Higher Inflation Is Here to Stay for Years

[adzino]

You do realize that even if higher inflation exists, the "real" prices of general goods are actually going down or is the same for the consumers, which means that the long term affect of high inflation is actually neutral? Pre pandemic, we had  a low inflation (the good inflation) which was actually more than perfect. Right now we have a high inflation which is mainly due to the spending for economic reliefs such as stimulus and equivalents which has somewhat increased the money supply. This should just be a short term effect.

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[Silberman]

You do realize that even if higher inflation exists, the "real" prices of general goods are actually going down or is the same for the consumers, which means that the long term affect of high inflation is actually neutral? Pre pandemic, we had  a low inflation (the good inflation) which was actually more than perfect. Right now we have a high inflation which is mainly due to the spending for economic reliefs such as stimulus and equivalents which has somewhat increased the money supply. This should just be a short term effect.

But that is because most of that money went to the markets and did not went to actually buy goods and services, this is why the inflation has not shown its ugly head yet but it will, this is very similar to what happened to Germany during WWI, the German government printed a lot of money and the price of goods went down even with the huge scarcity they had and this was because people were keeping their money under their beds, but when the war ended and they wanted to spend that money and it entered the economy the price of everything went up and something similar could happen here.

[The Sceptical Chymist]

I've said it for a long time, but this time, I'm not making this up. It's from the WSJ.

Well I guess it's now official if the Wall Street Journal said it.  Lol. 

Not that I doubt what they're saying in the least, because I and many others on this forum have been expecting a ramp-up in inflation for quite some time now.  We all knew there were going to be consequences for the money printers going brrrrr, all the unemployment assistance, the stimulus checks, the out-of-control spending, etc.  There's no way we weren't going to see chronic inflation.  And who's going to be the real victims of all this?  Our kids and grandkids.  I don't need the WSJ to tell me that they're fucked and are going to have to clean up the mess made by the politicians of this generation.

My advice?  Get out of cash and into some investments or at least something that hedges against inflation.  I'm not sure if precious metals are worth looking into, but bitcoin is certainly an option--even with its notorious volatility.  With all the institutional buying that's been going on, and the price being relatively stable despite its drop from the ATH, I'd bet it's poised to go much higher than it's at right now.  Spend that cash you have, and save only enough to get you through an emergency.  Any excess cash should be converted to other things IMO.

[HaleyOccam]

I've said it for a long time, but this time, I'm not making this up. It's from the WSJ.

Well I guess it's now official if the Wall Street Journal said it.  Lol. 

Not that I doubt what they're saying in the least, because I and many others on this forum have been expecting a ramp-up in inflation for quite some time now.  We all knew there were going to be consequences for the money printers going brrrrr, all the unemployment assistance, the stimulus checks, the out-of-control spending, etc.  There's no way we weren't going to see chronic inflation.  And who's going to be the real victims of all this?  Our kids and grandkids.  I don't need the WSJ to tell me that they're fucked and are going to have to clean up the mess made by the politicians of this generation.

My advice?  Get out of cash and into some investments or at least something that hedges against inflation.  I'm not sure if precious metals are worth looking into, but bitcoin is certainly an option--even with its notorious volatility.  With all the institutional buying that's been going on, and the price being relatively stable despite its drop from the ATH, I'd bet it's poised to go much higher than it's at right now.  Spend that cash you have, and save only enough to get you through an emergency.  Any excess cash should be converted to other things IMO.

Recently, David Folkerts-Landau, head of global research at Deutsche Bank, co-authored with Peter Hooper and Jim Reid, an important report titled "Inflation: The defining macro story of this decade" (Inflation: The defining macro story of this decade). The report warned that the global economy is "sitting on a time bomb" and that the outbreak of inflation may have devastating consequences for the US economy.

Inflation in the United States may cause a global economic crisis, but rainbows often appear after storms. As the epidemic continues to develop, Bitcoin’s position will be consolidated. When people panic and worry, I think this is also a great historical opportunity. Heroes often appear in troubled times. Hold the Bitcoin in your hand. Don't wait for the storm to return to calm, but you have nothing to do with the arrival of the digital world.

