interest rates

Speechwriter for Former US President George Bush Says BTC Rally Driven by ‘Historically Low Interest Rates’

23/02/2021 by Idelto Editor

A speechwriter for former U.S. President George W. Bush and a bitcoin critic, David Frum has claimed that the low-interest rates are fueling the crypto asset’s rally. Frum suggests that the crypto asset might experience a “fast and deep price crash” if and when interest rates start to rise.

Institutional Interest in BTC

In comments made via Twitter, Frum, who regurgitates the BTC mining inefficiency claims, also attacks the crypto asset’s store of the value proposition. He states that of “all the pro-bitcoin arguments, surely the worst is the store against inflation.”

Still, despite this criticism, the crypto asset continues to gain support from institutional investors and large companies. For instance, electric carmaker Tesla, which recently amended its investment policy, revealed it had bought BTC worth $1.5 billion.

Furthermore, according to bitcointreasuries.org, the website that tracks companies or institutions that have exposure to BTC, over 1.3 million coins or 6% of the total circulating supply is held by large corporations.

The True Value of BTC

In the meantime, Frum’s remarks about bitcoin have sparked a debate on Twitter concerning the crypto asset’s true value proposition. For instance, in his response to the remarks, Alex Gladstein, the chief strategy officer with the Human Rights Foundation (HRF), reminds the former speechwriter about BTC’s human rights implications. Gladstein, who recently endorsed the crypto asset, said:

Only 13% of humans live under a liberal democracy with a reserve currency. The other 7 billion+ live under authoritarianism or a weak currency. Bitcoin is a powerful tool for them.

Also, another user named Unfettered Nic Carter shares with Frum the other likely outcome of rising interest rates. The user explains that “if interest rates rise, the corporate sector and the government will be insolvent.” Carter then asks: “What do you think is more likely – we bankrupt everything, or we print our way out?”

Meanwhile, other Twitter users like Lepton939 said they were in agreement with the assertion that BTC provides “immunity from inflation.” Nevertheless, this user expresses concern at the crypto asset’s volatility saying:

“Since the price fluctuates so wildly I’m afraid to hold it. But I’m guessing its real value is the scale of illicit transactions it accommodates.”

Still, other users like Jeffrey Smith are praising Frum for making these remarks about bitcoin. In his tweet, Smith remarks:

Exactly. Zero intrinsic value (which is related to your interest rate observation); 100% speculative value (= bigger fool theory); & environmental mess to mine. What’s not to like?

While Smith suggests that “gold is very similar” he is however quick to explain that unlike BTC, the precious metal can be used for making jewelry. He then concludes by saying: “There’s no Bitcoin jewelry as far as I know.”

Do you agree with Frum’s assertion that BTC value will crash once interest rates start to rise? Tell us what you think in the comments section below.

QE Infinity: US Fed to Keep Rates at Zero, Billion-Dollar Bond Purchases Until Economy Recovers

18/12/2020 by Idelto Editor

This week the U.S. Federal Reserve met for two days at the Federal Open Market Committee meeting and detailed that it would keep short-term borrowing rates at near zero. Meanwhile, the Fed also stated that it would continue buying bonds until the U.S. economy returns to full employment.

America’s central bank met this week for the last Federal Open Market Committee (FOMC) meeting of 2020. The Fed has a touch more optimism for the end of this year and into 2021 according to the summary of economic projections. However, the central bank will make no changes to the benchmark interest rate and it will remain near zero for quite some time.

“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” the Fed said this week. “The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the central bank further added.

The FOMC progress report also noted that the Fed plans to continue purchasing at least $120 billion in bonds per month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” The committee did not disclose how long it will continue the easing program’s bond purchases.

“These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses,” the Federal Open Market Committee added.

However, despite the optimistic outlook, the U.S. dollar has been looking dreadful lately as the U.S. Dollar Index has plunged below 90. During the last few months, many economists and analysts have predicted bad omens for the American currency.

