The Impact of Record Stimulus Spending On Inflation and on Bitcoin Price & Demand

The US Fed and Government recently embarked on the largest stimulus spending ever, dwarfing QE1-QE3, what does it mean for bitcoin?

Disclosure: I drafted this quick opinion piece back in March/April 2020 as a self-reflection on the enormous stimulus spending ticket of the US Federal Reserve and Government, and its potential impact on Bitcoin pricing. Consider my points here as put forward during that time frame. I welcome any constructive feedback!

Quantitative Easing

Stimulus spending, also known as quantitative easing or QE, has been around for years, at least in the US. Japan started engaging in this practice in the early 2000s. In the United States, it started in the aftermath of the 2008 financial crisis. I actually wrote my Master’s Thesis about QE in 2011, for the famed economist Paul De Grauwe.

In the face of a crisis, the collapse of financial institutions goes hand in hand with a high degree of economic uncertainty, and people and businesses tend to hoard their money instead of spending or investing it. Because of this underspending, producers are then forced to lower prices in order to clear inventories. Subsequently…