Topic: Why FED like bitcoin - page 2. (Read 4509 times)

I'm sure you will spend more when your coin worth 1 million each 
Fed is appointed by government, they have huge problem now and maybe bitcoin is their only hope

It is not,
(We are discussing what Fed would think of bitcoin and I am thinking of one reason they may like it.)

Many goods we trade in we can not eat, I see this as an opportunity to make bacon a currency !

So let's examine this scenario: Government prints money, gives to banks, banks lend to people, people buy bubble item of the month, sorry, I mean Bitcoin, bubble bursts, money disappears, bankers get rich, politicians get rich, public gets shafted.

Sorry, how is this any different than SOP?

putting money in the bank or in buying Bitcoin does not increase spending in society.

Bitcoin related businesses might be able to hire more people that in turn spend more for their sallary, but any amount of saving or speculating, counter act the intended effect of printing more money.

if Bitcoin some day is considered in general to be the safe and easy alternative way to protect your savings against inflation, the government will have to act on Bitcoin, either by siezeing it or  capital tax holdings.

Are you crazy, no government would allow that and be able survive.

The second situation sounds great

Fed at least will not hate bitcoin too much, since bitcoin will not substitute fiat for the simple reason it is not the denomination of debt and tax, thus business can operate in bitcoin, but still accounting for dollar in the US.  But since the convenience and limited supply of bitcoin, it can form a "bubble", that is much needed when economy is shrinking and debt/credit creation slows.

Simple think this way, it has always been housing and new mortgages that brought US economies out of recessions in the last several cases, now fed have another thing in mind - fuel a bitcoin bubble and bitcoin mortgage to drive the economy (I am not saying this is good policy, but some central bankers may consider this as an option)

You can not eat gold either

Same as gold and stock, theoretically they worth a lot, but if everyone is going to sell them for real goods, their value will drop like a falling stone, holding them and feel getting richer and safer is an illusion, but people like this illusion and they will spend more when they have this illusion

A human body is also a complex beast, but you just need some common sense to know his reaction without need to know how his brain works

banks doesnt care for the poeple when there is a recession

Ben just printed 1 trillion dollar, where would them go?

Compare 2 alternatives

1. He lend them to government to setup some project, hire some worker, make some products. At first, this will create some jobs, but after a while, production increased, competition get hard, price level will go down, some other companies shut down and jobless rate increase again. Since computer and automation solutions are continuously deployed everywhere, less and less people will be required, and the government project can not fight against such a big trend

2. He lend them to people to buy bitcoin. After a while, bitcoin prices are on the steady rise, and everyone join the game wins, they start to spend big , more business are rushing into this new economy, and other companies will expand their capacity to meet the rising demand

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The core reason for a recession is simply caused by one fact: People do not have enough money to spend

So it is clear that in alternative 1, majority of people still don't have money, they just had another consumption option which might deplete their saving further, it does not really help them to get out of their trouble

But in alternative 2, people will get rich from buying bitcoin, and then they have money, they have saving, and they will spend, the recession will end naturally