Over the last several months, I’ve been gathering information on the issue of inflation, and I’d like to use this opportunity to share my findings with the Bitcoin community in particular. As part of our investigation, we will look at factors contributing to the recent rise in asset and consumer prices after the Global Financial Crisis (GFC). Before we move any further in this guide, please register yourself on the crypto genius, and become a fantastic trader by using British bitcoin profit right now.
Two issues in the Bitcoin world are sure to draw good attention to you: mining and cryptocurrencies. Many of the pieces that tackle the themes mentioned above may break down to simple cheerleading and, in my view, are often devoid of any natural substance whatsoever. Even though this letter will be dealing with the subject of inflation, it will be offering support from a different point of view than the one that is now popular. This post may appear a little longer to most readers, but don’t be concerned; it is just as chart-heavy as it is word-heavy, with the charts and illustrations we use being quite useful for our research and analysis. To do this, we shall rely on historical precedent on a more frequent basis.
In What Form Does an Inflationary Environment Take Formation?
To better understand what to anticipate in an inflationary climate, we shall go to the past. It shows in the chronological sequence below, and it effectively covers the past century or so of inflationary occurrences. We’ll start with Bolshevik Russia to get things started.
SOVIET RUSSIA (Soviet Union of Russia)
People could be reminded of more recent events, such as the experiences of Zimbabwe and Venezuela if they think about the example offered above. We know what was occurring to the Soviet currency, but how did interest rates react to this development? Interest rates paid on loans surpassed 216 % throughout the same period. Additionally, pawn shops may charge interest rates of up to 120 % on credit advances. Because the aforementioned Soviet commissars had complete control over all parts of banking during this period, black market rates were likely to be far higher than the rates shown above.
Germany’s Weimar Republic
Consumers attempting to get rid of their fast-deteriorating money as soon as possible is something you would expect to see during a time of high to severe inflation from a behavioral standpoint. The situation became so dire that producers and retailers were unable and unwilling to part with their wares. As a result, they restricted the number of hours their doors were open to avoid quickly depleting their inventory. The shopkeepers rely on the rapidly depreciating German mark as currency. Additionally, loans of over 10,000 % documents in Germany during this era, but, owing to the instability of hyperinflation, the French occupation of the Ruhr, and political radicalism, open black-market rates might have been even higher than these figures.
In What Form Does a Disinflationary/Deflationary Environment Take on The Appearance?
For the sake of this section, we shall no longer be looking at the history but rather at the current condition of events in the United States of America. Read about the following regions to know more about the deflationary environment in the section down below:
Indexes of Commodities
In this case, the tweet speaks for itself. Contrary to massive amounts of “money printing” and Federal Reserve interventions, commodities had remained below their 2008 levels… which happened well before any money printing started.
Even though there were multiple quantitative easing (QE) operations throughout 2013 to 2016, the lumber price managed to decline. It suggests two short-term booms, the first of which took place in 2018 and another which occurred at the commencement of the COVID-19 recession, both following subsequent collapses. Lumber orders increased dramatically due to the impact COVID-19 had on employees who were obliged to remain at home. In the same way, as things began to re-open and regular life resumed, demand slowed, and the cost of gold began to plummet down to Earth.
