since these entities need to balance out their cash reserves on a consistent basis.

Bitcoin hashrate and difficulty is still relatively high

The relative hashrate for Bitcoin has dropped over the course of February, but it is important to note that over the past 3 days, the relative change is very negligible. In fact, the current hashrate is still well above 2020’s highest rate, a finding that means that miners are still active and possibly profitable, despite corrections being the norm for most of the past 24-36 hours.

Source: blockchain

On the question of mining difficulty, the attached chart seemed to suggest that the difficulty was at an all-time high on 23 February with a hashrate of 21.724t. With a difficulty adjustment imminent on the charts, a minor correction would mean that bear-led corrections would not be dragged forward due to miners’ activity.

That being said, it remains critical to monitor miners’ position over the next couple of weeks.


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Source: https://ambcrypto.com/why-its-critical-to-monitor-bitcoin-miners-position-over-the-next-2-weeks

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