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Federal Reserve Money Printing vs Bitcoin Price Chart

Bitcoin chart
Fed Total Assets chart

Notice how closely correlated bitcoin and asset accumulation by the Federal Reserve are? Those calling bitcoin a bubble because of meteoric rises forget how meteorically messed up the rest of the economy and monetary action has been.

There are many more reasons why bitcoin aren't a bubble IMO, but seeing the relation to Fed is certainly interesting food for thought.

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How are the people that decry

How are the people that decry a fiat currency so stupid to trade one for another.


From Mt Gox:

Hi everyone, just a quick update on the situation and what happened last night.

First of all we would like to reassure you but no we were not last night victim of a DDoS but instead victim of our own success!

Indeed the rather astonishing amount of new account opened in the last few days added to the existing one plus the number of trade made a huge impact on the overall system that started to lag. As expected in such situation people started to panic, started to sell Bitcoin in mass (Panic Sale) resulting in an increase of trade that ultimately froze the trade engine!

To give you an idea of how impressive things were here are some numbers that we would love to share with you guys:
- The number of trades executed triple in the last 24hrs.
- The number of new account opened went from 60k for March alone to 75k new account created for the first few days of April! We now have roughly 20,000 new accounts created each day.

Due to these facts we have been busy working on improving things since last week and our team has been working around the clock to improve Mt.Gox to catch up with the demand. We will continue to release several updates today and in the coming few days to improve our system overall performance.

Also please note that we may have to close the exchange for two hours in the next 12 to 24hrs to add several new servers to our system.

Thank you for your understanding and continuous support!

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

What happened today was due

What happened today was due to normal trading volume.

We shook all of the weaklings off!!!

Wealth got transferred to more intelligent hands!!!

This was only a bear trap.

(eat your heart out haters!)


I Bought bit coins at today's LOW!!!

--> 105$$$

(get off ma nuts-haters!!)

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

Ever thought about new

Ever thought about new printed Federal Reserve money going directly into Bitcoins?

Pretty good description of Bitcoin:

(NaturalNews) John, Mary and Kate are three "investors" who are buying bitcoins. Each time one of them buys a bitcoin, the value of bitcoins rises due to increased demand.

John got in early and bought 10 bitcoins for $1 each. So John's investment is a total of $10.

Mary got in a month ago and bought 10 bitcoins for $20 each. So Mary's total investment is $200.

Kate just bought her bitcoins, purchasing 10 of them for $200 each. So Mary's total investment is $2,000.

The total amount of their combined purchases as $10 + $200 + $2000, or a grand total of $2210.

But the three of them, in total, THINK they have a grand total of $6,000 worth of bitcoins because ALL the bitcoins they purchased are now "valued" at the most recent purchase price of $200.

In other words:

John currently owns 10 bitcoins valued at $200 each, so John thinks he's got "$2,000 worth of bitcoins" in his account.

Mary's 10 bitcoins are also valued at $200 each, so Mary thinks she's got "$2,000 worth of bitcoins."

Kate's bitcoins are also worth $200 each, so Kate has $2,000 worth of bitcoins.

In total, these three people believe they have $6,000 worth of bitcoins.

Yet, they only "invested" $2210.

Somehow, $3,790 in "value" was created out of nothing.

Where did this extra $3,790 come from?

Answer: It doesn't exist. It is an illusion.

Good Job

You just described the stock market pretty well too.

The new value Mary is

The new value Mary is claiming is based on the fact that Kate will buy Mary's bitcoins for $200.

Bitcoin is a greedy bubble for nerds, gen-y, & the millennials

Oh please. "Notice how closely correlated bitcoin and psi of a Michelin tyre are? The more air you pump into a Michelin, the more parabolic the risks become of it blowing up in your face!"

Bitcoin is a bubble for nerds. Its a wet dream for gen-y and the millennials who are being cheated out of a real life by the bankers and politicians, and think this is THEIR big chance to score majour bling on a rocketing commodity.

