Bitcoin Forum

It seems that Inflation still cannot be separated from the US news in the last few months.
Even though they are trying to fight inflation in various ways, it seems that the US central bank's actions to fight inflation will actually trigger a new debt crisis.
Debt payments by developing countries are already in a sizable phase as they have more than doubled since 2010 and will even increase further if the Fed is still trying to raise interest rates.

Is it really difficult now to avoid inflation?
Because it's like going forward will get in trouble, even backwards can't.

Source https://www.theguardian.com/business/2022/jan/23/fears-grow-that-us-action-on-inflation-will-trigger-debt-crisis (https://www.theguardian.com/business/2022/jan/23/fears-grow-that-us-action-on-inflation-will-trigger-debt-crisis)

I don't think you can "avoid" inflation in fiat.  It's an integral part of debt-based money.  Governments just try to keep inflation somewhat under control when they can, so that it doesn't rise too quickly.  Usually not with any great deal of success, but that's the theory, at least. 

Governments run stealthy ponzi schemes through their fiat systems. Investors know about this fact, but they "partner" with these governments anyway, just like early investors invest in ponzi schemes hoping to profit before the whole ecosystem falls apart. It's just a matter of time until it happens, as governments never adopt responsible economical measures to make the finances sustainable on long run. They aren't going to stop printing money and promoting populist social actions when the elections get nearer.

And actually, it gives me some hope, because I believe once the traditional financial system becomes unsustainable or unprofitable, bitcoin will be the safe harbor for investors in order to protect their funds again, just like happened during the pandemic in 2021.

I am really thinking that there should be RESET button in the White House somewhere and it’s time to press it. Rest the whole economy and start from the scratch. Amid the COVID hospitals are not doing well and this is one of rib from system which keeps everyone going on. I’m not saying that everything must be reset but there should be a proper planning to resume the whole thing with the help of big industries, giant ventures, and billionaires within america. They should boast the things as greatest contributors in the country.

Things which are really zero priority should be stopped in US. Medical and healthcare staff should be increased, equipment’s and instruments related to the field shall be imported from other cheaper countries at discounted rates.

They need to improvise rather than deprive the whole situation by stuff like increased rates, printing money etc.

My theory is that they're pulling back their punches in fighting the inflation because they know that the elites who really control the country will still survive, they're trying to maximize their profit in a way to somehow make them more money, and they don't really worry about this problem because they've been to this kind of thing over the years so they don't worry too much about it.

Every country has inflation, it's the nature of economics. It is just not very noticeable in the previous years but there is inflation every year.


That's probably just one why they couldn't stop printing to go brrr. But it's the cycle, when a country like India dives down to its lowest low, it's also bound to go up one day. We saw this happen in Germany where they also experience the dive of their economy that thier money becomes worthless. It's a cycle.

But a country could purposely bring thier money to worthless to depreciate the value of their debts to thier trading partners.

Inflation is unavoidable in the mainstream economy. But there arr various ways to handle inflation. When I say "Handle", it means controlling the inflation within a reasonable range.

Increasing interest rate is indeed a great way to handle inflation. Howevee, FED is very reluctant to do so as it has last increased the interest rate is late 2018. So it's the need of the hour. This way additional money will be sucked by the banks from the hand of the people and people will control their spending which means less money will circulate in the open market which will control the inflation. Let's see if FED increases the rate now!

The only effective means to reduce inflation is to make "food" and "Services" cheaper..... so if you can reduce the input cost for the production of the food items that are used to determine the inflation basket, then the price of these items will be cheaper and the inflation will be lower. (The Consumer Price Index (CPI)

Now we know the government will manipulate that basket to reflect the inflation they want to boost their agenda. A lot of governments are also pressured to promote clean energy use by the consumers, and we know these methods to produce clean energy are more expensive, so your input cost will be higher and this will push up the price of goods and services.  ::)

Inflation is unavoidable, just that it is more in some countries (underdeveloped and developing countries) than others (developed countries). There are period the country will not have option and want to protect their foreign reserves, the government of the country will not have option than to manipulate fiat in a way all prices of goods and services are all manipulated in the government favour and in favour of the economy.

Inflation is just now avoidable but their are means you can help yourself, you can buy bitcoin or other asset that will be a hedge against inflation and fiat's value declination.

I wonder about the influence of the Federal reserve anti-inflation policy over the US national debt.
The increased interest rates should make the US national debt more expensive and the debt payment should become a bigger burden over the US government.However,there's no way for USA to get enough tax revenue to pay it's debt,so the money printing machine must keep working,in order to fill that 3.5 trillion budget deficit.
The good of part of inflation(at least in the eyes of the politicians) was the devaluation of debts.
Now,the politicians will have to make the choice between fighting inflation and getting into recession or keeping the high inflation(which is bad for the poor and the working class) and devaluation of the federal debt.This is a pretty difficult choice to make.

