Cameron Winklevoss may be willing to allow regulators into his Gemini Bitcoin and cryptocurrency exchange, but he isn’t a big fan of the Federal Reserve (Fed). He recently made his sentiments known regarding monetary policies in the U.S. since 2008 on Twitter.
The issue at hand is inflation. Governments retain the ability to manage liquid cash in their respective economies. Gross overproduction of cash generally results in inflation — with the net impact being loss in value for each unit of currency.
20 Trillion Reasons to Own Bitcoin
The printing of more than 20 trillion dollars in cash by the Fed, as Winklevoss pointed out (apparently using older data from 2012), only increases the overall amount of dollars in the U.S. economy. The problem with this overzealous printing is that the economy has not kept pace with this level of monetary creation.
The Fed has printed $2 trillion dollars since the 2008 financial crisis (increasing balance sheet by ~3x). 2 trillion reasons why you should own bitcoin.
— Cameron Winklevoss (@winklevoss) October 20, 2019
The result is that the ‘balance sheet’ for the U.S. economy has risen to a level three times greater than it was at the time of the crisis. Essentially, while some production has increased, the net result is that each dollar is worth dramatically less than it was at that time.
The reality is that, when the crisis occurred, most argued that injecting liquidity into the system was necessary. However, the Fed’s policies have seen little deviation in spite of massive market growth and economic recovery since then.
Short the Fed
Instead, while most would have seen a reduction in liquidity generation, the Fed has done the opposite. The net result is the potential for massive inflation and the eventual loss of the value of each dollar.
The answer from Cameron Winklevoss is to buy Bitcoin. Because Bitcoin is wholly unregulated, it is protected from government interference. Ultimately, inflation within Bitcoin only happens through block generation, forcing a gradual and regulated increase.
Do you think Bitcoin is the answer to the unmitigated Fed financial liquidity? Will the Fed be able to turn the ship around in time before inflation decimates the economy? Let us know your thoughts in the comments below!
Images courtesy of Twitter, Shutterstock.