TD₿: How Bitcoin Protects Americans from Inflation by Avik Roy
TL;DR In the best-case scenario, the rise of Bitcoin will motivate the United States to mend its fiscal ways.
Hey Bitcoiners,
Inflation has been on top of Bitcoiners’ minds for many years now, but it wasn’t until 2021 that the topic of inflation started to go mainstream.
Many economists were caught off-guard by this inflation and had to dust off some old textbooks on the 1940s and 1970s to study the last time the U.S. saw any kind of significant inflation.
The question becomes why now? What is causing inflation to finally re-emerge?
If you listen to mainstream media, the government, or the Federal Reserve, they will give all kinds of reasons why inflation is here now such as supply chain disruptions, Putin’s War, China lockdowns, the Pandemic, etc.
Of course, these supply-side dynamics have contributed to the current inflationary backdrop, but what you’ll rarely hear these institutions admit is that this inflation is primarily caused by the rapid expansion of the federal debt financed by the Fed’s printing press.
Over the past decade, the U.S. government has been spending money like no tomorrow, even running deficits in periods of economic expansion. The government's response to the pandemic simply put this trend into overdrive.
Today the massive amount of government spending is coming home to roost in the form of inflation. Policymakers now face a tough decision: Do they continue to spend and run large deficits, or do they protect everyday Americans from the harmful effects of inflation?
Avik Roy argues in this article that it is impossible for policymakers to do both, and this conundrum will lead to Bitcoin becoming increasingly important in the future (10/26/2021).
In these times, policymakers would be wise to remember the words of economist Milton Friedman that inflation is always and everywhere a monetary phenomenon.
Tick tock next block,
Cory Klippsten
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Quote of the Day
“The bitcoin is not an inflation hedge” narrative is dumb if not only because it buys into the Keynesian propaganda that it’s the price increases and not the monetary supply increases that define inflation. Inflation happened primarily in 2020, not 2021. Few understand this.” - Bitstein, Co-Founder and President of the Satoshi Nakamoto Institute
Meme of the Day
(h/t @4anna_12)
Hi Cory, I admire that you can produce something daily on the same subject. Congrat. I especially liked the rebuttal by Tomer Strolight of the various anti- btc arguements.
🥂