Why Biden-Flation presents new challenges for the Fiat price of Bitcoin – January 27, 2022,
I’m curious to know if any true believer in Gold is willing to sell off all their Gold and Silver holdings to buy Bitcoin? I know there are traders and speculators willing to do it, but I’m curious to know if true believers in Gold are willing to do it. The reason I say this is because I look at fiat money like coupons.
Sure I work for dollars, spend dollars and even hoard dollars, but when I look at fiat money, I imagine an expiry date on the bill and I know full well that, chances are if the hyperinflationary event happens in my lifetime, I’m going to get stuck with a bunch of useless fiat dollars. But for me, I see Fiat money and Bitcoin tied to the hip it’s hard for me to imagine a person who sees Gold and Silver as insurance from a fiat money crash converting their holdings into Bitcoin.
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Now, what I do see and what I can imagine are people trading their fiat money into Bitcoin, this does make sense to me, especially when the government is sending people free checks in the mail. The problem with Biden-Flation is that Biden is doing everything in his power to raise the cost of living. If I’m, to be honest, I think Joe Biden is an economic and financial moron. I don’ subscribe to this dementia nonsense, Ronald Reagan was also on the decline when he was president, but Reagan understood basic economics, Joe Biden clearly doesn’t and I think as president he’s alarmed by the financial responsibilities he has.
I think Biden like most Left-wingers imagines economics as non-important, so when he enacts regulatory laws on productive people, it’s hard for him to comprehend the economic consequences and this should make you nervous if you invest in Bitcoin because a higher cost of living equates to people having fewer dollars to throw at Bitcoin.
Money is borrowed into existence and if it’s not borrowed into existence, the money in circulation will send all sorts of incorrect buying signals, this is why I don’t imagine CBDCs as much of a threat to Bitcoin. China currently controls the means of production, which allows them some wiggle room with their CBDCs but there’s no real demand for CBDCs and even when there are, they will be bombarded with ADDITIONAL regulations on the productive.
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China already has their social credit score system, so not only are the Chinese not having children, but they’re also becoming less productive, adding fuel to the fire is the Chinese Communist Parties'(CCP) obsession with beating Covid-19, I think it’s like 20 million Chinese people on lockdown. a CCP lockdown is basically a prison, from an economics perspective it equates to a law-abiding productive person becoming unproductive.
Incorrect pricing signals could also be fueling Bitcoin right now, because, truth be told, the price of Bitcoin shot up when Donald Trump and other Western “leaders” began sending voters free checks in the mail. Some of these people getting these free checks already had money in their bank accounts and imagined that their free government money was money they were willing to gamble. “I’m playing with the house’s money, let’s give this bitcoin thing a try, I hear it keeps going up?”
The difference between Trump and Biden is not the spending it’s the regulatory environment, Biden’s money printing is more expensive than Trumps’. Biden likes regulations, he’s overly regulated American energy, he supports lockdowns, and he has a very expensive open-border policy, I think people forget these illegal migrants are also consuming and competing for resources, ZIRP makes housing prices more expensive and QE provides the wealth effect.
So although on the surface Biden and Trump look like the same person economically, in practice, Joe Biden costs more money. I personally think a lot of the money that went into Bitcoin during its run-up, was malinvestment, and malinvestment works as long as consumer price inflation remains low. Unless Biden begins cutting regulations, I don’t see consumer price inflation retreating.
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If private businesses can’t make a profit by hiding inflation, they’ll usually opt to close their doors, until more favorable market conditions are presented. shortages tend to equate to a change in consumer behavior, and because Bitcoin is currently seen as volatile, it’s not a store of value. As speculators see more and more consumer price inflation, they’re going to want to invest in something going up in value. Will Bitcoin be able to appreciate indefinitely during Biden-Inflation? So far in 2022 no, only time will tell if the price of Bitcoin can march upward in the future.
Interesting times ahead!