by Pam Martens and Russ Martens at Wall Street on Parade
Yesterday, Benzinga reported on a curious statement made by Fed Chair Jerome Powell during his appearance before the Senate Banking Committee on Wednesday. Powell was asked by Senator Kyrsten Sinema (D-AZ) if the Fed had been tracking the events in the crypto markets in the past several weeks. Powell responded that the Fed was watching those events “very carefully” but the Fed “did not see significant macro-economic implications.” The article goes on to lend credence to this observation from the Fed by noting the following:
“It is important to note the entire cryptocurrency market cap is $889.25 billion versus the American GDP, which is $25.34 trillion, and an equities market that controls more than $49 trillion.”
Before we drill down into the weeds of that crypto market cap figure, it’s important to note that former Fed Chair Alan Greenspan told Congress that he saw no major economic threat coming from subprime debt. In October 2008, as much of Wall Street and the U.S. economy lay in ruins from subprime debt bombs and related derivatives, Greenspan testified to a House Committee that “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”
Seriously? The most corrupt industry in America for more than a century and the head of the U.S. central bank thinks it’s an altruistic protector of shareholders’ interests?
The Fed and fellow Wall Street regulators appear to have made the same mistake today with crypto. As large financial institutions have entangled themselves deeper and deeper into all things crypto, federal regulators have been studying the problem rather than taking action.
So exactly how big is the problem?
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