[Xinarae*]

Low income people have more to do with inflation because they are more affected than this that is why inflation is called the silent killer of the economy. Even if the income does not increase it is also called compulsory tax as it costs more money to buy the same product than before it is inappropriate to impose taxes that are not represented. Inflation is a big obstacle for monetary policy keeping inflation in check could force the economy to withdraw support which could push the economy back into recession.

[cabron]

If we don't do anything about it to be gone then your claim that the higher inflation will stay here for years will come true, I think that if the economy recovers greatly, the high inflation rate will eventually die out.

If there was a plan, it had to be started way back before the pandemic blew up. It's only now that the Biden administration started planing out something like bringing the jobs back to US. They did have plans for infrastructures now, it's almost too late, carrying that plan out will be a race against time. US have not built a train for years while a train is essential to building a country, in fact, they united east to west by building their first railroad. If they didn't stop innovating just like the Chinese, the devastation isn't this big.

Agriculture should solve almost anything but the drought is adding to the effect of the pandemic. They've adjusted the stimulus to $600 but this will change the way of life.

[AicecreaME]

The pandemic has caused so many challenges that almost every country in the world faced unprepared. Almost everyone has not anticipated the huge effect a pandemic may bring. Hence, it was such a difficult struggle for the majority, particularly to the developing and third world countries to cope up with the negative impact of the virus on the country's state and to its economy. Inflation is really expected to happen because the safety protocols and measures imposed were a disadvantage to the economic aspect of the country. The lockdowns, social distancing protocols in every place, travel restrictions, the closing of businesses, and job losses contributed a large percentage to the inflation rise after several years. The debt of the country made it even worse because they can hardly pay on time resulting in higher interest rates.

However, despite the negative effects of the pandemic crisis such as higher inflation, it won't last permanently. The higher inflation rate is just temporary - a repercussion of the actions done in response to the pandemic which can later be lowered the moment the economy will bounce back once again. It's just that the burden to the less fortunate ones will be a little heavier compared to those who belong to the upper bracket of the society given that the former barely have the means to survive and the latter are privileged enough to buy all the things they need without breaking their pockets.

[jaysabi]

More people say store of value now than ever before, but my point about that would be the same.  An asset needs to have a reliably predictable and steady value to be a store of value.  Bitcoin I wouldn't say fits due to its extreme volatility.

I slightly disagree. An asset needs to have a value that doesn't go down drastically in the long term to be used as a store of value. If the value goes up in the long-term, then it is not an issue. And I don't think that stability and predictability needs to be there. If that is the case, then even gold can't be termed as a store of value. Because during the 2011-16 period, gold prices went down by 40%. If you talk about US treasury bonds, then in fiat terms the value is stable. But the returns are only around 1.1%-1.2% per year, while the current inflation rate is in the 5%-6% range.

"An asset needs to have a value that doesn't go down drastically in the long term to be used as a store of value."  If that's your criteria, there's no possibly way you can view bitcoin as a better store of value than the dollar.  The dollar depreciates very slowly and rather predictably.  Bitcoin depreciates very rapidly and without any predictability whatsoever.  There's no possible comparison between bitcoin and the USD in terms of what is a better store of value, it's unequivocally the USD.

[Kong Hey Pakboy]

If we don't do anything about it to be gone then your claim that the higher inflation will stay here for years will come true, I think that if the economy recovers greatly, the high inflation rate will eventually die out.

I agree, not doing anything won't solve the problem but instead will cause the problem to get bigger to the point that a collapse or long-term fix is the only choices for the government to deal with the hyperinflation.

[Silberman]

Low income people have more to do with inflation because they are more affected than this that is why inflation is called the silent killer of the economy. Even if the income does not increase it is also called compulsory tax as it costs more money to buy the same product than before it is inappropriate to impose taxes that are not represented. Inflation is a big obstacle for monetary policy keeping inflation in check could force the economy to withdraw support which could push the economy back into recession.

Not really, the middle class is the one that is the most affected by inflation, I am not saying that those with low income are not affected, they are, but not on the same level as the middle class, the rich are not that affected because a great deal of their wealth is not on cash but in assets that can create a hedge against inflation and in many instances they benefit from it, those with low income are not as affected as they did not had that much money to begin with, but the middle class is the one that losses the most as they are indebted and have most of their equity on their homes which they lose because of the higher interest rates while also losing their savings as the inflation destroy their purchasing power.