The problem is that other than burning money or burying it underground there is no way to stop the inflation coming from money that was already printed, after all sooner or later that money will begin to circulate as part of the real economy and people will have to suffer the consequences of this, so all of these news saying the US is doing something to combat inflation is just propaganda, as there is not much they can do about it other than not print as much money as they did during the first months of the pandemic.

It's difficult to avoid inflation, but not difficult to avoid hyperinflation, just look at the GBP - centuries pass and it's still there. On the other end of the spectrum are African countries that can create a new currency, make it hyperinflate and make a new one all within 10 years or less.

Inflation is important because currency without it would be hoarded and this means less transactions and less taxes. You want just a bit of inflation so that it's not profitable for people to hold cash. You want them to use savings accounts, buy bonds and stocks, start businesses. If the inflation is too high people will keep spending like there's no tomorrow and will withdraw currency from all their bank accounts to get rid of it somehow like spend or exchange to foreign currency. They will also borrow money and spend/invest it because inflation higher than interest rates mean that it's just profitable to buy stuff now than later, especially when you'll have to give back less in terms of value. To stop this process governments artificially pump interest rates, but this puts people who are already paying interest in a tight spot. Basically the government doesn't want to get fucked so it fucks everybody else.

I was afraid of US inflation and debt back in 2012, when government accountability office (gao) comptroller David Walker did his nationwide tour publicizing it.


It was impossible to get anyone to take these matters seriously back then. It was common for people to be offended if anyone said the national deficit was a legit issue or that social security could someday fail.

In many ways circumstances have remained the same. People still think inflation is something that can only happen in 3rd world countries. There isn't much incentive or will for things to change.

Politicians make their career promising stuff they know they cannot pay with just the taxes they collect and that will come instead from printing more money, if countries all over the world began to be responsible and cut down on their expenses then a great deal of things that people consider rights will have to be scaled down dramatically, and this is just political suicide so they will never do it, politicians just hope that the system does not crash when it is their turn to be on power so they are not the scapegoat used to take all the blame, and when those at the top and the bottom do not want to change an unsustainable system, the only way out is for the system to eventually crash.

As other posters have said, it is not about avoiding inflation, is about getting it between a 1.5 and 2.2% that seems to be the consensus on what a good inflation is (too little detracts investment, too much makes the country uncompetitive).

As COVID came, the printing machine had to be activates, there is little else you can do during a crisis without basically paralysing the economy. There is naturally a price to pay: you eventually have to pull the plug and start paying the cost with job losses and slow growth.

You technically could if there was a finite supply of fiat. A currency based on the gold standard wouldn't have any inflation, granted the supply of gold was steady. Even without a gold standard, a fiat currency based on magic pixie dust could theoretically not have any inflation, as long as the government is unwilling to create more supply.

Government targets the inflation rate to be at 2 percent, so they'll make adjustments accordingly. The problems arise when you try to increase the money supply too rapidly, like the US does by having a debt balance sheet of trillions of dollars -- predictable result is an insane 7 percent inflation rate (compounded by COVID, of course).

This is an expected and natural result of the wrong decisions taken by the US government to address the problem of inflation. These wrong decisions have had a great negative impact on the global stock exchanges and markets, as they affected the same thing on the Crypto market. Inflation is inevitable for fiat because the wrong economic policies will inevitably end in ruins for the economy, perhaps The increase in the interest rate by the US Central Bank will lead to many negative effects in America and the world and may cause the exit of capital to other countries, and this will have very bad effects, although it may increase the strength of the dollar against other fiat. But in the end, in my opinion, inflation is inevitable.

Is that the only way that they could have gone about this problem of job losses because of the covid-19 pandemic, shouldn’t there be other ways that they could have gone about this? Like they kept printing too much money and making the currency to lose its value, and just like they don’t care, when everyone is complaining about it they kept pumping even much money.

Anyways, I wouldn’t worry much because I had my plans already and right from time I have always get myself ready for times like this by planning the ways I invest my money.

COVID-19 pandemic has made the natural levels of inflation variable, and therefore monetary policies set by governments may fail to bring inflation under control and maintain levels according to expectations, for example, most countries are trying to maintain inflation between 2%-5%.

