Bitcoin Forum

When the next Halvening event occurs , BTC inflation will be @ 1%.

Do you think the Federal Reserve will cut interest rates to ensure that they keep up with this?

No.

Fiat needs inflation to ensure people keep spending their coins but it needs a balance so its worth saving (I. E you can buy 2 bags of rice today but only 1 tomorrow with the same amount then the currency would be too unstable and probably would be replaced pretty soon) .

The government's would rather you didn't invest in their currency and instead invested in the economy or "yourself" (spending).

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I don't think any government sees crypto as a threat and I'm not sure many governments are happy with the fiat system as it stands now...

I think the Federal Reserve acknowledges that there is some serious threat to traditional business and the traditional monetary system from Bitcoin and crypto in general but the notion they would even contemplate such a drastic move on the lines of cutting interest rates because of Bitcoin inflation percentages is completely incorrect. The chances of that happening are virtually zero in my opinion, the Federal Reserve not feel the need to keep up with Bitcoin in this case.

In the future if Bitcoin (and other crypto) value stabilises at +$50k or +$100k price then the market capital would be far too big for the Federal Reserve to ignore but even then they probably would have other contingency plans in place to handle anything they deemed a threat to their traditional way of doing things.

Closer to 2%. ~328,500 BTC produced annually / ~18,350,000 BTC circulating supply in May 2020 = 1.79%. So it'll be more or less in line with "regular" levels of inflation in the US economy.


How would that work?

And no, I don't think the Fed is altering its monetary policy based on Bitcoin.

No! What you are asking is if the Fed will stem inflation: this would mean raising interest rates. The Fed cannot fight too hard against inflation because the national debt would be much more difficult to pay off. Thus, as the U.S. dollar gets devalued by quantitative easing and other shenanigans, the national debt will be easier to pay off, and the price of both bitcoin and gold (https://globalgoldreset.wordpress.com/) will rise relative to the U.S. dollar.

I don't think the Fed will change its policy any time soon, and certainly not because of what bitcoin does. Mainstream economists still think bitcoin lacks legitimacy. We will need bitcoin at $50,000+ before mainstream analysts start to take it more seriously, in my humble view.

Nope, they won't. They care not about Bitcoin to the degree that they will adjust their own interest rate just to keep up with Bitcoin's.

The central banks and the governments have their own economic basis in setting their interest rates and inflation target. And I am 100% sure Bitcoin's inflation rate does not have anything to do with them.

I can't say I agree with the last portion of that. I think that many governments are happy with the current fiat system because they have control. Maybe not as much control as some would like -- but they still have control. Some of this is relative though, as I think those that are in the US controlling monetary policy are much happier then those in some random country that doesn't have as much power -- because USD is the world reserve currency, so changes to it (in regards to monetary policy) effect the entire world instead of just one country.

No. Unlike BTC, Fiat which is governed by the government themselves requires inflation to boost the economy of their countries. Fighting it over a coin of which is not controlled by anyone nor could they control is kinda stupid in of itself. Besides, the FED already has plans for how they are going to manage their economy, and BTC being a factor should have been taken into account to it as well. If they didn't, that would make them quite inept at their job right?


I doubt they are unhappy, more like they are fully taking advantage of the fiat system, which really caused the global debt to rise to quite the heights last year. As for crypto being a threat, I'm pretty sure some has already acknowledged of its existence and the possibility of it overtaking the currency system, but the only thing they could do is to ban most of them in their countries. Look at how China did as such, but most mining groups are still located in China.

So after 2024 it will be 0.9%, then 0.45% in 2028. It is basically like 0 inflation then, all other market forces will be a lot more relevant after 2028 or even already after the next halving.
Will be interesting to watch if close to no new supply changes the markets in some ways.

of course not, federal reserve have many things to think before take action like bitcoin halving. besides it, bitcoin, its pure because system,like or not,needed or not,its must be operated.
but,somehow , for now , i have a think,bitcoin its like one step ahead of what is happening in the global economic system.

