Headline: Fed quietly restarts “money printing”; Heritage economist warns inflation could return — what crypto traders should watch The Federal Reserve quietly resumed securities purchases this week, a move that’s stirring fresh inflation fears and adding another variable for crypto markets already watching dollar dynamics and de-dollarization trends. What happened — the facts - The Fed announced Wednesday it will resume buying Treasury securities, marking a reversal from its quantitative tightening (QT) program that began in June 2022. - The central bank said purchases will “remain elevated for a few months” before being “significantly reduced,” citing strains in overnight funding markets. - The program will start with purchases of $40 billion in Treasury bills. - The resumption of balance-sheet expansion coincided with the Fed’s third rate cut of 2025: the FOMC lowered its policy rate by 25 basis points to 3.50–3.75% — the lowest level in nearly three years. Since September 2024, the Fed has cut rates by a cumulative 1.75 percentage points. - The rate decision was approved 9–3, signaling some division among policymakers. Chair Jerome Powell said, “We are well positioned to wait and see how the economy evolves,” suggesting a possible pause in further cuts. - Fed officials’ projections currently show only one additional rate cut penciled in for next year. Why Heritage Foundation economist E.J. Antoni is alarmed - Antoni called the balance-sheet move “money printing” and warned on Newsmax that expanding the Fed’s balance sheet will put upward pressure on prices next year, potentially reversing gains from regulatory reforms. - He criticized Chair Powell’s timing and record, arguing the Fed has delayed policy action in the past (citing 2019 emergency cuts and post-COVID timing errors) and called for new leadership. How the Fed is “printing money” (and why it matters) - When the Fed buys government securities, it creates bank reserves and expands its balance sheet — increasing the digital money supply rather than printing physical currency (actual banknotes are issued by the Treasury’s Bureau of Engraving and Printing). - That increase in reserves can be inflationary if it translates into higher spending and credit growth — a key part of Antoni’s warning. Implications for crypto markets - Inflation risk and a potentially weaker dollar often fuel narratives that support crypto as a hedge or alternative store of value; renewed Fed balance-sheet expansion could reinforce those narratives. - Conversely, rate cuts can encourage risk-on flows that lift speculative assets, including crypto — but they also reduce the opportunity cost of holding non-yielding assets, complicating the picture. - Geopolitical and macro trends matter too: moves toward de-dollarization among BRICS and other global shifts could compound dollar pressure over time, an angle crypto traders watch closely. What to watch next - Size and duration of the Treasury-bill purchases and how “elevated” the Fed keeps purchases. - Economic data: inflation readings, payrolls and other labor-market signals that could change Fed calculus. - FOMC dissent patterns and any public comments from officials that signal a shift in balance-sheet strategy. - Dollar strength, real yields, and flows into crypto and gold as markets price policy and inflation risk. Bottom line The Fed’s quiet restart of securities purchases has put money-supply and inflation risks back on the table at a time of falling policy rates and geopolitical currency debates. For crypto market participants, that combination heightens macro uncertainty — potentially bolstering demand for non-dollar and inflation-sensitive assets, but also feeding volatility as traders reprice policy expectations. Read more AI-generated news on: undefined/news
