The total monetary base went from 3.4 trillion dollars in January to 4.8 in August.
There are those who predict that the country could enter a period of inflation in 2021.
The total monetary base of the United States has expanded in 2020 to levels never seen before. According to Federal Reserve figures, the amount of money in the hands of the public and bank reserves went from $ 3.4 trillion in January to $ 4.8 trillion in August. In May there was a peak of 5.1 trillion, that is, about 5,149,500,000,000 dollars.
Although the figures are difficult to assimilate, preliminary estimates indicate that 22% of the total dollars in circulation It would have been printed in 2020. That is, in more than 200 years since the creation of the US currency, there was not such a large money supply.
The situation is reminiscent of the time when the dollar followed the gold standard and the monetary system was backed by the precious metal, which safeguarded its value and avoided discretionary inflation of supply. However, the situation changed in 1971 when President Richard Nixon eliminated the so-called Bretton Woods agreement.
Currently, the coronavirus pandemic and its ravages in the national economy are two factors that They would keep the central bank machines on for money printing. However, the growth of the monetary base goes beyond the health crisis.
Since 2008, with the real estate financial crisis, the numbers have done nothing but increase. In April of that year the monetary base was 830,000 million dollars. After the bubble burst, for subprime mortgages, the figure stood at 1.7 trillion dollars, an unprecedented record until then.
More recently, and according to a report published on October 1, it is noted that the Federal Reserve has injected more than $ 9 trillion in bailouts since September 2019, long before the start of the COVID-19 pandemic. From the foregoing it follows that what the health situation has done is to accelerate the issuance of money under the figure of stimulus or financial aid.
United States, inflation and bitcoin
There are those who go further and raise the possibility that the Federal Reserve would be protecting are the interests of the great capitals of Wall Street. Consulted by CriptoNoticias in April, the Mexican economist and trader @ CRYPTOHISPANO01 mentioned that this situation could create a new bubble in the medium term.
“The most important question is, can these loans be repaid? If not, we will see: inflation, more gap between upper and lower class, public debt and many bankruptcies, “said the analyst at that time.
Specialists agree that large-scale money printing could have a “boomerang” effect on the dollar, creating higher levels of inflation. The situation could start with a downward cycle for the dollar, which includes a possible uncontrolled inflation as a result of the fiscal deficit and current distortions, as trader Alberto Cárdenas previously highlighted to CriptoNoticias.
The analyst is one of those who thinks that a situation like that could benefit bitcoin in its listing on the markets. Others like Dan Morehead, CEO of Pantera Capital, believe that the first cryptocurrency could help people in the event of an adverse economic outcome. On printing money, Morehead stated in July the following:
“The United States printed more money in June than in the first two centuries after it was founded. Last month, the US budget deficit, about $ 864 billion, was greater than the total debt incurred from 1776 to the end of 1979.
A report published by this newspaper in September indicated that the public debt of the United States will exceed the size of the economy in 2020. For the Congressional Budget Office, the fiscal deficit of the United States will be this year about 3.3 trillion dollars. dollars, 16% of the Gross Domestic Product (GDP).