Federal Reserve Now Targets Inflation Above 2%, Bitcoin Breaks $11K

[adaseb]

True asset inflation is already running at ~6-8%/year.

The Fed is full of shit. How they measure yearly inflation is a lie.

Yeah, if you live in Malaysia since the 1990s, where the government feels so proud to announce annual inflation every year at about 1%, but you see your coffee and meals price go up 10% every year, paying 2x as much in just less than 10 years, then you realize the silly money and economics games that all governments play to keep you less worried than you ought to be. Our faith lies in Bitcoin.

One reason why governments do this is because most people don't even know how inflation works exactly. And even less people know how the real inflation works. Basically my dad was given a raise every year which was like inflation + 1% or so. And he was happy. I told him you are getting ripped off. And he didn't understand. He looked at the bank stats and he assumed his pay rates were fair however I told him why are you paying double for heat now as compared to 10 years ago! Are you wages double? Probably not.

So employers I guess are happy that the government makes inflation 2%, so they can give their employees a 2% raise every year and most will be happy. However employers probably increase their costs by more than 2% to account for increased costs. Hence why people are buying real estate, bitcoin, stocks, etc. Because cash is becoming more and more useless as time goes on.

[bitgolden]

We were going above 10.8k and then we are dropping under 10.5k I do not understand what to expect from crypto right now, things looking like they are doing alright as well but it also looks like it is not doing great neither, it is not something I am very knowledgeable about I suppose but I really want to learn why does it not move at all but also move so much at the same time.

As in it doesn't move at all in big manner, not go above 11k or even 12k price but at the same time not go below 10k neither that would be moving, but also it moves a lot because it does that 10.5k to 10.8k a million times, there is really no reason why it should be moving up and down like that so small. If anyone knows why it makes so much money small time but no move big time at all could explain the reason that would be great.

[Torque]

So employers I guess are happy that the government makes inflation 2%, so they can give their employees a 2% raise every year and most will be happy. However employers probably increase their costs by more than 2% to account for increased costs. Hence why people are buying real estate, bitcoin, stocks, etc. Because cash is becoming more and more useless as time goes on.

Yes but...many people in the U.S., even higher paid white collar workers, are no longer even getting a standard 2-3% raise per year. Many many people, family, friends, and colleagues I've talked to told me that standard raises (and bonuses) basically ended around the 2012-2013 time frame. Most have gone 1-3 years without a single raise. When a raise does come, it is usually closer to 2%. Then another 1-3 years go by with nothing.

That is why the music stopped in the U.S. in the mid 2010's, because wages started falling WAY WAY behind inflation (which is ~6-8% /year), so people just stopped buying the things they used to buy fairly regularly, like luxury items, new cars, fine clothes & jewelry, lavish trips, etc.

[stompix]

Heck look at iPhone prices, the first iPhones were like $500 and now they are over $1000.

Would you pay now 500$ for a phone with 128MB memory, 4GB of storage a, 1400Mah battery, and an awesome 2MP camera? Guess not!
Comparing products that evolve and come with different stuff on it is meaningless, would you buy now a brand new car for 5000 knowing that it has one airbag and no power steering? Or a tv with only buttons and no remote?

We should stick to the basic stuff, mostly food which is not really that influenced by external things, like the price of oil for example.

[el kaka22]

There are tons of nations that has done this so far, in my nation the inflation rate was high which caused the saving interest to be high as well while making everything more expensive. When you have huge interest rate people try to not use that money but instead put that money into interest and collect it which removes money from the market and makes it hard for economy to grow as well.

When you drop the interest rates to very low, that makes people use that money instead to make more money because they can't get interest that is one example, also on top of that when they spend that money to make more money on something, they usually put money into the market and when they do that it results with economy recovering as well. So, just dropping interest rates alone does improve a ton.

