It’s a fact that the world economy isn’t doing so well currently, and that’s even made worse by the trade wars between major economies like the US and China. In light of this scary development that threatens to shrink national economies, some governments have taken some rather drastic measures to mitigate the situation.
China’s becomes the latest national government to attempt to lessen the severity of the rough economic slump. A few days ago, the Chinese government announced a sharp move to inject a cool $174 billion into the economy.
At the time of this announcement, Bitcoin’s total market cap stood at around $174 billion, meaning that the People’s Bank of China planned to inject money the equivalent of Bitcoin’s total market cap into the Chinese economy. That’s surely a lot of money.
Granted, this isn’t the first time a government is injecting money into the economy to increase liquidity. Just recently, the United States government did the same – an action that was called Quantitative Easing. On its part, the Chinese government had a few words to describe the validity of its action. It said that in light of the current epidemic in the country, the move would:
“Inject 1.2 trillion yuan via reverse repo operations on February 3 to ensure sufficient liquidity supply. The liquidity of the overall banking system will be 900 billion yuan more than the same period of last year,”
Basically, such actions are aimed at funneling money from the Central Bank to commercial banks in order to ease the burden of liquidity. However, various vocal people have condemned such actions, saying that an increase in the money in circulation leads to inflation.
For over a week now, China has faced a bad epidemic situation that has resulted in the deaths of over 300 people and over 20,000 others infected by the deadly Coronavirus. The outbreak started at Wuhan, a city that has since been abandoned by millions of people. Such a situation is tricky for the economy. However, some people aren't happy about the massive money injection.
Bitcoin Could Be The Answer
The crypto economy has been touted as being the most effective and resistant to such things as recessions and inflations. In fact, a lot of the rich people in China sought ways to get their money out of China as the US-China trade war intensified. This is because the Chinese Yuan was losing value. As such, Bitcoin became the go-to place to secure their money. In fact, Bitcoin has for long been looked at as the future asset that qualifies as a viable store of value.