In a recent series of webinars called #HashItOut highlighted the issue of inflation and money depreciation. Today this topic is very relevant, because the background of the pandemic coronavirus government started to print money to help their citizens. The discussion was part of a well-known venture capitalists, John Pfeffer and mark Yusko. Pfeffer noted that the printing of the dollar will seriously affect the level of inflation outside the United States, but in the country it will remain relatively low. Yusko, in turn, said that the increased emission of the national currency will lead to depreciation of securities and make Bitcoin a more attractive option for investors.
We will remind, after the pandemic coronavirus caused severe damage to whole sectors of the economy, the US government tried to bring the country out of economic crisis by issuing large amount of money. Cryptocommunist regarded the printing of new money as another plus in the Treasury of the advantages of Bitcoin over traditional financial system.
Still the maximum number of bitcoins in circulation are limited to no more than 21 million. Furthermore, the cryptocurrency cannot be created from need or on someone's desire. New BTC are produced in accordance with the rules in the code of a cryptocurrency. Each new network block should ideally be generated every ten minutes, and now give him 6.25 BTC. Approximately four years after the so-called halving will decrease still twice. That is to "flood" the world with new bitcoin for crisis is impossible.
What will happen to the global economy?
Co-founder Pfeffer Capital LP John Pfeffer considers the strategy of the Federal reserve system of the United States are quite reasonable considering the current circumstances. Here is his review, in which he highlights his position.
I think without it the economy would have gone into a nosedive. At least in the short term emerging markets — I am talking here about countries that receive loans in the currency of their printed — will be able to continue this policy without actually creating domestic inflation.
Come hear @MarkYusko and @jlppfeffer Hash It Out
We’ve partnered with @BitGo to bring you a 6-part webinar series will explore the changing role of the Federal Reserve and the great monetary expansion we are all playing witness to.
Episode one https://t.co/KjJeummBsE
— BlockWorks Group (@BlockWorksGroup) May 19, 2020
Pfeffer believes that the real blow will be inflicted on those economies that borrow a dollar. In turn, the pressure on their economies will increase demand for the dollar, gold and Bitcoin worldwide.
See also: Bloomberg spoke about the loss of the meaning of conventional money.
According to Morgan Creek Capital CEO Mark Yusko, now the fed uses monetary policy, tested by the Central Bank of Japan in 2007, when the chief financial body of the country have opposed quantitative easing. Here is his replica.
I think we will witness deflation in many things, but not in financial assets. The goal of the fed is to maintain high stock prices, because the boomers can’t retire without this condition.
Yusko has a view of the “demographic” inflation. Very soon, baby boomers — that is, born during the 20 years after world war II — will retire. Such people will spend less money and begin to move money out of shares into bonds.
The expert concluded the debate with a simple conclusion — in this situation best will be the decision of purchasing bitcoins. Cryptocurrency is not correlated with the movement of the prices of traditional financial assets, therefore, in any situation of BTC can be a profitable option for hedging against risks. In other words, the coin is not moving in sync with other assets. Thus, the probability that the next reduction in the cost of the same shares, the cryptocurrency will not only save money, but to increase them.
However, to be sure, this is impossible, because it is impossible to predict the future. However, it should be noted that Bitcoin has already become the most profitable investment of the last decade. And this title is worth a lot.
We believe that the massive printing of dollars may be a necessary measure, but it is in any case will lead to higher prices and devaluation of the existing money supply. Against this background, the advantages of Bitcoin are really obvious. The only problem is that some people still treat cryptocurrencies with suspicion, deservedly or find it too difficult to understand. So the key to mass adoption is to simplify the work with the coins — and there are already course, will catch up.
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