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Crypto Fans Angry Over Fed Decision to Buy Corporate Bonds

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The Fed has announced that it will be purchasing corporate bonds and ETFs, and the crypto community isn’t too happy about the decision.

The Fed Comes to the Rescue Again?

The choice comes following economic turmoil as the coronavirus has forced the United States – and several regions abroad – to shut down its businesses and operations so that people can avoid contracting the illness. The shutdown was designed to slow the spread of the virus, but now that things are opening up, the media continues to report that cases are rising, which makes one wonder if the shutdown was even necessary or helpful in the first place.

Either way, there’s a lot of catching up to do, and it seems America wants big business to stick around, for without it, there is no American economy. The Fed can purchase three quarters of a billion dollars-worth of corporate bonds as part of this new program it’s implementing. Fed Chairman Jerome Powell explained in a statement:

Over time, we’ll gradually move away from ETFs and move to buying bonds. It’s a better tool for supporting liquidity and market functioning.

Naturally, crypto fans aren’t crazy about the Fed’s ideas. Many experts have taken to social media and other platforms to explain the reasoning behind why crypto fans want to see bitcoin – and only bitcoin – move ahead as the ultimate hedge against financial disaster.

One idea comes from Dan Schatt, the CEO of crypto lending service Cred. He argues that many people no longer see the Fed as serving as a financial overseer. Rather, the branch is looking to become the financial system for the United States, which goes against its status and puts too much power in the government’s hands. In an interview, he states:

The Fed’s role has gone from setting interest rates to acting as a buyer of last resort to serving as a wholesale buyer of stocks, bonds, ETFs and anything else it can get its hands on. Everything now starts and ends with the Fed, which cannot be healthy for an economy. When the Fed’s stabilizers are removed, will the economy keep coasting, or will it veer off the road and crash? We may be reaching a point where the stock market is unable to avoid contraction without permanent Fed assistance.

This Strategy Isn’t Working

Meltem Demirors – chief strategy officer at Coin Shares – offered similar sentiment, explaining:

Looking at the lessons learned from Japan when the Bank of Japan has been pressing the ‘print’ button for the last 30 years and the impact it’s had on markets there. I see the U.S. heading in a similar direction. I don’t think the Fed will be able to stop the stimulus anytime soon, especially given the sheer amount of leverage in the market and the pension funding gap.

Nick Marinoff
Nick Marinoffhttps://www.livebitcoinnews.com/
Nick Marinoff is currently a lead news writer and editor for Money & Tech, a San Francisco-based broadcasting station that reports on all things digital currency-related. He has also written for a number of other online and print publications including Black Impact Magazine, EKT Interactive, Seal Beach USA and Benzinga.com, to name a few. He has recently published his first e-book "Take a 'Loan' Off Your Shoulders: 14 Simple Tricks for Graduating Debt Free" now available on Amazon. He is excited about the potential digital currency offers, particularly its ability to finance unbanked populations and bring nations together financially.

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