No. The Federal reserve targets price inflation, not the inflation of the money supply.

Anyway, with this Iran attack, the oil price has spiked, and that will keep inflation high, which means the Fed won't cut (and might raise rates instead).

No. The FED has a lot more things to worry than fighting it over with BTC tbh. One would be the impending doom of the US dollar with how large the accumulated bet they have right now, which in all honesty should be detrimental to their economic growth AND could potentially lead to another recession just like the one in the past. They might actually raise inflation prices as of yet, with how the possibility of a war with Iran is at hand. We all know how the government is quite experienced with profiteering off of wars.
Indeed, governments actually see crypto as a threat, China being a sample as one of the countries said. The country has already banned a lot of exchanges from their country and is still in effect till today. To be fair, the governments have control over the number of dollars in existence to be specific. They print more dollars than needed so as to say boost the economic growth of the nation, but this action has also increased the inflation in their country by a large margin, much so that it has exceeded the proper amount of inflation that is beneficial.

You are mixing emission inflation with price inflation. Or even mention interest rates.  After halving Bitcoin emission will go close to Gold mining inflation. That is around 1.7% per year.  Average USD emission of M1 in last 10 years was around 10% a year. In case of war that will increase drastically.


You even have pined post in here  explaining you the difference: https://bitcointalk.org/index.php?topic=140793.0

There is no "inflation" in bitcoin world, it just doesn't exist, for something to have an inflation it has to be a currency that loses its value depending on the printing of new money, considering bitcoin doesn't have any unexpected print of new coins (only the miners mine the expected amount) all of it is included in the price already. Plus, federal reserves have anything to do with bitcoin as well, they do not care about bitcoin as much as people imagine they do and they won't do anything about it when halving happens.

As long as everything is planned beforehand and everything is going expected to plan there is nothing that will ruin the price of bitcoin like it happens to fiat when even one Iran military office dead means a lot of change in prices.

It would be a problem if Federal Reserve would cut interest rates as the bitcoin halving occurs. The inflation that may happen would definitely attract the attention of different set of group of people which may cause a commotion for the to make an action to prevent bitcoin from dominating the world economy. But as to what most investors says, the Feds wouldn't act strangely as bitcoin halving occurs. We should instead focus on getting ready for the incoming bull run so that we can make the most from it and gain much benefits.

Well, not yet.

http://www.mattwhitlock.com/Bitcoin%20Inflation%20logarithmic.png

It will still be around 2%, but that is well in line with the "best" inflation model as told by the ECB or FED( ::)).

This will definitely inflate the price of bitcoin, but it shouldn't be a threat to them if anything. See, the reason why there is inflation is because the government's trying to balance the currency's purchasing power along with it's saving capability so banks won't go bankrupt. That being said, this doesn't apply to bitcoin as fiats are the only one heavily affected by inflation so it should bother us if anything.

You are right to say printing of new fiat flooding the country can be the reason for inflation. I don't see how bitcoin will suffer inflation in this light. Inflation is not associated with bitcoin more so as we are about to have a bitcoin halving which will ensure that mining is even limited more.

What makes you think that there will be a halvening soon ?
I think 2020 will be a great year for bitcoin

The funny part is that fiat isn't going to do anything to increase your purchasing power. Bitcoin even at ~4% inflation blows fiat out of the window in terms of maintaining and increasing your purchasing power, especially over a longer period of time. On top of that, you actually use a new form of money that puts the power into the hands of the people.

In the end, even 0% inflation for Bitcoin can't prevent it from going through a lasting bear market. The speculative nature of this market is a brewing pot for boom and bust cycles. People love to buy what is going up, but dump everything they have when they see the price go down, or ignore the asset in case they don't have any holdings. That's how markets in general are.

Good thing about fiat inflation is that it gives people more incentive to spend it, or buy something like Bitcoin.