Inflation running — What it means for the digital assets & everyday life.
Inflation accelerated to 7% in the US. Latest it was this high in June 1982. Europe is at 5%. Okay its totally different time today, but let’s see what were the interest rates and bond yields back in the 80's.
FEB 1982 the yield was 14.65% and today it is 1.70%. FED is expected to rise interest rates this year. What is certain is that there wont be double digits interest rates like early 80's.
Are the Bond markets broken? It does not make much sense now to invest in bonds when the yields are ridiculously low and inflation is running 7%. You are losing money here. Or are the Bond markets predicting that there will be huge debt collapse and deflation and inflation was just transitory? Funny how FED is not talking about transitory anymore.
It is absolute fuckery what is happening here, i have literally zero clue what is going on here. I have come to conclusion that nobody really knows what is happening here and where this is going. This covid virus has shown me one thing that leaders, government officials, central bankers, bankers, etc they are just people and people tend to be pretty stupid, before i just did not pay attention at all.
Im stupid too but if i had to take a guess these weird times could last pretty long and we have low interest rates with under 2 digit inflation. Then we could have some huge crash and we have new Bretton woods eg. Some sort of crash will come but it can take longer than many are anticipating. I was screaming Chinese real estate bubble from 2010 and here we are 12y later. This current FIAT system will collapse in the future. 5y? 10y? 20y? from now, but it will collapse in the end.
We average Joe’s will have tuff times. Expenses are currently going only up, gas, food, electricity, so we have less money for leisures and investing. If you can get double digit salary increase then congratulations, you are good and safe. If you eat this current narrative in mainstream media, that FED will just print and inflation runs hot, stocks and risky assets are good hedge?
- Start keep tracking of your expenses, cut it down.
Many wont do this and they could end up in vicious cycle. Consumption goes up and no more money for savings/investing. What if interest rates start to go up? Thats higher mortgage payments too. Im fairly certain interest rates will stay low since nobody will not survive in the environment where rates are +5%, every country and household would default.
- Those risky and fun investments don’t feel so good now. Digital assets market cap already down to 2trillion from the highs 3trillion.
Digital assets are heavily owned by retail investors (at-least the ones who buy the top). The shittiest digital assets will also die away. I said many times this will play like the dotcom bubble, 95% is garbage at the moment at they will go to zero.
- Have cash too, it is almost impossible to predict anything now. Don’t try to be right all the time, in the end the one who was least wrong wins.
Have just tiny bit of Bitcoin just for the peace of mind, its insurance if everything goes crazy. Silver and Gold should work too.
It remains to be seen if Bitcoin is the real safe haven and inflation hedge. It’s all speculation, if the inflation continues to run we will see. For me it’s the safe haven and only thing that makes sense.
Stay safe!
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