https://ift.tt/3sGHotK Federal Reserve’s Increasing Interest in Bitcoin

An interesting and overlooked tidbit:

The Federal Reserve would love to have an asset on its books that basically inflated forever, as it would solve several problems for them.

Remember every dollar that the Fed issues is a “Liability” on its balance sheet, and needs to be offset by an entry in the “Asset” column. Traditionally this is done by “Bonds”…but the perverse nature of this is that it creates an endless debt cycle. More bonds, enable more printing, but greater debt induces more pressure to print.

Bitcoin offers the Fed a way out of this trap.

In fact, this was Gold’s intended role in 1971…The Fed envisioned that Gold would rise forever against the dollar and serve as the primary Asset item on the balance sheet.

For understandable, but ultimately misguided reasons, Congress passed a law in 1973 forcing the Fed to value its Gold holdings at a set $42.22/oz. Thus, Bitcoin (immune from this statutory price cap) offers the Fed an alternative way out.

Source (https://www.federalreserve.gov/faqs/does-the-federal-reserve-own-or-hold-gold.htm)