Now we have an energy crisis and I believe that the dollar is linked in one way or another to the price of a barrel of oil, which prices most things in our lives, and with the fluctuation of energy prices, political risks and others, it will become difficult to maintain low inflation levels and a price of 100 dollar per barrel of oil without high inflation more than 5%.

Therefore, I do not think that governments will succeed in keeping inflation rates under control during the next three years.


Source --> https://talkmarkets.com/content/economics--politics/macroview-2021--a-disappointment-of-growth-and-disinflation?post=295732

 This is the problem that Biden will face all his presidency. He took over from a guy who distributed more than %50 of the giveaways to companies (check the covid relief packages, less than %50 went to individuals each time he did it) and that caused the dollar to be inflated. Now Biden will have to explain to people that he did not caused it, I mean sure maybe a part of it but he took over a nation that printed more than %20+ of debts amount in a single year, yes thats right, for the past 250 or so years, %20+ of the debt amount got printed in just one year. So of course Biden is responsible for some stuff but not all of it. He will be seen as the president who had bad inflation during his term. Quite similar to Obama taking over Bush 2008 crisis, it always happens, a republican president leaving a bad economy to be replaced bye a democrat.

I think most government that game in since the past 20 years have got to worry about inflation. And what can be the course of this rising inflation globally ? I think there is a relation between inflation, population and printing of more fiat. The government rush in for printing more cash to take care of the growing population and this has ripple effect on the economy. The challenge is population growth and trying to control that will help take care of inflation.

I'm not sure how much of a factor the population is, but I'd imagine the biggest issue would be the "Snowball effect".  The more the money becomes devalued, the larger the quantity governments need to print in order to provide economic stimulus, and consequentially the more it debases the currency.  It's a vicious cycle.  The problem generally escalates over time as larger and larger sums are printed.  Eventually, it results in "hyperinflation", where the situation is effectively uncontrollable and the currency becomes all but worthless.

See inflation can never be avoided. We have to understand that it's a necessary evil but at the end of the day if the government is not able to take care of the rates of inflation then it would cause so much trouble for the people and the government itself. The economy will go down as well plus the government does have to worry about inflation right now.
Healthy rates of inflation is 1-2% but for US it's approximately 6%.
The labor shortages are getting so much worse as well. They have to understand that printing excessive money will make it so much worse. They are not able to meet the demand as well. Wonder what will happen to the government now.

Unfortunately cheap borrowing by the masses is an extremely popular method for politicians to buy votes, even if it is just a continuation of the previous administrations policies. People like easy money and home buyers (heavily active voters) are ultra happy when they can get mortgages for a dirt cheap price. However at some point the party has to stop, because too much money is floating around and reckless spending gets too carried away. People stretch themselves to the limit, borrow far too much and come to the dawning realization that they have to pay it back. Those people stop spending as they pay down debt. In order to encourage responsible debt levels, the interest rate at the central bank is also raised, which ripples through the economy and sometimes pushes mortgage owners beyond what they can afford - this is the start of a recession. It's a very dangerous balancing act and small triggers can have big consequences.

Oh really. But if you take a good look at your post you see you are yet subscribing that population is a major factor to inflation because that means change is occurring in the system other than what was known or used to before and requiring planning, printing of cash and change of status quo.

Inflation is already inevitable, because for the last three years all states have been fighting the coronavirus pandemic by taking unprecedented economic measures. Forced isolation led to large losses in the economy of all states without exception. Therefore, there will be a large world inflation, and maybe a global economic crisis, but it will all pass. The world always alternates between periods of economic recession and recovery, as in cryptocurrency. But for cryptocurrency, this is a good chance to increase its capitalization and liquidity.

Not all countries were able to escape the crisis due to the pandemic at that time, even to stand up to overcome inflation, only a few of these countries finally submitted to developed countries. China offers loans that will only exacerbate the economic problems of a country that is willing to so much want to stabilize the economy from the pandemic. US inflation has not yet recovered, not a few of them now also have to prepare to experience dollar bleeding because they print more paper money while the underlying dollar is now a big question where the US is looking for it.

I don't know much about formal economics but even I believe just making the money printers go brrr will make not inflation go away. Heck, could make it get even worse. What I saw from videos about the topic is they basically printed a whole bunch of money, like 80% of all the dollars in circulation, in a span of few months. Unbelievable. Oh that definitely wouldn't cause problems later....

It is the easy method but it also means that they will crash down eventually. We all remember the 2008 period where everyone got a house, or they refinanced it or whatever and they just kept up buying houses like crazy.

