Following the specifics of a major coronavirus stimulus project, Congress could devote at least $350 billion to SME loans, $250 billion to unemployment insurance benefits, and $500 billion to Carter for businesses in distress. U.S. Congress senior leaders have outlined up to $250 billion in direct cash transfers a proposal previously proposed by Republicans.
The U.S. Federal Reserve is still considering increasing its balance sheet. In fact, Congress is expected to have a balance sheet consisting of market-supporting bonds and the overall economy, a number estimated to be neighboring $10 trillion.
Largest Assistance Program in US History
An earlier proposal indicated the need to improve the economy during this challenging period. President Trump’s chief economic advisor, Larry Kudlow, referred to the Coronavirus stimulus package as the biggest street assistance plan in history for America. Currently, both the Senate and President Trump have already agreed and are looking forward to adopting the plan.
In addition, the Federal Reserve is also considering sending stimulus money through the digital dollar rather than printing US dollars. Initially, when Congresswoman Maxine Waters proposed the concept of the digital dollar, its use was more theoretical than practical.
Now the use of a stablecoin issued by the central bank has taken shape and found an urgent use. For example projects such as eThaler will take on new frontiers and have fresh meaning by using blockchain to build CBDCs.
Trillions of Fed Reserve Dollars Means High Bitcoin Valuation
The Federal Reserve does definitely not issue money to banks as a means of directing the cash to state businesses, customers and vulnerable populations. If the funds are issued by intermediaries, there is a risk that they will trickle down, hence the need for a digital dollar.Meanwhile, the cryptocurrency community has reacted to the news with mixed feelings of celebration and astonishment.
Cryptocurrency hedge fund Morgan Creek noted that a stimulus of at least $6 trillion from the federal reserve could buy the entire bitcoin capitalization 48 times. The stimulus project will certainly surpass the value and timing of the financial crises of 2008, in terms of intensity and according to economics experts. This excludes all other stimulus plans in the wake of Coronavirus that are being implemented by a number of central banks and governments around the world.
However, the idea of digitizing the stimulus plan has come with a wide range of skepticism. A side of the blockchain community feels that the federal reserve issuing digital dollars makes a middleman a fact that the blockchain deems unnecessary.
Furthermore, another section of the community finds blockchains necessary for digital money.Given that most of the world’s financial dynamics are driven digitally.Nevertheless, this is a question for the Federal Reserve as it implements digital dollar issuance over the Ethereum blockchain.
Galaxy Digital’s Mike Novogratz shared his sentiments:
“If there was ever a time—debasement of fiat currencies, monetization of trillions of dollars of debt, this is the time for bitcoin,”
Adding he’d be astonished that bitcoin would close this year with no higher pricing. Meanwhile, there are still questions as to why the price of bitcoin has not yet reacted to the stimulus plan.
Cryptocurrency experts have attempted to explain the frenzy, claiming such dynamics always take time to establish.