“The U.S. Dollar Index has broken below 90 with very little fanfare,” the gold bug Peter Schiff wrote on Thursday. “I expect a bit more noise when it breaks below 80. However, the real fireworks will start when the index cracks 70, which would take it into uncharted territory. That failure could happen as soon as next year,” Schiff added.

Meanwhile, the safe-haven asset gold has been climbing in value again as the precious metal trades for $1,887 on Thursday afternoon (EST). Since the Fed’s FOMC meeting this week, crypto assets have been on a tear, as the crypto economy is now getting much closer to a trillion dollars at $650 billion.

After the Fed convened and gave the FOMC’s economic outlook, bitcoin (BTC) touched a lifetime price high at $23,777 per unit.

What do you think about the fact that the Fed is keeping interest rates at zero and will continue to purchase massive sums of bonds? Let us know what you think about this subject in the comments section below.

The post QE Infinity: US Fed to Keep Rates at Zero, Billion-Dollar Bond Purchases Until Economy Recovers appeared first on Bitcoin News.

Aave Protocol Outpaces Maker With $1.4B Locked, Defi Project Granted UK Electronic Money License

26/08/2020 by Idelto Editor

The decentralized finance (defi) open-source protocol built on Ethereum, Aave, has surpassed the Maker Dao project in terms of total-value-locked (TVL) this week. The lending and borrowing platform Aave has $1.43 billion locked on Tuesday climbing 7.7% in the last 24-hours.

On August 25, the defi project Aave (the Finnish word for ‘ghost’) has seen it’s TVL supersede the Maker Dao project. Essentially Aave is an open-source, noncustodial protocol that has allowed individuals to stake credit lines by leveraging a myriad of digital assets.

After the first month of launch, Aave’s protocol TVL had over $5 million in liquidity locked and it jumped 28,500% since then. At the time of publication, Aave is the top defi application on the website defipulse.com representing $1.43 billion locked into the protocol.

Maker Dao holds around $1.42 billion on Tuesday, as the lending protocol Maker is usually the top defi app in terms of TVL.

Basically, Aave (previously known as Ethlend) allows for decentralized lending and borrowing using a variety of cryptocurrencies while also leveraging variable and stable interest rates. Individuals also utilize Aave for flash loans, a loan that must be executed within a single Ethereum transaction.

Flash loans if executed properly can allow anyone to borrow liquidity from the Aave protocol and they don’t need to provide any collateral. As long as the liquidity is reimbursed within the one transaction in a single block, the loan will carry out as planned. Aave’s lending and borrowing protocol at times can remove the need for capital, which essentially lowers the barrier to entry.

In addition to the platform’s recent surge in popularity, Aave’s U.K. business entity, Aave Limited, was recently issued an Electronic Money Institution license. Documents show Aave was approved by the U.K. Financial Conduct Authority (FCA) on July 7, 2020.

Aave is also in the midst of transitioning to V2, a fully autonomous system called the “genesis governance.” The team believes that in time the project can encompass tokenized mortgages on the Ethereum blockchain. In a recent blog post Aave’s Marc Zeller hinted at the concept concerning tokenized real estate.

“The Aave Protocol will now allow the governance to open private markets to support tokenized assets of all kinds,” Zeller wrote. “A collaboration between Real-T and the Aave Protocol is in the works to push DeFi even further and bring mortgages on Ethereum.”

In addition to the FCA approval, Aave launched a website dedicated to its position as an Electronic Money Institution in the U.K. region. Flash loans have been a big part of Aave’s popularity and news.Bitcoin.com reported on how there’s been over $100 million a day in flash loans using the lending protocol.

Moreover, developers have created programs like Furucombo that combine all the defi applications together in order to execute combined actions within a single transaction. However, Furucombo’s website notes the program is beta software, and it “should be treated as highly unstable.”

What do you think about Aave’s TVL surpassing Maker and the project’s recent Electronic Money Institution license? Let us know what you think in the comments below.

