The Federal Reserve is apparently very worried about bitcoin disrupting the monetary system.
According to an alleged whistleblower’s post on Reddit, Fed governors were “highly alarmed” by internal economic modeling that showed Bitcoin has the potential to completely displace the dollar by as early as 2021 (which they called “worst case”).
The whistleblower, who currently remains anonymous, claims to work for the Federal Reserve as a researcher who was tasked with doing “econometrics and related modeling” for Bitcoin.
The Dirty: We were directed to upgrade our modeling of bitcoin from developing currency to a major currency. In addition to all of the common modeling and forecasting that task entails, we were instructed to do full simulations of money flows, interest rates, multi currency derivative baskets, risk metrics, and their effects on global macro monetary policy and trade agreements. What we found was shocking. Even with a mediocre adoption rate and variable growth rate, bitcoin severely disrupts how we model, forecast, and ultimately understand currency interactions to make monetary policy decisions. This is a huge technological, monetary, and policy disruption which leaves the Fed, the US govt, and other entities with much less control.
Our best case scenarios are modeled upon current bitcoin adoption rates which have simulated a tipping point for the year 2026 (worst case 2021); this time frame projects the Fed (via the dollar) to lose its dominant global monetary policy maker status – instead everything will superseded by bitcoin.
I presented this updated report along with all of our modeling work and simulation outputs which were statistically and independently verified to the Board of Governors. The Board was highly alarmed and interrogated me and my fellow researchers in a 3 day session trying to understand every point of our research. It must be remembered that unlike politicians, the Board of Governors is a very well educated and empirical group with an ability to conceptually grasp complicated research.
The ramifications of this internal analysis could be huge. Pressed by the Reddit community to verify his claims, he is said to be working with journalists to release proof or his employment and of the report itself.