The implementation of the Federal Reserve's "third mandate" could change long-term monetary policy, which may be unfavorable for the dollar but positive for cryptocurrencies.
For a long time, it has been widely believed that the Fed has only two mandates—price stability and maximum employment. However, Stephen Miran, a Fed governor nominated by President Trump, mentioned the "third mandate" earlier this month, sparking speculation about the future direction of the central bank's monetary policy.
Hidden in the founding documents of the Federal Reserve is a third statutory mandate, which clearly states that the central bank actually needs to achieve three main goals: maximum employment, price stability, and moderate long-term interest rates.
According to a report by Bloomberg on Tuesday, the Trump administration seems prepared to use this overlooked statutory requirement as a basis for more aggressive intervention in the bond market, possibly through yield curve control, expanding quantitative easing, and increasing monetary supply.
For decades, this third goal has been largely ignored, with most people believing it to be a natural result of achieving the first two goals. However, Trump officials are now using it as a legal basis for yield curve control policy, where the Fed buys government bonds to anchor target interest rates.
Trump has long advocated for interest rate cuts, stating that Fed Chair Powell is "acting too slowly" or "cutting rates too late."
The government hopes to actively lower long-term interest rates, with potential tools including increasing government bond issuance, repurchasing government bonds, quantitative easing, or yield curve control.
Against the backdrop of national debt reaching a new high of $37.5 trillion, a decline in long-term interest rates would reduce government borrowing costs. The government also hopes to further stimulate the real estate market by lowering mortgage rates.
According to Christian Pusateri, founder of the crypto protocol Mind Network, the third mandate is "essentially financial repression," and he added that it is "very similar" to yield curve control.
He stated that the price of capital is being more strictly controlled because the long-term balance between capital and labor, as well as debt and GDP, has become unstable.
According to Arthur Hayes, former founder of BitMEX, this has a positive impact on cryptocurrencies. He stated that yield curve control could drive Bitcoin (BTC) to $1 million per coin.
Related: Solana shows bullish signals again, with a similar historical pattern previously triggering a 1300% surge in SOL.
Original article: “The Fed's 'Third Mandate' Could Devalue the Dollar and Boost Bitcoin (BTC)”
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