How Ending 2% Inflation Targets Could Positively Impact Crypto

2022-10-10 08:00

Central banks have used established targets to keep inflation on track, but the current economic turmoil could see them adjusted upwards. This would be bad for fiat currencies but good for crypto in the long term.

For years, central banks have used monetary policy to keep inflation on target, typically at or below 2%. Governments, meanwhile, would continue efforts to keep debts under control to maintain this economic equilibrium.

This was shattered during the 2008 financial crisis, which was caused by avaricious investment banks issuing and profiting from toxic loans. Bitcoin was spawned from the fallout of the inevitable collapse that followed as a hedge against banks and their meddling. However, the financial fiasco is happening again as inflation rampages out of control and central banks grapple to get a hold of it.

Upping inflation targets

As suggested by The Economist last week, those long-standing 2% inflation targets could be increased to 4%. On Oct. 10, co-founder and CEO of Circle, Jeremy Allaire, commented on this ‘new normal’ in reaction to a take provided by crypto liquidity provider Cumberland.

Love this take. 4% is the new normal. That’s the likely exit for govt’s. Watch closely in Feb/March for this. https://t.co/sf72chBZil

— Jeremy Allaire (@jerallaire) October 10, 2022

According to The Economist, revising the target upward to 4% would enable central bankers to simultaneously engineer both a budgetary windfall and an off-ramp to the impending disinflationary crisis.

However, hiking inflationary targets is a slippery slope as it could result in a loss of faith being seen as just another form of QE (quantitative easing). Furthermore, it causes inequality because investments that are inflation-proof are largely unavailable to most people, the company noted.

Capital tends to flow into assets that appreciate during these times, and they have traditionally been real-world assets such as property or commodities. However, a new digital asset class is now universally available to everyone, which is historic, Cumberland commented.

Positive impact on digital assets

Crypto has lost its inflation hedge properties this year as markets have behaved more like tech stocks, losing value over the past year. However, market cycles usually last a couple of years, so a prolonged state of high inflation could be very good for digital assets.

Cumberland pointed out that crypto is more of a debasement hedge than an inflation hedge, 

“But sustained, tolerated inflation is just another form of fiat currency debasement – a backdrop against which crypto performs spectacularly.”

These properties can clearly be demonstrated in countries such as Argentina, Venezuela, and Turkey, which have turned to crypto after their own fiat currencies were crushed.

The post How Ending 2% Inflation Targets Could Positively Impact Crypto appeared first on BeInCrypto.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

Emerald Crypto (EMD) на Currencies.ru

$ 0 (+0.00%)
Объем 24H $0
Изменеия 24h: 0.00 %, 7d: 4.67 %
Cегодня L: $0 - H: $0
Капитализация $0 Rank 99999
Цена в час новости $ 0.0095806 (-100%)

could targets inflation crypto impact ending positively

could targets → Результатов: 126


Фото:

Litecoin could be one of the best performers in the upcoming days. Here are the next targets

Litecoin (LTC) is enjoying steady bullish momentum, and for now, everything indicates that the price could advance again above $300 resistance. Fundamental analysis: Litecoin could be one of the best performers in the upcoming days The cryptocurrency market is advancing in the first trading days of May, Ethereum went above $3300, and this situation also […] The post Litecoin could be one of the best performers in the upcoming days.

2021-5-4 00:16


Фото:

Aave (AAVE) could advance even more in the ongoing bull market. Here are the next targets for buyers

The cryptocurrency market is advancing this Saturday, Bitcoin is trading very close to $60000 resistance, and for now, everything indicates that the price could advance above this level again. Aave’s (AAVE) price has advanced above the $375 level this trading week, and the main trend of this cryptocurrency remains bullish.

2021-4-11 23:56


Ethereum Posts Breakout Rally as Analysts Set Upside Targets at $290

Ethereum has been able to incur some notable upwards momentum throughout the past day. This has come about after weeks of it severely underperforming both Bitcoin and the aggregated crypto market. It now appears that the cryptocurrency could be positioned to see even further gains in the near-term, as this latest movement has provided its...

2020-5-30 00:00


Фото:

Bitcoin Price Could Drop Down To $7000; Diamond Top Breakdown Confirms Right Shoulder

Bitcoin price continues to free-fall after a failed bullish rally. New signals and a breakdown of two confirmed patterns point to bearish downside targets in the low $7,000 range. Bitcoin Forms Elusive Diamond Top, Signaling a Deep Drop  On Friday, October 18, Bitcoin price set a higher low at roughly $7,800, signaling that bearish sell pressure may be waning.

2019-10-24 20:34