Jerome Powell is the United States Federal Reserve chairman. Recently he announced that the Federal Reserve would focus on ‘unemployment shortfalls’ from targeting inflation. The Federal Reserve doubles-down on the same inflationary policies with which it was experimenting amid the 2008 global financial crisis.
Recently, Powell was speaking at a virtual Jackson Hole event. There, he said that Federal Reserve would not raise rates anytime soon. Moreover, Powell added that the Federal Reserve, departing from the historical norm of a two percent inflation target, would tolerate higher inflation. This higher inflation and cheap money policy take quantitative easing to an entirely new level.
A Federal Reserve made a study about the Bank of Japan’s practices during its 2013 economic crisis. Thus, it warned that higher inflation targets might result in never-ending monetary accommodation. This was the case even when financial stability risks accumulated or when economic activity was intense. In March 2014, the Bank of Japan introduced qualitative and quantitative monetary easing. It was to stimulate the Japanese economy and to increase the inflation rate.
Gold rallied back to its 1950 highs, While the dollar’s value fell against the euro, on the heels of Powell’s Jackson Hole speech. Meanwhile, stocks have yet again rallied; BTC (Bitcoin) has plateaued, and ETH (Ether) stabilized. However, the Federal Reserve will not be able to reverse the course from its new policy so quickly.
Inflation will likely send core prices higher, as governments print infinite amounts of money through quantitative easing and bailouts. Nevertheless, the system of fiat is imperfect. The crypto media is using the threat of inflation to proclaim the benefits of cryptocurrencies. Cryptocurrencies and Bitcoin have been touted as an inflation-resistance hedge against government bailouts and fiscal stimulus, the backdrop of shrinking gross domestic products, and economic slowdown. Thus, it would help if you bought Bitcoin. This is because crypto serves as a hedge to the broken fiat system.