[pinggoki]

Inflation happens because money is hard to trace, so instead of reinstating old banknotes that are still in the system but is left out of the circulation, they will print more banknotes to accommodate the supply needed by the public. Not to mention excessive printing of cash during this pandemic. Until we find a way to make money traceable, or at least irreplaceable, Inflation will always be here to stay. Now in the case of bitcoin, this is where it shines the best because even though there are unused coins that are left in circulation, there is little worry about inflation because no more bitcoins will be created besides the 21 million that are there from the start.

The pandemic has caused so many challenges that almost every country in the world faced unprepared. Almost everyone has not anticipated the huge effect a pandemic may bring. Hence, it was such a difficult struggle for the majority, particularly to the developing and third world countries to cope up with the negative impact of the virus on the country's state and to its economy. Inflation is really expected to happen because the safety protocols and measures imposed were a disadvantage to the economic aspect of the country. The lockdowns, social distancing protocols in every place, travel restrictions, the closing of businesses, and job losses contributed a large percentage to the inflation rise after several years. The debt of the country made it even worse because they can hardly pay on time resulting in higher interest rates.

However, despite the negative effects of the pandemic crisis such as higher inflation, it won't last permanently. The higher inflation rate is just temporary - a repercussion of the actions done in response to the pandemic which can later be lowered the moment the economy will bounce back once again. It's just that the burden to the less fortunate ones will be a little heavier compared to those who belong to the upper bracket of the society given that the former barely have the means to survive and the latter are privileged enough to buy all the things they need without breaking their pockets.

I agree, but then again we have to consider the fact that with all the banknotes and currencies that are released in circulation, a huge number of them won't be reinstated into the system, hence prompting the central bank/federal bank to create more banknotes to make up for the lack of supply. This will keep on going.

[magneto]

Isn't it funny how people are worried about inflation now?

It's almost like they have selective amnesia. If they hear inflation fears from bitcoiners (and they have, for 10 years), then they automatically deem us the radicals who are just spewing garbage to fulfill agendas. Whilst if they hear from mainstream media, they panic and start raising their inflationary expectations too.

Anyway, the period of deflation/low inflation is transient and now that is gone. This inflationary period is naturally reflective of the Fed and other central banks' wild policies during the pandemic. I don't know why anyone should be surprised.

BTC is still a great hedge against this, nothing has changed on that front.

[oHnK]

Isn't it funny how people are worried about inflation now?

It's almost like they have selective amnesia. If they hear inflation fears from bitcoiners (and they have, for 10 years), then they automatically deem us the radicals who are just spewing garbage to fulfill agendas. Whilst if they hear from mainstream media, they panic and start raising their inflationary expectations too.

Anyway, the period of deflation/low inflation is transient and now that is gone. This inflationary period is naturally reflective of the Fed and other central banks' wild policies during the pandemic. I don't know why anyone should be surprised.

BTC is still a great hedge against this, nothing has changed on that front.

Such is the condition of the people now, they are much more worried when the media starts to talk about it while bitcoiners have long been voicing that inflation has undermined the economy of the lower classes.  Meanwhile, crypto has given tangible results that it is going against the old paradigm where governments regulate inflation as they wish.

[Silberman]

Isn't it funny how people are worried about inflation now?

It's almost like they have selective amnesia. If they hear inflation fears from bitcoiners (and they have, for 10 years), then they automatically deem us the radicals who are just spewing garbage to fulfill agendas. Whilst if they hear from mainstream media, they panic and start raising their inflationary expectations too.

Anyway, the period of deflation/low inflation is transient and now that is gone. This inflationary period is naturally reflective of the Fed and other central banks' wild policies during the pandemic. I don't know why anyone should be surprised.

BTC is still a great hedge against this, nothing has changed on that front.

People are afraid of going against the herd, if most people have a particular belief then they are going to share it as they do not want to be wrong, it takes courage to see what is happening and think that it is all wrong, after all most of the people will tell you that you are the one that is in the wrong as this is the way things are, but it is always the same story, the great discoveries and inventions are not made by the people that think everything is right and instead are made by those not afraid to be called crazy by their peers, so this is nothing new and it will probably continue as long as humanity exists.

