Bitcoin-Hating Federal Reserve Official Is Suggesting More Inflation Ahead

Neel Kaskari, a cryptocurrency critic and President of the Federal Reserve Bank of Minneapolis, called for another strict lockdown in the United States last week while speaking favorably about supporting inflation, he wrote in a New York Times op-ed.

Bitcoin is “Garbage,” but Fed Prints Money

Kashkari’s calls for another lockdown to save the US economy are touted, by him, to help “save the economy. He was joined by Michael T. Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, in his opinion, suggesting a state by state dictum was required to “crush the spread” of COVID-19. 

He said there “won’t be a robust economic recovery” unless the virus is controlled while stating a new six weeks, and stricter, lockdown is required.

Kashkari’s words come after an earlier statement that spurred heated discussions in the crypto community this year, noted Decrypt. He said the US Federal Reserve has an “infinite amount of cash” to pump the economy – causing Bitcoiners to push their narrative of an inflation-proof asset class.

The Minneapolis resident has been hard on cryptocurrencies for a while. In February this year, Kashkari said crypto was like a “giant garbage dumpster,” stating the US dollar’s scarcity made it valuable. 

But just one month later, the Federal Reserve launched a record $2.3 trillion rescue package; ironic given its statement on the USD’s scarcity. 

Inflation Good for Bitcoin

Such a large stimulus package is regarded by some Bitcoin-faithful as reckless; Bitcoin’s monetary policy, however, is hard-coded into its consensus mechanism, noted Decrypt.

Gemini co-founder Cameron Winklevoss noted the drastic fall of the dollar as a store-of-value in the past century; using everyday items as an example:

A General Store was once called a nickel store. Over time, it became called a five-and-dime store (all items priced at either 5 or 10 cents). Today, it's called a dollar store. Soon, it will be called a ten dollar store. #Inflation #Bitcoin

— Cameron Winklevoss (@cameron) August 4, 2020

For some in the industry, the proposed inflation is a positive sign for Bitcoin and other cryptocurrencies; a “killer app” moment for the industry.

Last week, CNBC noted the US Federal Reserve would draft a policy outline that favors low-interest rates and higher inflation as it pursues a return to pre-pandemic levels of economic activity. 

Jameson Lopp, CTO of Bitcoin storage company Casa, commented on the announcement of higher interest rates:

“The Fed is expected to make a major commitment to devaluing your money. Whatcha gonna do about it?”

Inflation fears have already started to spur up discussions among the broader hedge fund industry. As BTCManager reported this May, Paul Tudor Jones, founder of asset management firm Tudor Investments, revealed that his firm holds one percent of its assets in Bitcoin, singling out inflation as a chief concern.