Yeah, federal reserve all by itself is a wrong place, it shouldn't even exist to begin with. They control the economy a lot more than they should, they have the right to change so many things when they want and it is not really acceptable to have a place that is filled with "economists" who are basically ex-wall street people to actually end up with ruling over countries economy.

Moreover, the current system needs them and that is why they can't be abolished but the reality is I can't deal with one organization focusing on interests, printing money, inflation and many more which changes everything for regular people, whatever they do hurts or helps public and they shouldn't have that type of power. This is why bitcoin is great, it is decentralized.

[STT]

instead put that money into interest and collect it which removes money from the market and makes it hard for economy to grow as well.

Money placed on deposits is used as capital by the banks for loans, its not wasted, unused or wasted while retained but that is narrative we might be receiving from current policy.  Bank capital is normally required but in many western economies now the central bank is issuing whatever funds are required by the banks so that interest rates offered to small savers are tiny, they arent needed any more.   Saving isnt a negative unless inflation is taken as a positive then you arrive where we are now, governments want people to exercise money as much as possible to stop any possibility of deflation.   Similar kind of thing can happen in Bitcoin where if we get alot of circulation or monetary velocity it helps to support the overall valuation for the Bitcoin economy; main difference we have is no fractional reserves and a plain ledger.
  ECB, FED or Bank of Japan cannot accept deflation occurring due to the size of the debts now held roughly about the size of world war two ending which was not a time for riches for most.    Deflation would amplify the burden of debt and its probable cost with the possibility of interest cost ten times as much it could cause default.   I respect one dynamic more then the brains of central banks which is natural dynamics, I just dont believe they can juggle natural factors greater then all of us long enough to balance the excessive debts and make safe the situation.  
  Failure isnt something to wish for and I dont think BTC can fix the problems of FIAT but it does at least offer some dry land if all of QE unwinds itself.   This is where 100k for a Bitcoin becomes a reality but only with great negative backdrop as proviso,  I hope the system can handle much greater traffic by that point

[SquallLeonhart]

The reason why bitcoin price increase is insane is because the technology that improved should also be the same in the price as well compared to today's prices. For example using your analogy the 128 mb memory and 4 gb storage was the highest in that time, and it was 500 dollars, the current high version has higher memory and a lot more storage but it is the high tech of today as well, which means it should be 500 dollar today as well, if in 10 years we have a lot better tech it should go up and it should be 500 dollar again.

A phone is a phone, no matter how high it gets, because time passes, and this means we should be reaching the better things with same money if there was no inflation, not because it is better tech. Better tech will continue to happen, by that logic there will be 10k+ dollar iphone, there shouldn't be if inflation is not high.

[adaseb]

The reason why bitcoin price increase is insane is because the technology that improved should also be the same in the price as well compared to today's prices. For example using your analogy the 128 mb memory and 4 gb storage was the highest in that time, and it was 500 dollars, the current high version has higher memory and a lot more storage but it is the high tech of today as well, which means it should be 500 dollar today as well, if in 10 years we have a lot better tech it should go up and it should be 500 dollar again.

A phone is a phone, no matter how high it gets, because time passes, and this means we should be reaching the better things with same money if there was no inflation, not because it is better tech. Better tech will continue to happen, by that logic there will be 10k+ dollar iphone, there shouldn't be if inflation is not high.

This doesn't really make much sense. The advance of technology has nothing to do with the inflation of financial markets. There is some law, Snell law of whatever is called and its basically normal to have computer increase computation every few years. However the price of the computers still increases slightly due to inflation. For example maybe 10 years ago you could buy a mid-tier i5 CPU for $200 and these days you can buy a mid-tier CPU for $300, and inflation is still taken into account.

But this has nothing to do with inflation. Sure an iPhone 1 cost maybe half of the latest iPhone but the newest iPhone is about 10x as fast, does that mean it needs to cost 10x as much? It would cost around $5000 for an iPhone XS which is not the case. This topic is about real inflation and how its so expensive to buy groceries or pay utilities and how wages haven't risen high enough and why the gap between the rich and poor is widening.