[Shenzou]

This comes to no surprise since the pandemic has hit and is still hitting a lot of the world' economy and by result the finical system, and the only possible solution to immediately solve the problem is to print more money, and i am pretty sure that  this going to go on for a couple of years, so the best solution for us is to keep our trust in bitcoin to be our savoir against this inflation

[Silberman]

This comes to no surprise since the pandemic has hit and is still hitting a lot of the world' economy and by result the finical system, and the only possible solution to immediately solve the problem is to print more money, and i am pretty sure that  this going to go on for a couple of years, so the best solution for us is to keep our trust in bitcoin to be our savoir against this inflation

What I have always wonder is how long is this going to continue? I say this because as you mention this inflation has been going on for decades and yet the system is still in place so while it is obvious that this cannot continue forever at the same time there is not an end in sight, so we are in a kind of a strange place, but even if the system doesn't collapse at the same time the effects can still be felt and as such it's important to hold assets that protect us against it.

[jaysabi]

Isn't it funny how people are worried about inflation now?

It's almost like they have selective amnesia. If they hear inflation fears from bitcoiners (and they have, for 10 years), then they automatically deem us the radicals who are just spewing garbage to fulfill agendas. Whilst if they hear from mainstream media, they panic and start raising their inflationary expectations too.

Anyway, the period of deflation/low inflation is transient and now that is gone. This inflationary period is naturally reflective of the Fed and other central banks' wild policies during the pandemic. I don't know why anyone should be surprised.

BTC is still a great hedge against this, nothing has changed on that front.

And how is something that regularly drops 10% in a single day a hedge against inflation of a currency that has an annual inflation rate of 2-3%?  The USD will never have periods where it devalues anywhere near the drops that bitcoin has on a regular basis.  The point of a hedge against inflation is the the volatility is less, not more.

[Dragonfund]

You don't know what you're talking about in your title OP, it's going to eventually subside, it's just that at this point we just can't see it so we think that there's no end to it. There's a lot of hyperinflation throughout history and all of them seem to subside in time and the country that was affected did recovered from the damage.

OP forgot that Central Bank is also watching his activity. We shouldn't be consumed by the volatility of crypto and the immense profits we all have.
Saying hyper-deflation isn't good for everyone even if you are holding a the crypto, what's the essence of high return in profit from investment and inflation chart is linearly increasing, your investment becomes nill.
The system will adjust itself as the economy opens back to its normal state.

[Vishnu.Reang]

And how is something that regularly drops 10% in a single day a hedge against inflation of a currency that has an annual inflation rate of 2-3%?  The USD will never have periods where it devalues anywhere near the drops that bitcoin has on a regular basis.  The point of a hedge against inflation is the the volatility is less, not more.

I can't agree with this statement. For the last two months, the monthly inflation rate in the United States stood at 0.9%, translating to an annual inflation of 10.8%. Even if we take a very conservative scenario and take 5% as the inflation for this year, Bitcoin looks much better. If you had invested in any point of time between 2009 and 2020, you will be in profit with your Bitcoin investment right now. And your argument that Bitcoin is an asset that regularly drops by 10% is completely baseless. Short-term fluctuations are there, but in the long term Bitcoin always give good returns (at least when compared to the USD, whose purchasing power goes down by 5% to 10% every year).

Source: https://www.bls.gov/news.release/cpi.nr0.htm

[teosanru]

I've said it for a long time, but this time, I'm not making this up. It's from the WSJ.

https://www.wsj.com/articles/higher-inflation-is-here-to-stay-for-years-economists-forecast-11626008400

BTC holders shall not worry.

This actually is pretty true and quite obvious. The amount of fiscal deficits that have been created by governments around the world in the past two years is honestly much more than what was created in years before that which means it would actually take a lot of time for the economy to adjust itself according to this deficit, also covid even until now doesn't look like it's ending which means in some countries there might still be some lockdowns leading to even more fiscal deficits and then the same cycle could continue even further for a longer time frame. But I am sure with an increase in inflation the interest rates would rise too and therefore investing in traditional markets would be profitable. But yes Bitcoin holders will obviously be at an edge.