It is my heartfelt wish that hyperinflation never reaches our shores. The likelihood of avoiding this outcome is extremely small. In other words, our odds of experiencing hyperinflation are extremely high; the only question is the timing. when will it happen Many hope it is a long way. Some believe it is already there and has been for quite some time.
The US dollar is inflating drastically against real estate
Some argue that hyperinflation is already there in the real estate sector. Many Americans (and others around the world) are feverishly overpaying for real estate, causing real estate prices in some areas to nearly double in just one year. I don’t want to be buzzkill, but no, your home didn’t just double in value in a year. Your currency will quickly inflate against a hard asset like real estate. Are there other signs?
Is Bitcoin an inflation hedge?
There are many people who say that Bitcoin is not an inflation hedge. They point to the past year of record inflation while bitcoin price has remained roughly flat or down since November. How can that be?! Well, the only people trying to measure inflation on a monthly or yearly basis are central bankers and people who work with high time preferences. Is that you? If so, zoom out!
Let’s make a fair comparison between the US Dollar and Bitcoin since the day they hit parity. Most people, including Bitcoiners, have no idea when this happened. Do you? A quick search shows that as of February 9, 2011, one bitcoin equaled one dollar. Now we have a measure of inflation over the last 11 years. Measuring inflation per decade seems like a low time bias to me. So what do we learn?
The dollar has drastically inflated against bitcoin
If you zoom out like I suggest, you will find Bitcoin is now 29,000 times more valuable than the US dollar. Seen through this lens, it’s safe to say that Bitcoin tells us a different story about inflation. It tells us that the US dollar is inflating drastically against the hardest form of money ever invented or discovered. Anyone trying to argue otherwise doesn’t understand money, the banking system, or our financial system. Oh wait, that’s pretty much all of us.
I take no comfort in pointing it out, but I roll my eyes at the idiots in government, the press, Wall Street, Silicon Valley, and yes, even die-hard Bitcoiners who see inflation through the wrong lens. If your unit of account is US dollars and You view bitcoin as an investment, then your framing is plausible, albeit misguided. Maybe I’m the one who’s delusional, but I think the experiment of a decentralized form of money that governments, corporations and billionaires can’t debase has been working very well since 2009, and I’m sure more people will catch the blinding flash of the obvious this year and for many years to come.
To all those bitcoiners who believe they work with low time preference and Wondering why bitcoin hasn’t moved in step with reported inflation numbers, check your financial blind spot: you’re using the wrong unit of account. They suffer from Fiat disease. If your unit of account is bitcoin, the US dollar has been rapidly inflating against bitcoin for 11 years. No, it wasn’t a smooth ride.
No need to panic, but newsflash: The US dollar has been inflating drastically against Bitcoin for some time. I admit this reality is a hard pill to swallow. You might want to buy something just in case the dollar continues to balloon.
Bitcoin is savings technology, not an investment
There’s a reason many businesses and people are accumulating more and more bitcoin as the price goes down. Even portraying Bitcoin as being in a bull or bear market is dead wrong because it implies that Bitcoin is an investment. There are many people who believe Bitcoin is an investment. I’m not one of them. However, if you view bitcoin as a savings technology, then the current season is a time of value discovery for the only digital money that has existed for at least a decade and has appreciated 29,000 times in value than the world’s reserve currency. You might want to get some just in case.
“Humanity and our world has many problems… Bitcoin is not one of them.” -Erin Crawford
This is a guest post by Mark Maraia. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