People who couldn't afford houses all ended up buying houses, it was a reality and in the end the crash came up. This is quite similar, inflation allowed people to get "richer" in a way where the purchasing power stayed the same but the amount rose, which allowed people who had mortgages to pay it off easily, and they used that to get another or whatever which will eventually result with people not being able to pay eventually.

Yeah... the M1 supply of US Dollar went up by 400% or so in the last 3 years. I checked similar numbers for other fiat currencies such as GBP, EUR and JPY, and with none of these currencies the situation was this bad. On top of that, the crude oil prices have breached the $90 per barrel level and are surging towards the three digit mark. That should further magnify the impact of inflation in the United States. Biden needs to act now, as the elections are only 9 months away (Senate/House). There is a real chance that Dems may lose a few important senate seats this time.

It does seem like quite a few scholars have looked into the connection between demographic changes and inflation.  Some of them suggest it can go either way in terms of a positive or negative effect on inflation, depending on what proportion of the population are working versus retired.  But it'll depend just as much on other economic factors as well.   

It's very hard to avoid inflation regardless. The best that the governments can do is attempt to control inflation instead of wholly prevent it. When you have President Biden dishing out $2 trillion in COVID relief funds - I don't know what they expected to happen. The main problem with fiat currency in my opinion is that it can be manipulated effortlessly. Politicians can just print more money out of thin air to fund their campaigns in order to yield short-term benefits with no regard for macroeconomic repercussions in the future. If I'm not mistaken, approximately 1/3 of the USD supply to ever exist has been issued in the last 18-24 months - it's no coincidence that ever since 1971, an increasing number of countries have experienced hyperinflation.

A good way to think about money and its desired attributes is/are in 3 hypothetical levels:

Fundamental Layer - Level 1: Store of Value, Means of Exchange, Unit of Account
Quality Layer - Level 2: Transportability, Divisibility, Fungibility, Durability
Economic Layer - Supply (Fixed/Deflationary or Inflationary), Credit, Debt

Credit & debt can be up for debate, but all other boxes in that hypothetical model are ticked by Bitcoin. For example, Gold could never be a true reserve currency because of transportability and divisibility issues. Fiat currency has its limitations in supply - money can be printed out of thin air at will, driving inflation and also calling into question as to whether it's a reasonable store of value at all anymore.

Off-topic of the US but on the topic of inflation - I live in England, and I was thinking about whether CBDCs and fiat currency could genuinely and successfully co-exist? If done incorrectly, it could just spike inflation due to x amount of (digital) £Sterling (Sterling/Pound = issued by the Bank of England) being authored out of nowhere. Talking of inflation had me also thinking that it's a shame that the Basecoin concept didn't amount to anything - the premise was/is extremely intriguing and something that I've been thinking about recently. It almost seems too good to be true to be honest. I believe they stopped their research due to increasing legal pressure from regulators but I might be mistaken. Basecoin intended to be a price-stable cryptocurrency with an algorithmic central bank. You could theoretically peg this asset to the value of a country/economy and program smart contracts to burn or mint the currency depending on the current state of that in which it was pegged towards. Taking elements of the Basecoin concept and Djed on Cardano could amount to something interesting potentially?

Regardless, inflation issues were practically inevitable under the Biden Administration. He was handed a somewhat stable economic situation considering the circumstances, an economy which was set for a boom, he was handed somewhat peace in the Middle East, a stable situation in Afghanistan, a clear distribution plan for the vaccines, a world where Russia and China were basically stagnant and so on. Since I live in England, I do not claim to be an expert on the current situation in the US, but from where I stand, Biden has failed on all fronts and has sent the economy tumbling with his reckless spending.

But the problem is, most of the elites would just probably shrug off this issue and appear concerned, while in actuality they couldn't care less about the situation as long as they're making money. The government bailed some of the industries biggest players countless of times, yet these players wouldn't even do something in return. For them, it's just business and expansion, nothing more.

Perhaps the central bank and the feds can come bite these huge players' hands while they're at it, and make them 'help' ease inflation or at least the economic situation of the country they operate in, but that would be a reach.

That is what it always happen, in theory fiat currencies work if governments could stop themselves from printing all the currency they want, but since their power is centralized the temptation to abuse it is simply too strong, so eventually they will find themselves in a situation to do so and slowly but surely they will begin to walk the path of hyperinflation, this is why it is so important that money is outside of their control so we can avoid that scenario.

