Record High Inflation and They're Still Low-Balling It
The Blurb
“The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.”- U.S Bureau of Labor
Last week the U.S Bureau of Labors CPI data recorded 7% inflation. The highest annual inflation rate in 39 years. Even with them reducing the weight of past variables like food, gas, and used cars. All these were used to measure the CPI in previous years, but excluded in this years. You can expect the “unofficial” rate somewhere in the +10% range. For example, you have the Dollar General raising their prices to $1.25 (25%).
Simply put, everything around you is getting exponentially more expensive in terms of the U.S Dollar. Since March 2020, the U.S created over $6 trillion of new money. It took from the founding of the country until 2003 to create the first $6 trillion! What are they doing to “combat”this? They’re printing more to hand out to people in need. So they’re paying you back with a form of currency that loses it’s value immediately after sending it to you. You’re practically put in the same situation you were in before with everything around you getting more expensive.
The U.S is destroying its currency as a store of value; and in return ruining foreign currencies in the process. Countries have had enough and are beginning to look for a Plan B(no pun intended). Russia’s ditching the USD with the pricing of their oil reserves. El Salvador has made Bitcoin their legal tender. The Mayor of Rio De Janeiro has converted part of the city’s treasury to Bitcoin. Most importantly, you’re seeing China make dollar loans to developing countries that, if defaulted on, give China the infrastructure. For example, China will takeover Uganda’s Entebbe International Airport for default on debt repayment. A recent change instead of using their dollar surpluses to buy US Treasuries and finance U.S deficits like they did in the past. In other words, they’re hedging a bet against the U.S dollar. They get prime real estate and infrastructure from other countries if the USD keeps inflating.
This time last year the Turkish President openly declared a war on Bitcoin. Last week the Wall Street Journal reported, “Turks embrace Bitcoin as Lira loses 40% of its value vs USD since September.” India “Banned Bitcoin” last year, but recently announced they’re set to launch its first Bitcoin ETFs(exchange traded fund). Listening to “analysts” on T.V talk about Bitcoin prices instead of paying attention to what’s happening around the world will be our biggest mistake. Most “experts” on T.V speaking on the country’s financial status haven’t read the Bitcoin White paper. Let alone understand the core fundamentals of the Bitcoin network. Bitcoin is bigger than U.S policy.
Goldman Sachs expects interest rates to be raised FOUR times this year. With this in mind, you can expect liquidity sucked from markets including Bitcoin. At the same time El Salvador should be releasing the number of subscribers for their “Bitcoin Backed Bond”. If the bond becomes oversubscribed, expect other Latin American countries to follow suit. Countries can offer investment opportunity to their people while becoming financially independent at the same time. This would never happen without credit score checks in our traditional finance/banking system.
Altogether, you should expect the possibility of a slight downturn in the market because of interest rate hikes. How long that downturn lasts is up for debate. There will be a race between countries for buying bitcoin under $50,000. This race will be around the same time interest rate hikes are happening. Everybody will be looking for a hedge against inflation and Bitcoin is THAT. Countries who buy and put aside Bitcoin will be better off than those who decide against it. Finding a way to adopt and plug into the Bitcoin network should be our country’s number 1 priority to fight inflation.
Remember, 1 Bitcoin is made up of 100 million “Satoshi’s”. Have a good week and stack some Sats. Peace