Bitcoin (BTC) bulls were lambasting United States President Donald Trump this week as he called on the Federal Reserve to tax people’s savings.
In a tweet on May 11, Trump renewed pressure on the Fed, which he has long suggested should “keep pace” with Europe in lowering rates.
Trump: The U.S. needs negative interest rate “gift”
The European Union first introduced negative interest rates in 2014.
Trump wrote:
As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the ‘GIFT’. Big numbers!
Negative rates essentially involve charging banks — and therefore savers — to store money. Fed chair Jerome Powell has said he is against their introduction, but last month, an ex-official joined calls to send U.S. rates negative for the first time in history.
“The U.S. Federal Reserve should fight a rapidly deepening recession by taking interest rates below zero for the first time ever,” former Minneapolis Fed president Narayana Kocherlakota claimed.
Taxing savers, Bitcoiners say, has only worsened since the coronavirus, as enforced economic shutdowns saw governments bail out big business while taking equity and wealth away from smaller players.
Fiat squeezes the savers
Trump’s words were particularly poignant, coming on the day that Bitcoin “hardened” its money supply and cut inflation to 1.8% via its third block reward halving.
Unsurprisingly, those in favor of the cryptocurrency had little time for the president’s demands.
“As the Fed adopts a controlled Weimar strategy, Bitcoin just completed its third halving,” Gemini exchange co-founder Tyler Winklevoss responded.
Even gold bug Peter Schiff, famous for his dismissals of Bitcoin, was unimpressed.
“Negative rates are not a gift. They are a transfer of wealth from savers to debtors,” he told Trump on Twitter.
But the inflation created to make negative rates possible will hurt wage earners too, plus the overall economy will be less productive and living standards will be lower as a result.
Previously this week, critics decried the Fed pushing ahead with plans to enter the exchange-traded fund market, while Virgin Galactic chairman Chamath Palihapitiya told CNBC that the dollar was heading for a “massive deflationary spiral.”