More cracks seem to be appearing in US financial markets as the central bank has to step in once again with a rescue effort. A spike in overnight borrowing rates has set alarm bells ringing as the economy teeters on a precipice which could lead to another recession. Good news for bitcoin?
Fed Meddles Again
Warning lights flashed red in a corner of the markets the public rarely notices yesterday. According to CNN, the New York Federal Reserve came to the rescue with a special operation aimed at easing stress in financial markets following a spike in overnight borrowing rates.
It has been the first such intervention by the Fed since the rocky days of 2008. The central bank attempted to ease pressure in markets by purchasing Treasuries and other securities with an aim to pump money into the system in order to keep borrowing costs from creeping above its target range.
Unlike bitcoin’s scarce supply structure, it is effectively market manipulation on a grand scale as $53 billion was injected into the financial system. The move demonstrates escalating economic tensions as the printing machines keep churning out the fiat. Managing director of fixed income strategy at Janney Capital Markets, Guy LeBas, added that markets are clearly stressed.
Bitcoin space observers pointed out that the Fed has been ‘producing money’ on a massive scale since the last crisis.
“Since 2008 the Federal Reserve has printed $31,000,000 per hour.”
Since 2008 the Federal Reserve has printed $31,000,000 per hour.
— O₿iWan (@ObiWanKenoBit) September 17, 2019
Unlike Bitcoin, Fed To ‘Flood’ Markets Again
The Fed announced that it would continue flooding the markets today with an additional $75 billion repurchase effort.