The post Aave Protocol Outpaces Maker With $1.4B Locked, Defi Project Granted UK Electronic Money License appeared first on Bitcoin News.

Fed Chair Jerome Powell Discusses Leveraging an Ethereum-Based Libor Replacement

05/06/2020 by Idelto Editor

The Federal Reserve’s Chair, Jerome Powell has hinted at using an Ethereum-based interest reference rate in a transition from the London Interbank Offered Rate (Libor). Powell also detailed in a letter to Senator Tom Cotton (R-AR), that the Ethereum version of Libor, a software called “Ameribor” may not be for everyone.

The United States Federal Reserve has expanded a great deal since the start of the coronavirus outbreak and a few months prior as well. This week a letter to Senator Tom Cotton from Fed Chair Jerome Powell indicates the Fed is contemplating using Ethereum for interest reference rates.

For instance, the Fed and many other international central banks leverage Libor, a benchmark interest rate where a great number of global financial incumbents use to lend funds to each other and clients.

However, the public is well aware of the “Libor scandal,” a theory that claims that banks and Libor were manipulating rates in order to fleece the populace. Banks are supposed to submit realistic interest rates to Libor, but the organization and member institutions are accused of manipulating the benchmark rates since 1991.

“The way the inter-bank, or Libor, interest rate is set is no longer fit for purpose,” explained a written review by the Financial Services Authority. The megabank Barclays was one of the big name banks accused of messing with the Libor rates.

Powell suggested Ameribor which is a similar tool designed by the American Financial Exchange (AFX) and the system leverages Ethereum to make sure the rates are reliable. Essentially there is the use of nonfungible ERC721 tokens that represent payments services and settlement.

Fed Chair Jerome Powell Discusses Leveraging an Ethereum-Based Libor Replacement — A flowchart showing how the Ethereum-based Ameribor works.

In the letter to Senator Tom Cotton, Powell explains a few of the benefits tied to using AFX’s Ameribor system for the benchmark rates. Although, Powell said that he doesn’t think Ameribor would be a “natural fit” for everyone in the market.

“While it is a fully appropriate rate for the banks that fund themselves through the American Financial Exchange or for other similar institutions for whom Ameribor may reflect their cost of funding, it may not be a natural fit for many market participants,” Powell wrote.

The Fed Chair did note that “Ameribor is a reference rate created by the American Financial Exchange based on a cohesive and well-defined market that meets the International Organization of Securities Commission’s (IOSCO) principles for financial benchmarks.”

The letter doesn’t say whether or not the Fed will officially leverage Ameribor over Libor. However, the crypto community seems to enjoy the idea that the Fed is contemplating using the Ethereum-based product. The AFX-blockchain product has been operating since it was first announced on November 22, 2019.

“American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American banks and financial institutions, the official Ameribor announcement detailed at the time. “AFX now mints two ERC721 non-fungible tokens for each Ameribor transaction on the AFX platform (for each counterparty to the transaction),” AFX added.

What do you think about the Fed contemplating using Ethereum-based Ameribor? Let us know in the comments below.

The post Fed Chair Jerome Powell Discusses Leveraging an Ethereum-Based Libor Replacement appeared first on Bitcoin News.

US Central Bank Blamed for 2020 Financial Crash: ‘The Fed Is Lawless Economic Government Unto Itself’

06/05/2020 by Idelto Editor

The last two months dealing with the coronavirus outbreak have been strange, to say the least, and as data rolls in more people are becoming aware that there was quite a bit of overreaction from politicians, the media, and medical professionals. A small number of people are starting to focus on the economic situation and the possible destructive aftermath the finance world will see. On May 5, 2020, the Austrian economics-based think tank, Mises Institute, published a 157-page report covering the anatomy of the crash.

