Good for Bitcoin - FED to let inflation run hotter than 2% for "prolonged period of time"

in LeoFinance •  5 months ago 

As expected the FED shifted policy course today and it could have profound effects on bitcoin

In what was signaled well beforehand, Jerome Powell and the FED announced that they would be shifting course form their state duel mandate.

Specifically, instead of targeting 2% inflation, they were going to instead target an "average 2% inflation".

While that may not sound like that much of a difference, it actually could end up being a significant difference down the road.

Normally, when inflation ticks up to about 2% the FED starts shifting monetary policy towards stamping out inflation.

However, today they announced that they would let inflation run hotter than 2% of a "prolonged period of time" if it had been well below 2% for a prolonged period of time.

The reason being is that they don't want to stifle growth too quickly.

This is a lesson learned over the last decade as well as from Japan who have been struggling with low inflation and terrible employment numbers for 2 decades.

This is good news for Bitcoin...

Normally when you think about inflation you think it's a bad thing, and I think many 3rd world countries struggling with hyperinflation would be the first to agree with that statement.

However, the silver lining to that is that inflation can often be a symptom of economic activity and growth.

Stamping it out too aggressively and quickly can be akin to stamping out economic growth too quickly.

And inflation can be especially good for investors...

When there is inflation, everything priced in dollars (or whatever the local currency is) goes up, and that would include stocks, gold, and yes bitcoin.

Interestingly enough, give then fact that this was well telegraphed beforehand and largely expected, I think the market is a bit disappointed that the inflation range mentioned wasn't larger, like the 4% rumored.

And that is likely why the near term reaction may be down for equitie, gold, and bitcoin in the short term:

And up for the dollar in the short term:

(Source: https://cointelegraph.com/news/bitcoin-price-hits-116k-as-fed-says-it-will-let-inflation-pass-2)

TLDR...

The takaway from this announcement is that the FED is prepared to do whatever it takes to bring the economy back.

They are not going to stamp out a recovery too soon by raising interest rates like has been done in the past.

In the medium term, this is good news for just about all asset classes, bitcoin and crypto included, though the immediate price reaction may be to the downside.

Which means...

BTD!

Stay informed my friends.

-Doc

Posted Using LeoFinance

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Real assets are definitely king, and will continue to be for a good long while.

And, in anticipation of someone asking if I think HIVE is a real asset, my answer is YES.

Just like BTC. Just like gold. Just like gemstones. Just like real property and real estate. Stocks of profitable companies are too.

I think just about everything else just gets thrashed, doesn't it.

You believe that inflation was ~2% in the past? Let me tell you that centralbanks has way higher (shadow) inflation then they report on their websites. Those centralbanks are blackboxes that can do whatever they want, its controlled in secret loges by the Illuminati!!!

Our best weapon against them are cryptocurrencies.

According to the way they measure their inflation indexes, yes it hasn't gone higher than 2% over the last decade. You can debate the merits of those indexes all you like, though, they have been using the same ones for decades and decades. I know for a fact certain food prices have gone much higher than 2% over the last decade...

Well let me tell you what I think about it. Its funny that you mention food prices, because I often wondered HOW the food prices where I live remain relatively low, while house prices and other things went up at much higher rates. I have no proof of this, but I think they manipulate the masses with keeping the food prices stabile low, while the assets of the 1% goes up at insane rates (from the secret money printing and the huge loans to "their friends").

So I noticed something contrary to you, that food prices looks like they are kept low, so that the slaves still can eat while they are robbed by the inflation in for-instance real estate prices.

No matter what, we need to use sound money and get rid of fiat. Thats why I am 100% in crypto and only do as little as possible in fiat money.

Where do you live? It's been the opposite most places... housing prices have gone up 20% but a double cheeseburger has gone up more than 100%...

Copenhagen, Denmark. The food in supermarkets are in my view very cheap compared to the general prices in for instance real estate.

A cheeseburger cost the same as for 15 years ago, as fare as I remember... this is all based on my observations and memory, not real statistics.

In the United States it is far different. For example, less than 10 years ago, I could buy a double cheeseburger for .99 at McDonalds. Today it costs almost $3.

My little theory is that the Illuminati want places without a lot of very poor, homeless and hungry people and Denmark is one of those places.

A cheeseburger cost 10 crowns as long as I can remember, I don't remember it costed less in the past, but it could be my memory that is wrong.

Yea in the US it has been far different. Everything has gone up in value and the things that have appreciated the most have hurt the poor disproportionately more compared with the rich. And of course, wages have not kept pace in any shape or form.

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That's the most important.

yes, more inflation should lead to higher asset prices, we'll see..

Which means if we get a dip, it's probably a good buying opportunity.

Always.

yes! I have a ladder set up all the way down to the high 8ks. Let's see how it'll work out

This is also good news for gold and silver.