The United States Dollar seems to be in a deep crisis that is threatening its very dominance as the primary global reserve currency. The impact of the ravaging Covid-19 pandemic has only made matters worse.
Glut of U.S. Dollars
A well-known Bitcoin critic and current CEO of Euro Pacific Capital Peter Schiff believes the ongoing circumstances threaten the very existence of the USD and could quickly bring it down. Schiff took to Twitter to share his concerns on the prevailing economic situation in the United States and the ongoing civil unrest caused by the death of George Floyd at the hands of the police. He stated:
“When the Covid-19 crisis began, there was a surge in demand for U.S. dollars. The Fed was happy to satisfy that demand by printing trillions for the U.S. government to spend. There is now a glut of U.S. dollars that no one needs or wants. The stage is now set for a dollar crash.”
Inflated Dollar Supply
A report in Bloomberg suggests that the root of the problem appears to be the U.S. Federal Reserve’s response to the impact of coronavirus on the economy. The Fed went on to print over six trillion USD in the face of the pandemic that originated in China and has wreaked havoc in most of Asia and Europe, leading to lockdowns and quarantines. The “wild” response by the FED has inflated the dollar supply at a time when the world’s biggest cryptocurrency has cut its supply in half once again.
A chart comparing the United States money supply with Bitcoin posted on Twitter by Robert Breedlove, the CEO of Parallax Digital, a digital asset investment company shows bitcoin leveling while the dollars is parabolic. The chart indicates strikingly distinctive paths taken by the two currencies in the wake of a worldwide pandemic whose full force landed in March. Bitcoin has a finite supply and the number of coins halves after every 2016 blocks. Bitcoin halving seems to have coincided with the mass printing of the U.S. fiat currency.
Good News for Bitcoin
As this unfolds, Binance Exchange CEO Changpeng Zhao (C.Z.) believes it’s time for Bitcoin to emerge as the possible solution in the aftermath of the Covid-19 crisis. C.Z. had in earlier tweets expressed his fear that hyperinflation was imminent and would mean trouble for small businesses. However, he believes that this would be good news for Bitcoin. C.Z. tweeted:
“2020 is not a kind year:
1. COVID19, hospital overrun
2. Quarantine, shutdown of economy, Q.E.
3. Looting, police brutality and we are not even halfway yet, soon:
4. Hyperinflation, fiat wealth for retail guys get wiped.”
As the current crisis rages, bitcoin seems to be showing the kind of curve that the U.S. and other governments are wishing to see regarding the coronavirus. Printing excess money to solve the problem seems to have achieved the opposite result.