The economy is in a bad state, and the US government is trying its best to keep it lubricated with the help of relief checks. The theory is that the US citizens have increasing diminishing sources of money due to the cut down of businesses and loss of jobs. When people have less money, they start to save more. In this manner, the flow of money into markets starts to diminish.
To remedy this issue, the government tries to offer people some money so that it could jump-start the economy. However, this situation can create a hyperinflation scenario. When a lot of money goes into the markets at the same time, the sellers will increase their prices, and it could cause once again clog the commercial veins of the USA. As the US government is planning to circulate trillions of dollars back into markets, the people are worried about the devaluation of money. A good number of them are convinced that Bitcoin could serve as a hedge.
Technical Proof in Support of the Hyperinflation Scenario in the United States
Personal Consumption Expenditure (PCE) and Consumer Price Index (CPI) are two federal government measures to prepare the budget. However, the Economic Analysis Bureau excludes food and energy indices since they are too volatile. This makes the monetary policy have a weaker standing and credibility. Many economists argue that it would allow in this manner the government is unable to properly estimate the cost of living.
The PCE readings for this year show that it has been increased as much as 1992. Economists argue that this could mean that inflation levels could go higher in 30 years.
Michael Burry is a Federal Governor who has issued a warning for a massive inflation hike to hit the markets this year. He compared the current readings with World War II destruction when the stock market could not keep up with the huge pile of paperwork. He also relates the situation with the recent WallstreetBets incident that forced Robinhood to delist some assets.
How would Hyperinflation Affect the Bitcoin Markets?
Mark Cuban said that due to the present condition of the economy, only a fool would not look for better investment alternatives. It is a fact that both fiat currencies and gold have been trading down consistently in the current pressure. The only trade commodity that has been able to pull its weight is cryptocurrency.
The probability of investors looking at Bitcoin and other cryptocurrencies as a hedge fund would grow more and more visible in a few weeks. Even if the government tries to intervene, it would not be easy to take down Bitcoin. Anthony Pompliano, a crypto-journalist, said that as long as one computer is intact, running nodes, cryptocurrency, and blockchain technology can survive.