Mises Institute President: ‘The Crash Was Overdue’

For well over two months now, the world has been distraughtly dealing with Covid-19 and the government-induced shutdowns worldwide. The economy has faltered and in the U.S. people are growing leery of the bureaucratic decisions and stimulus injections stemming from the country’s central banks. News.Bitcoin.com has been covering the Federal Reserve’s schemes since last summer and the trillions of dollars the bank handed out before the first U.S. Covid-19 death. Now the Mises Institute (Mises.org) has published a report filled with a collection of enlightening editorials that may show people the ramifications of the Fed’s endless fiat game. The introduction to the report called the “Anatomy of the Crash: The Financial Crisis of 2020,” was written by Mises Institute president Jeff Deist. His introduction and the articles tethered to the report explain how the economic crash was not caused by the virus.

“The Great Crash of 2020 was not caused by a virus,” Deist details. “It was precipitated by the virus, and made worse by the crazed decisions of governments around the world to shut down business and travel. But it was caused by economic fragility.” The Mises Institute president further added:

The supposed greatest economy in U.S. history actually was a walking sick man, made comfortable with painkillers, and looking far better than he felt—yet ultimately fragile and infirm. The coronavirus pandemic simply exposed the underlying sickness of the US economy. If anything, the crash was overdue.

Most of the Blame Can be Laid at the Feet of Central Bankers

Deist further added that the media and general public in the U.S. are fixated on the virus and they cannot see the manipulation the Fed has been causing. “Too much debt, too much malinvestment, and too little honest pricing of assets and interest rates made America uniquely vulnerable to economic contagion — Most of this vulnerability can be laid at the feet of central bankers at the Federal Reserve.”

Despite the fact that the general populace is not aware of the problem, Deist thinks that Americans should not let the authorities at the central bank get away with what they have done. “We should not let them get away with it, because (at least when it comes to legacy media) the Fed’s gross malfeasance is perhaps the biggest untold story of our lifetimes,” Deist wrote.

News.Bitcoin.com has explained in various articles how the world’s monetary system is broken and the various methods free-market advocates can use to shelter themselves from the storm. Individuals can use tactics like barter and trade, leveraging precious metals for a hedge, and utilizing censorship-resistant digital currencies. Following Diest’s introduction in the “Anatomy of the Crash” report, the research contains various articles written in the past by some of the Austrian school of economics’ greatest visionaries.

The 157 pages cover topics like why the financial sector now rules the global economy, central banks nationalizing the economy, the menace of sub-zero interest rates, how the ghosts of failed banks have returned, what central banks may do next and not-so-modern monetary theory (MMT), how central banks are propping up stock prices, and what Ludwig von Mises would think about the financial system today.

Faith in the Federal Reserve’s Monetary System Will be Sorely Tested

Back in 2008, the financial crises woke a lot of people and many understand just what the bailouts were doing and how the Federal Reserve is manipulating the U.S. economy today. The report published by the Mises Institute (Mises.org) opens up the central bank’s can of worms and shows it for what it is really worth. Sound money advocates, bitcoin proponents, Austrian economists, and libertarians have been warning their friends and family of the Fed’s fraud for years now. The Mises Institute president ends the report’s introduction by stressing that the faith in the U.S. dollar and the Fed’s schemes will be tested in due time.

“The Fed is, in effect, a lawless economic government unto itself,” Deist conceded. “It serves as a bizarro-world ad hoc credit facility to the US financial sector, completely open-ended, with no credit checks, no credit limits, no collateral requirements, no interest payments, and in some cases no repayments at all. It is the lender of first resort, a kind of reverse pawnshop which pays top dollar for rapidly declining assets. The Fed is now the Infinite Bank. It is run by televangelists, not bankers, and operates on faith. That faith will be sorely tested.”

What do you think about the Mises Institute’s report on the 2020 crash? Let us know what you think about this topic in the comments below.

The post US Central Bank Blamed for 2020 Financial Crash: ‘The Fed Is Lawless Economic Government Unto Itself’ appeared first on Bitcoin News.