This is one of the reasons why many bet on Bitcoin other than to hedge against the possibility of high inflation due to accommodative monetary policy and expansionary fiscal. The role of Bitcoin as an asset for hedging can indeed be competitive
so that many big business experts and economists are discussing it again after recently not only the dollar in other currencies there was inflation in every country because of the covid-19 pandemic.
Topic: USD Inflation over the last century. Bitcoin can protect you even in the US. - page 3. (Read 251 times)
June 16, 2021, 03:23:00 AM
June 16, 2021, 02:59:54 AM
To me that chart only tells half the story. Annual inflation matters, if we believe it, as the CPI does not accurately reflect the effects of currency printing, but even more important is cumulative inflation. An average inflation of 3% causes you to lose half your purchasing power in a few lustrums. Of course, if there are big spikes it is even worse, and the best way to protect yourself is to buy inflation-beating assets, Bitcoin being the one that seems the best, at least in the last 10 years.
June 16, 2021, 12:23:03 AM
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Visualizing the History of U.S. Inflation Over 100 Years
Is inflation rising?
The consumer price index (CPI), an index used as a proxy for inflation in consumer prices, offers some answers. In 2020, inflation dropped to 1.4%, the lowest rate since 2015. By comparison, inflation sits around 2.5% as of June 2021.
For context, recent numbers are just above rates seen in 2019, which were 2.3%. Given how the economic shock of COVID-19 depressed prices, rising price levels make sense. However, other variables, such as a growing money supply and rising raw materials costs, could factor into rising inflation.
To show current price levels in context, this Markets in a Minute chart from New York Life Investments shows the history of inflation over 100 years.
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At the same time, the Federal Reserve is following an “average inflation targeting” regime, which means that if a previous inflation shortfall occurred in the previous year, it would allow for higher inflationary periods to make up for them. As the last decade has been characterized by low inflation and low interest rates, any prolonged period of inflation will likely have pronounced effects on investors and financial markets.
We can see by the chart that US has a constant 1-3% inflation over the last decade. Somewhat controlled low inflation, but there were huge spike in the past.
Those spikes (some of them more than 15% in a year) can destroy our economic power within a short period. Also, 1-3% inflation rate every year is also consuming our buying power every year. Will we face another of those spikes soon?
I see that bitcoin rises is bringing up this discussion about inflation again, and I see this discussion all over the place.
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