Bitcoin Has Been Co-Opted – Jim Bianco Warns The Fed Is Losing Control

A Surreal Walk Through The Fed: Trump, Powell, And Theatrics At The Reserve

When a former president walks into the Federal Reserve building and stages a spectacle, the headlines write themselves. Jim Bianco frames Donald Trump’s visit not as a policy debate but as political theater with a clear objective: to weaken Jerome Powell’s authority and pave the way for a successor more aligned with presidential preferences. The act of publicly shaming a sitting central banker exposes an uncommon strain of direct political pressure on an institution designed to be independent, and it raises durable questions about precedent, legal standards for removal, and what happens when monetary policy becomes a campaign issue.

Why the Fed Visit Mattered

Bianco points out the legal nuance: the Federal Reserve chairman can be removed only for cause, a standard that’s never been fully litigated. But the optics—parading receipts, standing in a construction zone, and suggesting malfeasance—are strategic. If Powell is made into a lame duck, the real power may shift to a president-backed successor or a so-called "shadow Fed," undermining the Fed chairman’s ability to shape markets and expectations.

Interest Rates, Mortgages, And The False Promise Of Lower Rates

Lower for longer is a popular political talking point, but Bianco dismantles the idea that lower rates are always better. Sovereign yields reflect nominal growth expectations—real growth plus inflation—not political bragging. Cutting rates without market buy-in can actually push long-term yields higher, as happened last year when a perceived policy mistake spooked investors. For mortgages and housing, the result is even trickier: affordability worsens as prices remain elevated, and lower central bank policy rates don’t necessarily translate into lower mortgage costs.

The Limits Of Monetary Policy When Fiscal Pressures Dominate

Bianco and the interviewer return to fiscal dominance: when government borrowing needs drive policy, central banks face constraints. If rate cuts are used to lower interest burdens and enable larger deficits, bond investors may ultimately force higher yields to compel fiscal discipline, potentially leading to "suffocatingly high" interest rates that drain liquidity from other markets.

Where Bitcoin, Stablecoins, And Tokenized Assets Fit

Crypto occupies a complicated place in this narrative. Bitcoin remains a store-of-wealth proposition but behaves like a levered risk asset correlated with stocks. Stablecoins look set to be legitimized in parts by legislative frameworks like the proposed Genius Act, but Bianco warns these could become de facto money market funds without passing through yield and risk stifling innovation.

Tokenization And Real-World Assets

Tokenized stocks and real-world assets (RWAs) could unlock global market access, faster settlement and lower fees, but they raise custody, voting, and dilution questions. Bianco notes that institutional players may co-opt tokenization to preserve control, and that stablecoins issued by banks or central banks may bear little resemblance to the decentralized designs crypto purists envisioned.

An Investment Framework For The Four, Five, Six World

Bianco lays out a pragmatic allocation thesis for a market where cash yields around four percent, bonds five percent, and stocks six percent on a long-run basis. In that environment, fixed income becomes competitive with equities: bonds can deliver much of the market return with lower volatility. He cautions against chasing levered crypto or triple-leveraged equity products: the upside can be dramatic, but the downside risk is often permanent.

• Expect cash, bonds, and stocks to compete for returns over the coming years rather than one clear winner.
• Understand that rate policy must match nominal economic growth; arbitrarily low rates risk inflation or bond-market backlash.
• Tokenization and stablecoins will change settlement and cross-border flows, but the institutional path may centralize what once promised decentralization.

Payments, Micropayments, And The Real Utility Argument

Bianco highlights a concrete friction: the payment rails remain costly and slow, with merchants passing card fees onto consumers or raising prices. The long-term promise of crypto innovations is to make money transfers as trivial as sending an email, enabling pay-per-minute services and new business models. Whether that future arrives via decentralized stablecoins, bank-issued tokens, or central bank digital currencies remains unsettled.

In short, this conversation threads politics, markets, and technology: presidential theater aiming at the Fed, fiscal pressures that could outlast monetary maneuvering, and a crypto sector transitioning from disruptive ethos to institutional adoption. The stakes are tangible—mortgage rates that affect millions, bond yields that can reshape government borrowing, and payment rails that determine everyday consumer costs—and the choices made by politicians, central bankers, and markets will shape which risks come to pass.