For the fourth consecutive day, the Federal Reserve has printed out billions of dollars. This comes in an effort to stabilize the financial market that has been hit by a new wave of volatility. The FED enacts the “repurchase operation” right with the new operation. This allows the FED to print out money and give it to banks in exchange for pledged collateral. The FED began doing this four days ago, with the first injection totaling $75 billion.
One notable point remains that the FED has avoided this measure for nearly a decade. The special operation dates back to the 2008 financial crisis. Although this has continued for four consecutive days, it remains unclear how long it will go on. With many investors wary of what happened back in 2008, there is great concern that this coupled with other economic factors, the US economy could be headed for trouble. One of the key factors that have investors rattled is the ongoing trade war with China.
The two countries are still locked in negotiations with no end in sight and none looking like they will blink. If this prolongs, it could have a catastrophic effect on the economy. This however exactly one of the reasons the FED is having to calm the market.
Does The FED Recent Activity Call For Precaution?
One key and undoubtedly income from the FED’s recent activities is the weakening of the dollar. With so much money printed out of thin air, the US will be losing in the international markets. A recession in the next 12 months remains possible but farfetched. For Bitcoin enthusiasts, there is plenty of armor to get excited about prices rallying. Bitcoin was born out of the 2008 financial crisis for the sole purpose of that repeating. If the politicians and governments organizations, and banks are beginning to misbehave again, it might be time for Bitcoin to swoop in. Finally rising up to the occasion it has been preparing for in a decade.
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