The Federal Reserve did not raise rates for the first time since the inflation-inspired start of its rapid interest rate expansion. However, crypto continues its downward slide. Fed intervention A Fed pivot is on the horizon even though it may not start to actually reduce interest rates until next year. This was certainly coming given that the current mad series of interest rate hikes is forcing the economy into recession. Never before has the Fed tightened as quickly and as harshly as this following Biden and Yellen’s claims back in July of 2021 that inflation was only “temporary”. History tells us that our boom and bust cycles are caused by government and central bank manipulation of credit, and that government intervention in the markets is always a bad thing and could probably be said to be axiomatic. Attempted eradication of crypto In such a chaotic world where the dollar and all other fiat currencies are being debased like crazy, it appears that the last thing the US government needs is the slightest hint of competition to its currency. It could be argued that the government sees this competition coming on two fronts. It is now understanding the full import of cryptocurrencies - which might be classified as a type of private money. After huge successes for some cryptocurrencies, admittedly mostly driven by hype and speculation, the US government has probably decided to try and eradicate them through the auspices of its enforcement agencies (SEC and CFTC). A systemic attack on the crypto ecosystem is now taking place and lacking liquidity and with many crypto investors fleeing the sector the market is bleeding out. Bitcoin unassailable? However, there is one cryptocurrency that even the US government would have the devil of a job in taking down, and that is bitcoin. Bitcoin is the most decentralised and secure private money that exists in the world today, and given that it runs purely on code there is nothing any government or agency can do to stop it. Be that as it may, the rest of the market is obviously having an effect on bitcoin as large crypto businesses run into difficulties with sizable chunks of bitcoin on their books, and Mt Gox and the US government are selling their bitcoin into the market. Once this selling pressure is gone though it might be expected that bitcoin would begin a dramatic rise as investors rush out of a worsening dollar, to say nothing of the rest of the fiat currencies. BRICS currency on the horizon The other front where the US can expect huge competition is from the BRICS nations. In August, at a Summit in South Africa, these nations are expected to announce a new currency which could be backed by gold and/or other commodities, or could even become a rival reserve currency to the dollar by having its own deep and liquid bond market, with the bonds bought by citizens in 20 or so countries that are in or on the point of joining the BRICS nations. So whether it be Bitcoin or the BRICS nations, the dollar is likely to undergo the most profound and serious rivalry since it came into existence. With the unpayable debts owed by the US government and nothing but thin air and promises backing the currency, a new world order may be on the way. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