But its just another highly manipulative derivative pulled right out of the devil's behind. Or Blythe Masters'.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

Is this post some kind of

Is this post some kind of joke? All you have to do is take a look at the labels on the axes to realize this is not the same trend at all. Fed assets start at around 29,000, and finish at around 32,000, for around a 10% increase. Bitcoin, on the other hand, starts at around $20 and finishes at around $240, for around a 1,200% increase. Care to explain a reason for the difference?


Just zoomed out a bit so you can see qe1:

If the two are "correlated"

If the two are "correlated" as you suggest, this chart would imply a highly efficient market. Of course, I'm guessing after the 50%+ plunge today that the Fed must have sold off half of its balance sheet, but I'm guessing that's not the case.

maybe misunderstood

The graph is just good food for thought. The Fed's balance sheet has exploded, revealing massive underlying economic ills. And fiat currencies in general are way off what an optimal money system should be, doing an extreme disservice to the world.

This paves a massive opportunity for a new system to take at least some market share from the multi-trillion dollar international commerce space. The rates at which the two are occurring are related. Their prices will be loosely correlated on a granular basis, especially now as several forces will inject unusual volatility in the early days, but the theoretical connection is most important I think.

It's fine to say that, but

It's fine to say that, but your first post basically read (to me) as buy bitcoin because the Fed's balance sheet has exploded. Things aren't that simple. Bitcoin is going to have a hard time becoming accepted by businesses throughout the world if it keeps on seeing violent swings like it did this past day. What business in their right mind would accept bitcoin, knowing full and well that they might have to sell their bitcoins at a huge loss. In my opinion, the high amount of volatility in bitcoin is not going to do it any favors. For the foreseeable future, people are still going to be using dollars to purchase goods, so even if they are using bitcoins, the merchants are likely just to cash out of bitcoins immediately once they have received them. That doesn't sound like a recipe for success.

Market traders can compensate.

Bitcoins can be discounted or premiums charged.

Prices could be quoted in gold or silver wts. The gold silver ratio has been 47±6 since 1900. Both have been proven to be stable measure of value for a century, relative to currencies.

Free includes debt-free!

SteveMT's picture

The Federal Reserve will not stop printing money.

They have to continue and may soon speed the presses up even more. By this chart, Bitcoin is safe until the printing presses stop creating virtual dollars out of thin air. Bitcoin and dollars are linked by their connection to the virtual world.

Notice how

correlation does not imply causation?

Garan's picture

Correlation is Science.

Correlation might not be 100%, yet it is at the heart of science.

Proofs are usually a demonstration of correlation with hypothesis.

Which is why people should regularly question the west's religion: 'science'.

As far as correlating currency statistics goes, yeah, correlation can be flimsy, ...and can be very profitable.

Someone should at least post

Someone should at least post the p and r values of the correlation. Otherwise, it is just a picture.

Here's your answer:rho =

Here's your answer:

rho = ~0.5
pval = ~1e-10

I used weekly data sourced from the Fed's balance sheet (specifically, the H.4.1 release located at: and weekly data sourced from a bitcoin website (located at:

It is worth noting that the last weekly amount available for bitcoin is for April 8th; therefore, I think the correlation would weaken a bit as we have seen a gigantic run-up (and run-down for that matter) in the past few days that will not be reflected in the Fed's balance sheet.

correlation does not imply causation?

Sure it can suggest causation. It is not proof, but can justify scientific investigation.

I've plotted the prices of a dozen geological commodities from 1900 to 2008. (Gold, silver, copper, aluminum, steel, tin, lead, gypsum, salt(sodium chloride), potash,...

On a logarithmic charts they trended linearly with roughly the same slope.

Plotted linearly they trended to nearly identical exponential curves.

A quick glance the OP's chart suggests the same tendency.

What it suggests to me is that banker's money is broken and it leaks value. Nine percent per year on average for the last 100 years.

Free includes debt-free!

