In an interview with Squawk Box host Joe Kernan earlier this week, investment bank Stifel chief economist Lindsey Piegza made remarks against the U.S. Federal Reserve.
Kernan was keen to emphasize during the discussion that America is not facing a recurrence of the 1970s’ high inflation. At the same time, the TV host cited the adage that “history does not repeat itself, but it does frequently rhyme.”
Kernan went on to say that inflation is practically the same as a tax on fiat, emphasizing the severity of the issue.
The Fed has lost control
“It’s definitely a tax,” Piegza said. “I feel the Fed has lost control of inflation at this time,” she added.
“They continue to assure us that it’s only temporary, that as the economy rebalances, price pressures will fall to a more manageable 2% level, but we must keep in mind that wage pressures are also on the rise,” Piegza said.
Inflation, according to Piegza, will climb not just through the end of the year, but also until 2022. Inflation in the United States is currently at 6.2%.
Inflation is the rate at which fiat money loses purchasing power in comparison to other assets such as consumer goods, services, and cryptocurrency.
So, whereas fiat holders should anticipate their fiat money to lose purchasing power owing to inflation, crypto hodlers can expect their crypto to gain purchasing power through the same mechanism.
Bitcoin as a kind of inflation protection
Inflation fears have pushed the price of bitcoin higher in 2021, as traders buy bitcoin as a hedge against inflation.
Bitcoin’s price climbed from $29,000 at the start of the year to $69,044 on November 10, an all-time high.
BTC is presently trading at $58,956, but high inflation rates in the U.S. and abroad will continue to put upward price pressure on the currency for the foreseeable future.
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