Friday, December 3

Will the gigantic dollar printing continue? The US ratified Jerome Powell at the Fed

Key facts:
  • President Joe Biden praised the management of the official, who has held the position since 2017.

  • The FED controls the monetary policy of a country that breaks emission and inflation records.

On Monday, November 22, the president of the United States, Joe Biden, ratified Jerome Powell as president of the Federal Reserve System (FED) of that country. This official ordered a historic issuance of dollars in 2020 and is pointed out as one of the main responsible for the inflation suffered by the currency.

While the president’s nomination has yet to be approved by the Senate, it is almost a given that Powell will continue in office for another four-year term., after official announcement in which Biden himself ratified the new mandate. Lael Brainard, who until now served as a member of the Central Bank’s board of governors, will be in charge of the vice presidency.

In a release Shared with American journalists, Biden said that during his tenure the country has made “remarkable progress in the last 10 months to get Americans back to work and the economy to move forward again.” Likewise, the president assured that the FED needs “stability and independence” to continue “the successful path of this year”, in reference to 2021.

Powell was appointed to head the Federal Reserve for the first time in 2017, although he took office in February of the following year. The president at that time was Donald Trump, of the Republican Party, so the decision of Democrat Biden expresses the bipartisan approach that he intends to give his government.

Erome Powell is responsible for the massive monetary issue that the US had in 2020 and bitcoiners memes about its management abound. Source:

A nod from the United States to the markets

The Federal Reserve acts as the Central Bank in the United States. It is a public-private entity made up of a Board of Governors, the Federal Open Market Committee, 12 regional Federal Reserve banks, and private banks. Its mission is to control the banks’ reserves and determine in part the monetary policy in the North American country.

The impact of Powell’s renovation was good on the market. Following the communication from Biden, US stock indices temporarily rose -although Nasdaq and S&P 500 they closed the day down – and so did the Treasury bonds.

This could be interpreted following the logic that, according to some analysts, investors would want to “get rid” of the dollars and, to that end, turn to the stock market. In addition, the price of bitcoin (BTC) also had a similar effect of momentary rise on Monday, although then its price also fell. The variation in the price of the cryptocurrency could also be seen as a “profit taking” by traders taking advantage of this movement.

Powell, haunted by the shadow of inflation

During 2021, there were several times in which it was explained in CriptoNoticias the almost unprecedented inflation crisis facing the United States. In April of that year, the country registered the highest inflation in the last 12 years, with increases of up to 25% year-on-year in energy rates.

Two months later, in June, the situation worsened. At that time, annual inflation of 5.4% marked a maximum that had not been reached since 2008. Finally, in November there is already talk of the highest inflation in the country in the last 30 years, which in turn coincide with the historical highs of the price of bitcoin. Thus, the cryptocurrency “threatens” to dethrone the dollar as a store of value worldwide.

The issuance of dollars during 2020 was the largest in the history of the United States. Source: Federal Reserve.

One possible explanation for this phenomenon is the constant “brrr” that has been heard in the United States during 2020. That sound is that of the banknote printing machine, which has had a lot of work lately. During the year in which the pandemic exploded worldwide, the issuance of the dollar was very high: at least 22% of this currency in circulation was printed that year.

In addition, to mitigate the economic effects of the pandemic, among other objectives, the United States approved the Infrastructure Law, which provides for the spending of one trillion dollars. Although taxes will be applied to industries that previously did not pay them, such as some of the activities related to cryptocurrencies, many opponents of the law believe that it will be financed on a print basis. This would translate, they say, into a weaker dollar and more inflation in the country.

Leave a Reply

Your email address will not be published. Required fields are marked *