Fed Chair Vows to Pump Bitcoin, Prop up Stock Market, & Dump USD
The Federal Reserve vowed to keep on throwing cash into financial markets until the US economic recovery is ensured.
The Fed had a meeting on Wednesday following which Chairman Jerome Powell said the central banks’ tools are not well-suited to the issues faced by businesses and households.
“The parts of the economy that are weak are the service-sector businesses that involve close contact,” such as restaurants and the travel industry, which aren’t held by financial conditions but by the spread of the virus, said Powell in a news conference following the two-day meeting.
Struggling businesses and unemployed households are more in need of immediate cash, he said.
“The issue is the next four, five, six months,” Powell told reporters, adding it would be “some time in the middle of next year” when economic activity will surge.
The Fed also boosted its outlook for the economies’ performance this year and next year, with GDP now expected to get hit by just 2.4% in 2020, lower than the previous 6.5% decline projection.
With interest rates to be kept at zero for years to come, the central bank said it would continue its current bond-buying program until “substantial further progress” is seen in employment and in hitting the 2% inflation target — a policy stance Powell called “appropriate.”
Crypto is transiting the first year of a multi-year bull market. The monetary supply has exploded. Stocks are flying. Real yields are negative. Crypto assets are neither in a bubble nor expensive. For as long as real yields don't spike in 2021, should have another great year. pic.twitter.com/wNW18bl8bH
— Alex Krüger (@krugermacro) December 16, 2020
“The central bank just announced that they would continue the extraordinarily high level of quantitative easing until unemployment returns to normal levels. So basically, they'll keep throwing money at the rich rather than at the problem itself,” wrote analyst Mati Greenspan in his daily newsletter Quantum Economics. He added,
“It's no wonder bitcoin rallied passed $20,000 today. The institutions have every reason to be FOMOing in right now.”
Unlike Bitcoin’s wild performance, which went past $23,000 to nearly $24k, gold only jumped to the $1,880 level. Nasdaq Composite closed at a record high with S&P 500 also trading higher. The US Dollar meanwhile edged lower under 90.
In Congress, lawmakers are also “closing in on” a $900 billion COVID-19 stimulus relief that includes $600 to $700 checks and extended unemployment benefits. Powell said,
“Although there has been much progress in the labor market since the spring, we will not lose sight of the millions of Americans who remain out of work.”