[LUCKMCFLY]

This is a very subjective issue, because the FED is always injecting money generating inflation into the world economy and that is well above 2%, the fact that Bitcoin continues to rise will not generate any change, it is a totally inflationary vs deflationary economy.

The makeup of the numbers by the government and the Fed are impressive, the hegemony of the dollar is an advantage that gives supremacy above all to the United States.

[stompix]

The reason why bitcoin price increase is insane is because the technology that improved should also be the same in the price as well compared to today's prices. For example using your analogy the 128 mb memory and 4 gb storage was the highest in that time, and it was 500 dollars, the current high version has higher memory and a lot more storage but it is the high tech of today as well, which means it should be 500 dollar today as well, if in 10 years we have a lot better tech it should go up and it should be 500 dollar again.

A phone is a phone, no matter how high it gets, because time passes, and this means we should be reaching the better things with same money if there was no inflation, not because it is better tech. Better tech will continue to happen, by that logic there will be 10k+ dollar iphone, there shouldn't be if inflation is not high.

By using logic, and not "that logic", you could easily check and see that an iPhone 6S which has a lot more specs than the first is still for sale new for 250$.
And, for just 100$ you can buy NOW a Nokia 1.3 with x4 the specs of the first iPhone. You're basically saying that if the trends change you need to have a 24 airbags car with all the drive assists and autopilot, at the same price as a car from the 20' that had only a cassette player and a fuel indicator.

So next time, rather than using an invented logic, use REAL logic!

[Torque]

https://www.zerohedge.com/economics/inflation-already-here-fed-may-have-major-problem-its-hands

[Emitdama]

The funny thing is, when federal reserve's talk about 2% inflation we see this as a bad thing, I just saw a meme on reddit about how people who go crazy about 2% inflation as a very bad thing but willing to pay tens of thousands on a defi that is untested and totally unreliable.

If someone told you to put 10k on uniswap or polkadot or whatever on early days you would do that in a heartbeat (there has been thousands who did) but when there is only a 2% inflation you go crazy about it. Hell there are coins that promise 10000% of your investment per year in coin form, and you see that as a great thing to get early, but somehow regular finances are bad. There are tons of things that are horrible in fiat world but this is not one of them, 2% inflation is not as bad as you think it is.

[Torque]

There are tons of things that are horrible in fiat world but this is not one of them, 2% inflation is not as bad as you think it is.

Ummm, are you even following the latter part of this thread?

We're saying that the FED is lying, that the 2% inflation target is bullshit, because the real rate of inflation is a LOT higher than that, and has been for some time now.

[SquallLeonhart]

By using logic, and not "that logic", you could easily check and see that an iPhone 6S which has a lot more specs than the first is still for sale new for 250$.
And, for just 100$ you can buy NOW a Nokia 1.3 with x4 the specs of the first iPhone. You're basically saying that if the trends change you need to have a 24 airbags car with all the drive assists and autopilot, at the same price as a car from the 20' that had only a cassette player and a fuel indicator.

So next time, rather than using an invented logic, use REAL logic!

"Logically" in a world where inflation is not a big problem, things wouldn't get increased in price not only with improvements for regular stuff as well. What you guys are failing to realize is that, yes there is new tech but even something milk increases in price, that is the main thing that makes iphone more expensive as well.

If milk goes from 2 dollars to 4 dollars, that means iphone going from 100 to 200 would be same logic, apply new found tech on that and suddenly you have more expensive stuff as well. If we didn't had one carton of milk increasing in the first place (milk is just example, put any unchanged item of past 30 years) we would have iphones cheaper as well.

Yes, I believe that whatever the price of a car today is, should be the price of a car in 2040, or at least go up as much as our salary. If my salary was 100k when first iphone came out and 200k now, I do not want to see iphone go from 100 to 1000.