Home
News
- The U.S. inflation rates rose to their highest levels in over 13 years, exceeding expectations by large.
- Figures might be distorted mainly due to the base effect, but inflation doesn’t seem transitory as the authorities make it out.
- 46M, i.e., more than 22% of the adult American population has already bought Bitcoin, a great development from 5-10% reported in the past.
Part 1:
The U.S. inflation rates experienced its biggest growth month in a very long time. But is it really transitory, as the government so desperately relays, or is there more to this than meets the eye? Meanwhile, a new survey recorded 46 million Americans as Bitcoin (BTC) owners. A CoinDesk Podcast Network featured podcast mused whether the rising inflation and rising levels of Bitcoin ownership are, in any way, inter-connected.
The Breakdown By NLW
The Breakdown by Nathaniel Whittemore, or NLW, is a daily podcast on “analysis of macroeconomics, bitcoin, geopolitics, and the big picture power shifts remaking the world,” produced and distributed by CoinDesk. It’s sponsored by Nexo.io, the global leader in regulated digital assets institutions, and Bitstamp, the world’s longest-running cryptocurrency exchange. The Wednesday edition, titled “46M Americans Now Own Bitcoin as Inflation Rises to Highest Level in 13 Years,” first touched both halves of the discussion separately, then reasoned how the seemingly “unrelated” bits of news might be linked.
Inflation Everywhere
Recently, the U.S. has been witnessing inflation and its impact in almost every section of society. From commodities like copper and lumber rising four-times the normal to labor shortages and rising wages, it’s absolute chaos everywhere. With difficulty in finding qualified staff, the companies are offering significantly increased wages. For example, Knight-Swift Transportation Holdings Inc., the largest North American truckload carrier, increased its newly certified driver wages by 40%. Then enters companies like Kimberly-Clark, who already began to pass on increased costs to consumers. But the question now is, how real is it.
Figures Exceed Expectation
The official inflation numbers seem to have exceeded expectations. According to the Bureau of Labor Statistics, inflation rose 4.16% year over year and 0.77% month over month, the largest sequential increase since 2009 and highest overall rate since September 2008.
Core CPI rose 0.83% month over month, the fastest sequential growth since 1982, and 2.96% year over year, the biggest change since 1996. Bloomberg noted the overall CPI was more than twice the highest projection in the firm’s economists’ survey.
Although prices of almost everything went up, it was more focused on the sections that the pandemic hit the hardest, motor vehicles, transportation services, and hotels. The 10% price surge in used cars alone accounts for over one-third of the overall CPI increase. Hotels and airfare prices made records with 8.8% and 10.2% surge, respectively. Michael Gapen, the chief U.S. economist for Barclays, said, “transitory pandemic influences clearly contributed to the surprise.” But the “residual firmness in core inflation,” suggesting upturned inflation risks in the near term, can’t be ignored either.
Now that it’s evident that inflation does, in fact, exist and that too, at an alarming stage, how exactly are the authorities dealing with this? And more importantly, what has Bitcoin to do with this? There are just too many questions left unanswered; to learn about the second half of the story, proceed to part 2.
To be continued.
Mr. Pratik chadhokar is an Indian Forex, Cryptocurrencies and Financial Market Advisor and analyst with a background in IT and Financial market Strategist. He specialises in market strategies and technical analysis and has spent over a year as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the Financial markets.
