The infinite supply of dollars will generate a significant decrease in its value

In the week of March 18-25, the Federal Reserve’s balance sheet shows that outstanding dollars increased from $ 586 billion to $ 5.25 trillion. Basically, the Fed issued about $ 970,000 every second during this period. In other words, the US central bank printed the equivalent of the Bitcoin market cap every 35 hours.

The reason for the financial efforts was the attempt to boost the economy affected by the coronavirus pandemic.

According to Bloomberg, this is the first time the Fed balance sheet has exceeded $ 5 trillion. Investor panic has prompted the central bank to launch several liquidity initiatives, such as bond buying programs. It seems that the magnitude of its current efforts is much larger than the similar initiatives that the Fed took in the last financial crisis of 2008.

Endless supply of dollars

US authorities have agreed on a $ 6 trillion incentive package. This will include the distribution of $ 560 billion to individuals and $ 500 billion to corporations.

Although these seem hard to accept, the Federal Reserve has shown its willingness to continue its cash injection efforts. Neel Kashkari, president of the Federal Reserve in Minneapolis, said March 22 that the institution has an “infinite amount of cash.”

In an interview for the “60 minutes” show, Kashkari said:

“There is enough cash in the financial system and there is an infinite amount of cash at the Federal Reserve. We will do everything we need to do to ensure that there is sufficient cash in the banking system. ”

The problem is that the infinite supply of dollars will generate a significant decrease in its value.
By comparison, Bitcoin’s offer is limited, which means that the value of the cryptocurrency increases automatically over time.