Inflation may grow as the US prevents negative interest rates, boosting Bitcoin bull case

One of the biggest Bitcoin catalysts over the past few months has been the introduction of negative interest rates into economies in Europe and Asia.

Unfortunately for the Bitcoin bull case, the U.S. Federal Reserve has been hesitant to let its policy interest rate go negative.

Chairman Jerome Powell said in a recent speech that negative interest rates are something the Federal Reserve is not looking at as a viable monetary policy lever.

The Federal Reserve's target inflation rate could soon double.

To respond to the ongoing recession caused by the end of the business cycle and the COVID-19 lockdowns, the Federal Reserve has been forced to take record action, dropping its policy interest rate to 0-0.25 percent just months ago.

A 2017 study from two individuals on the Federal Reserve Board - which is arguably more relevant today than before due to the macroeconomic backdrop - found that due the tendency to keep rates and inflation near zero, economic performance will be poor.

Low inflation will beget low inflation and output will be low.

According to an op-ed authored by former Federal Reserve chairman Ben Bernanke in 2017, a solution may be to increase the central bank's inflation target to four percent, double the status quo of two percent inflation.

"If you're wondering how the fed is going to try and stave off negative interest rates, here's a potential preview, authored by Ben Bernanke himself. The inflation target is going higher, expect another wave of debt monetization."

"Although massive currency issuance by govt central banks is making Bitcoin Internet money look solid by comparison."