Following on from the Federal Reserve’s humungous injection of cash into the US economy, consumer price inflation rose 6.2% in the year to October, making a 31-year high. Bitcoin, and the cryptocurrency market have risen sharply on the news.
Amid a backdrop of surging inflation, the cryptocurrency market has now become a $3 trillion asset class. Investors are seeing two choices – keep their fiat dollars in the bank and see a depreciation of possibly around 10% per year (taking into account ‘real’ inflation figures), or put their cash into hard assets such as cryptocurrencies and ride the current boom.
We have prominent figures from the banking industry, regulators, and those who head financial organisations, all queueing up to call crypto a “scam” and of “having no intrinsic value”, but it seems as though they are just like King Canute, who ordered the tide to go back.
The financial world as we know it is undergoing the most monumental change, and it doesn’t appear to be one that the powers that be had in mind. We’ve heard talk of a “financial reset” and of “owning nothing, but you’ll be happy”.
But instead, the common man is starting to wake up and realise that a certain Satoshi Nakamoto set some code in motion, stepped back, and let it start to run its course. The bitcoin network has grown exponentially since then, and has given birth to cryptocurrencies.
Those who have bought bitcoin, and some of the best fundamental cryptocurrencies, have managed to front-run Wall Street and leave the banks on a rapid path to obsolescence. Who would have imagined it?
Of course, the path to financial freedom for the little guy was never going to be easy. Regulators, with the entire weight of government and huge institutions like banks behind them, are ready to pounce.
It just remains to be seen whether what they do will be enough to stop the incoming tide.
“Transitory inflation”, or whatever else the Fed likes to call it, is going to strip the middle and lower class of their wealth. The banks, large institutions, and high-wealth individuals are the only ones that can benefit in this sort of environment.
It’s obvious to see behind the façade of Jerome Powell and the Federal Reserve. The only avenue for them is to let inflation run hot so that the debt can be eroded and inflated away.
However, the life raft on this Titanic is called Bitcoin and cryptocurrencies. Those who have managed to get on board will at least have a fighting chance of retaining some financial freedom. On the other hand, those who accept central bank digital currencies will be enslaved to the system for evermore.