The View | How the Federal Reserve helped create and burst the FTX crypto bubble
- As the Fed boosted liquidity, the odds of cooking up a successful scam improved greatly – and more people did
- Now that the Fed is winding down its bloated balance sheet, hot-air assets like cryptocurrencies are losing their life line
The Fed has actually kept the pace of balance-sheet unwinding rather slow (more on this later), given fears of a financial meltdown. But it is just prolonging the inflation crisis and keeping up the pressure for monetary tightening. Even if the Fed avoids the prospect of a thousand FTXes going bust together, the world will still see one collapse after another for the next couple of years.
As the Fed’s liquidity engulfed markets in recent years, the odds of cooking up a successful scam improved greatly and more people crossed over to the dark side. “Effective altruism” is something these people say to convince themselves that everything is OK.
Throughout history, questionable things have been done in the name of morality. One result is that Europeans have taken over much of the world, including North America and Australia, eliminating massive numbers of local peoples in the process.