Fortunately or unfortunately, this is already for everyone, but for the United States there is no longer a good way out of the inflation-related problem that has arisen. Yes, of course, they are trying and will try to reduce it, but as I wrote above, they will not succeed. Of course, they will try to show as much as possible, informationally, that inflation is not so big, but judging by the situation both in the USA and in the world, we can say that inflation is very high, on average, about 25%. The situation is aggravated by the fact that in the US in 2022 the election race begins, which means that the opponents of the current power in the US will crush their rivals with great force. But what will happen next and what to do in this situation? According to one economist, the solution to this problem is the collapse of the international dollar system into currency zones, and hence the complete collapse of US dominance in the world. If you take a different path, that is, to preserve the world dollar system, the United States will completely lose its economy, and therefore also influence in the world.

this is what will be a problem because there will always be some parties who take advantage of things like this and one of them is what China is doing.
they did look pretty good at first by lending but in the end they took the opportunity and took advantage of it.
actually this is like the law of nature that preys on each other and small countries are only trying and preparing to accept the worst possibility of inflation attacking

Wait, 400%? I don't even know what M1 is but that figure don't look good. And despite all this Biden is still flying in illegal immigrants into the country in the dead of night. Seems like they only care to let people in to vote (that non-citizens apparently can coz they don't require IDs to vote now is shocking in itself) coz they don't want to let Cubans in.

You can perfectly avoid inflation in fiat and it does not need to have a limited supply. It is a simple as printing money based on the real growth of the economy so that the monetary mass is in sync with the real demand for money. To explain it for a 9 year old: You print the money that is required. If you print less, there is deflation, if you print more there is inflation.

Bitcoin is NOT inherently deflationary.

In theory.  But I suppose in practice it's unlikely to happen that way.  Partly because new money issuance can arise from many sources, but mainly that it's not always possible to accurately forecast the real level of demand. 

On top of that, there's also the issue of governments with their (arguably absurd) notions of chasing perpetual economic growth forever, but perhaps that's another discussion altogether.

Actually, you can, and it's not the government who can stop this but poeple themselves, and the perfect example is one of the biggest economies in the world, Japan. Although you have money printing, a lot of printing, consumer prices haven't grown simply because there is no extra demand for those goods so there is no way for them to raise the price, since the cost isn't going up either then there is nothing forcing the price up either, the only thing that can influence this is a rise in the imports costs or energy, that's why actually covid helped them get out of continuous deflation, to which probably they will revert back by the end of the year.

The government can print trillions, if those trillions are not making their way back into consumption it will have no effect whatsoever.

Let's assume the government pays 2000$ to everybody, if poeple decide it best to spend it on pizza and phones you have a demand of 200 million  Iphones and 4 billion pizzas, surely making the price skyrocket. But if all of them would put the money under their bed, you would have nothing, it would be like that money never existed.


Not that simple.
Inflation is unavoidable when there are major changes in the economy, you can't do anything against it if it's triggered by an energy crisis, even without money printing you will have inflation if the cost of gas or electricity goes up. The exact opposite is perfectly true also, you can have deflation with money printing too, just as I mentioned above.

Inflation is the effect of an unbalanced demand and offer market. Money printing can and usually does increase demand, but it doesn't have to always be like that.

I have noted inflation being just everywhere in different countries and this causing instability in economy and getting countries to disagree because of the choice of world economic policies. Poor countries want more realistic policies but relying on economic theories to developing countries not solving the problem of inflation but increasing it more and affecting tax rate.

The central banks purposely target inflation to be at 2 percent, so even in a perfect world the money supply coincided perfectly with GDP, it'd be difficult to pull off. You're one economic dip away from ruining the entire system before the central banks panic and begin injecting money into the economy to save industries that would have probably crashed had it not been for intervention. Just use COVID as an example, debt of most countries began to sky rocket. The US in particular has their inflation rate out of control so it isn't merely just a problem with supply chains.

That's the issue with centralized economics, the entity in control inevitably loses control.

Well, inflation will always be here, at least for as long as the current economic paradigm is in place. Money will always have to weaken regularly. That's necessary in the economic model that is prevailing right now. What is important, though, is that the level of inflation should fall within the range which is considered tolerable for any economy to continue to thrive.

However, things are not smooth nowadays with the pandemic wreaking havoc in economies around the world for years now. That's true even in rich countries like the US. It must be hard even for them to somehow strike a balance between keeping the finances of the country afloat at the same time tempering inflation in the midst of health lock downs.

The only way to avoid inflation is to stop printing the money but no government is going to do it and US printed more money in the 2020 year for stimulus and as temporary solution to bring money flow in their economy but the effect will stay for longer period even for a decade.

But new money also comes into existence through loans and mortgages.  It's not just the government and their stimulus packages.  Banks are creating new money too.  And (although most governments neglect to include the cost of housing in their published inflation rates) it absolutely does have an impact on the true rate of inflation.