The Fed, Inflation and Bitcoin with Steven McClurg - WBD512

Steven McClurg is a Co-Founder of Valkyrie Investments. In this
interview, we discuss how Steven called Bitcoin’s 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’t a surprise
for everyone.


Janet Yellen, who previously characterised inflation as
“transitory”, told Congress on Tuesday “inflation is really our
top economic problem at this point and that it’s critical that we
address it.” This is happening across the world: the ECB plans a
“gradual but sustained” 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’t be a rational
possibility: surely politicians and policy wonks are students of
history and they’ll stop spending.


But yet, there is talk another $5-10 trillion could be printed.


Whatever the outcome, we’re 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’s 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’s currently
58%.