Fed Spending Is Good for Bitcoin, Bad For Main Street

In early March 2012, three years after the biggest financial disruption in 80 years, with 8% of the U.S. workforce unemployed, with four million American homes foreclosed and with Europe tearing itself apart over fiscal austerity measures to contain a debt crisis, someone forked over $119 million for a painting.

The price, paid by an anonymous bidder at a Sotheby’s auction for Edvard Munch’s “Scream,” smashed the record price for fine art set when Pablo Picasso’s “Nude, Green Leaves, and Bust” sold for $106.5 million two years earlier. 

What was striking when I wrote about this eight years ago, was that the trend in the consumer price index was then extremely soft. The scourge was not inflation but employment-killing deflation. The Federal Reserve had slashed rates to zero and was spending hundreds of billions of freshly created dollars on government bonds in a mostly failing bid to recharge investment and consumer spending and drive CPI inflation up to its target rate…