Like stock market prices, we

Like stock market prices, we can compare charts and speculate. However, the price is always influenced by numerous influences, most of which we cannot calculate / graph. Whether there is or is not a correlation between Fed activities and BitCoin, IMO, the greater influence is the lack of faith in exiting money / banking. And I get that the Fed influences that, but I doubt it is as corelative as the graph suggests. I think it has more to do with varying currency instability / Cyprus / Off shore expose, and the new realization for many that BitCoin exists as an alternative. Invariably there are going to be ups and downs, and it will come into equilibrium. And that equilibrium might in deed be in the $1000 range, or $5 range. To which I say: So what? Use it as a medium to exchange wealth. Not to store wealth or make financial gain. Playing BitCoin value is no different than playing stock market. If that is your gig, have at it. For me, I just want an alternative currency.

Everyone will use bitcoin in ways that suit them or not at all.

$FRN are created 9% per year on average. The Fed manipulates the supply which is detected by measuring the True or Austrian Money Supply (TMS). Mike Pollaro has charted these manipulation back to 1960.

Fed members use this td make money, by knowing what is overvalued and undervalued given their insider knowledge of the TMS.

Gold and Silver are at lows, but the Fed has shrunk the TMS. Little cash ($FRN) is available for Gold or Silver purchases.

Using bitcoin as a currency and spending it rather than saving it would maximize utility and minimize risk, IMO.

Free includes debt-free!

Saving OR spending bitcoin is good, but they're buying & selling

Paul, saving OR spending bitcoin would be good, but these bitcoin fanatics are just buying and selling. Mostly buying. I hear there is a waiting list to buy. That means it is a commodity, not a currency.

But of course, it is not a commodity, but a derivative of a nerd's greed.

Look at it this way: No currency appreciates by hundreds of percent per week; some currencies DEpreciated by hundreds of percent per week -- and they DIED.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

What is the value of an reusable, anonymous, global transfer?

Banks charge $15 for a national, on time use, regulated money transfer.

Even if bitcoin was $15, then ten can transfer $150 and be reused.

That utility is under-appreciated.

Time will tell.

Free includes debt-free!

Depends on the bank. My TD bank account has a zero fee

Depends on the bank. My TD bank account has a zero fee for income or outgoing intl transfers, providing I maintain $2,500 monthly balance. Used to be only $1,000 of course. They are becoming tightwads too. But the fact remains, some banks can choose to be flexible, while others choose to fee-rape their customers.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

Fractional Reserve makes that $2,500 look like $225,000.

It's an illusion, this making mountains of molehills.

Bitcoin for its other concerns can not be fractional reserved.

If I deposit one thousand bitcoins, I control them, but I can only loan 1000. When your deposit expires the loan has been paid back. No currency was magicked into existence.

Gold and silver coin work the same way.

"A bank that issues more notes than gold and silver held in its vault is a cheat on someone." ~John Adams.

Free includes debt-free!

But Bitcoin exchange rates are fractionalized

But Bitcoin valuations are fractionalized, as Marc S. elegantly demonstrates in a comment farther up:

1,000 bitcoins may always be just a thousand, but they can be divided 100,000,000 ways and each assigned values based on demand -- much like loans. Demand for money brings up interest rates, lack of demand brings em down. Demand for BTC bring up value, and the inverse.

Anyway, my point about TD Bank was that banks don't have to charge a transfer fee if they don't want to. I mean, the real cost of transferring $1,000 by wire is 0.0001 cents/dollar I bet. The $15 is just most banks trying to make up for the credit card interest they lost as a result of Dodd-Frank provisions.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

Beware of dabbling in the bitcoin market...

Just last week a programmer friend of mine was playing the market, riding on the bitcoin rise and got 3 of his computers hacked. He was using one of the most reputable sites for trading. Now he's out of the bitcoin game.

If Java or Adobe installed That's likely the problem not bitcoin

JAVA -Just Another Vulnerability Announced.

Free includes debt-free!

If you're using Bitcoin to turn a profit

If you're using Bitcoin to turn a profit, in the immortal words of the internet, "ur doin it rong".

Bitcoin's one function is to create a system of currency that does not require the trust of a central authority.