Bitcoin Supporters Warn Donald Trump That Negative Rates Are Not a “Gift”
Bitcoin (BTC) enthusiasts were scolding United States President Donald Trump this week as he called on the Federal Reserve to tax people’s savings by introducing negative rates.
In a tweet on May 11, Trump pressured the Fed again, stating that the central bank should “keep pace” with Europe in lowering rates.
Trump: The U.S. needs negative interest rate “gift”
The European Union first brought about negative interest rates in 2014.
“As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the ‘GIFT’. Big numbers!”
Negative rates mean 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 Kocherlakot said.
Taxing savers, Bitcoin supporters argue, has only worsened since the coronavirus, as enforced economic shutdowns made governments bail out big businesses while taking equity and wealth form smaller participants.
Fiat squeezes the savers
Trump’s words were particularly piercing, 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 commented.
Even gold bug Peter Schiff, well-known 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.”
Earlier this week, critics decried the Fed pressing with plans to enter the exchange-traded fund market, while Virgin Galactic chairman Chamath Palihapitiya told CNBC that the dollar is about to enter a “massive deflationary spiral.”