Bitcoin and the economy are inextricably linked with each other. The cryptomunt is being developed as a response to the economic crisis of 2008. For many, it must have bitcoin, therefore, as a Plan for lwa.
At this point, it seems to be economically good for a while, but more and more signs point to a recession. We keep every Tuesday, a topic from the macro-economic environment is increasing. In order for us not to forget why bitcoin was developed.
Last week, we talked about the obligatiebubbel. This bulb is not to be divorced from the Quantitative Easing (QE). In this article, you can read what it means, and what the consequences will be. This may be an opportunity for bitcoin?
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Contents
What is Quantitative Easing?
Quantitative Easing (QE meaning quantitative easing. There, you’ll probably still be pretty disappointed. By extension it is also known to create the money. QE, thus, the creation of money by central banks.
But the central banks are creating, not just money. They can use this money for effects to buy, such as treasury bonds. And that the buy-back of securities may be a number of reasons.
Japan was the first one. They have been using for more than 15 years of Quantitative Easing to deflation (in prices) from entering the system. The assets to buy it, there is more money in the economy. The money is worth less and less, so the prices are going to rise.
After that it was QE, is used as a measure to ensure financial stability after the economic crisis of 2008. First, the Federal Reserve system in America in 2008, and as of 2014, the European Central Bank.
These are the central banks have promised that before with the OE program to stop it. However, recently it became known that the FEDERAL reserve and the ECB will continue with QE. Starting from next month to buy the central banks on a global level again and again for billions of dollars and euros in bonds.
What is the purpose of QE?
The idea behind QE is to have price stability is to be monitored. And central banks by assets, such as bonds, to buy it. In this way, there will be more money in the economy. The banks then have more money to lend, and that will push interest rates down. This means that borrowing and spending more attractive.
But QE also has other effects. If there is more money in circulation will flow on to other markets. This can lead to a massive bubble, for example, in the stock market, the housing market and the bond market. And that is a risk. In the worst case, it may be a new crisis if the bubble bursts.
In America, there have been several rounds of QE have been. In the chart below, you can see the effect of QE on the stock market, is clear:
But that’s not all of it. Because there is more money in circulation is the currency worth less and less. In other words, for the same money you can buy less. As a result, the prices go up. It’s called inflation. Then the cost of a beer, for example, suddenly no more than 2 euro but 2.50 euro.
On the political front, QE is controversial. Opponents of QE have been worried that the “weak” countries, such as Italy and Spain are slowing down, at the expense of the “stronger” countries. The national debt will eventually have to be sold in the MARKET.
QE is more of a stopgap measure for the short-term, it is a drop in the ocean. And, nevertheless, central banks globally to continue.
New round, new chances
Up until June of 2017, the FED, already more than 4500 billion dollars (4.035 million) of the assets sold. And at the beginning of October this year, the Us Federal Reserve (FED) to know to proceed with the purchase of the bonds. As of October 15, purchases the U.s. central bank for the sixty-billion-dollar-per-month government bonds.
Also, the European Central Bank (ECB) will proceed with the purchase of the bonds. As of november, will buy the ECB a monthly basis for a twenty-billion-euro debt. The ECB will stop only if the interest rates rise again. So far, the ECB has been to 2.650 billion euros in government bonds that are purchased. Written down? 2.650.000.000.000 of the euro.
For the ECB, it means that the second yi in the following round, on the Us market, it is all in the first round. Together with the astronomical amounts of money. By way of comparison, the gross domestic product (gdp) of the Netherlands to 2017 is a 725 billion euro. The opkoopprogramma of the ECB, it is more than 3.5 times as large.
With bitcoin you can protect yourself from QE
The opkoopprogramma central bank provides a monetary value for the money. QE creates bubbles in various financial markets. And because there is money in the economy, it remains to be pumped, it is your money, little by little, less and less worth it.
And that’s where you have nothing at all to do so. Or is it? Bitcoin is an independent currency, without any intervention from the central bank. With bitcoin, it is possible to protect yourself against devaluation of your money due to QE.
The monetary-policy of bitcoin is very transparent, you can simply find it in the code. The rules are pretty simple. There will be a maximum of 21 million bitcoins in circulation. In addition to the stream of bitcoin is predictable. Unlimited bitcoin print ” does not exist.
Want to know more about bitcoin? Then take a look at this page.