The Fed, Inflation and Bitcoin with Steven McClurg
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\\u201cYou watch the Fed very carefully: you analyse every word; you try to see where interest rates are going; you try to see what the Fed\\u2019s doing. There\\u2019s an old adage, don\\u2019t fight the Fed.\\u201d
\\u2014 Steven McClurg
Steven McClurg is a Co-Founder of Valkyrie Investments. In this interview, we discuss how Steven called Bitcoin\\u2019s top, watching the Fed for policy indications, protecting wealth against high inflation, how governments should fight inflation, supply chain issues, and inflation hedges.
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Today, US CPI data shows that rather than inflation slowing as had been expected, it continues to accelerate. Year-on-year inflation currently stands at 8.6% - the highest in 40 years. Prices in May alone rose by 1%. But maybe this wasn\\u2019t a surprise for everyone.
Janet Yellen, who previously characterised inflation as \\u201ctransitory\\u201d, told Congress on Tuesday \\u201cinflation is really our top economic problem at this point and that it\\u2019s critical that we address it.\\u201d This is happening across the world: the ECB plans a \\u201cgradual but sustained\\u201d path of interest rate rises; India may need to dampen growth to control inflation; in Turkey inflation is out of control.
So, how bad could it get? The great inflationary period of the 1970s? Or could it be worse? Some commentators talk of extreme examples such as when hyperinflation tore the fabric of the Weimar republic apart. Most think this can\\u2019t be a rational possibility: surely politicians and policy wonks are students of history and they\\u2019ll stop spending.
But yet, there is talk another $5-10 trillion could be printed.
Whatever the outcome, we\\u2019re entering a new paradigm in respect of the cost of living. Whilst there are opportunities in every market, the focus is turning to wealth protection ahead of wealth creation. Is this the time for Bitcoin? It has long been regarded by advocates as an inflation hedge. Yet, its current price performance would suggest otherwise.
Maybe we need to recalibrate our understanding of what constitutes an inflationary emergency. Block\\u2019s recent survey has shown a strong correlation between inflation rates and viewing Bitcoin as a safe haven: Argentina came out top with nearly 50% of respondents stating they saw Bitcoin as protection against inflation. At the time inflation was north of 40%; it\\u2019s currently 58%.
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