Bidenflation is here, and it’s persistent:
Not only is it up, it’s picking up pace compared to the preceding months:
+0.3% in August, +0.4% in September, and now +0.9% in October.
So the inflation rate went up almost 1% in a month, exceeding expectations of 0.6%. It’s up 6.2% compared to where it was in October 2020. This chart comes via Charlie Bilello on Twitter:
It’s a spike even greater than the one seen in 2007/2008, which as we all know preceded a devastating recession and a period of brief deflation.
There are a lot of people out there saying that the big prints in year-over-year inflation are only due to the fact that we’re comparing it to 2020, but as you can see from the chart above, the inflation rate really didn’t get too out of whack in 2020 in the grand scheme of things. We didn’t even dip into deflationary territory in 2020 like we did in 2015.
Here it is in the grand scheme of things dating back nearly a century:
Now obviously it’s nothing compared to what we saw in the 1970s and early 1980s, or following the end of WWII, but it’s getting to the point where it’s surpassing anything we’ve seen in the past 40 years.
And the 6.2% year-over-year inflation rate is really under-stating things. That’s the overall CPI rate, which measures a whole “basket” of consumer goods and services. It’s a weighted average across a whole bunch of different categories.
The prices of certain individual goods and services have increased way higher than the average 6.2% reflected in CPI. And this chart is even a bit outdated as it’s from July:
This doesn’t even mention the housing market, either, which, if you understand inflation as simply an increase in prices, has been undergoing massive inflation for well over a year now.
Normally when inflation spikes, the Fed jacks up interest rates in order to get things under control. They don’t want inflation to spiral. But our Federal Reserve today does not want to hike interest rates or else it could send the stock market off a cliff and the nation into recession.
It seems like they’re backed into a corner here.
However, don’t worry. MSNBC says inflation is good:
Look at how the media has “evolved” in its “thinking,” i.e. water carrying, on inflation:
It went from a conspiracy theory to a good thing in less than a year.
Now, the one thing I’ll say is that I see a lot of people talking about how “Bitcoin fixes this” and how Crypto is a hedge against inflation.
Let me just ask this then: how, exactly, is Bitcoin’s value measured?
In US dollars.
Most people aren’t buying Bitcoin to spend it. The process of actually spending it is complicated and arduous, especially given the constant price changes in Bitcoin. It’s not ideal as a “spending” currency.
The real value of Bitcoin is ostensibly as “digital gold,” but if the US dollar is constantly losing value, and Bitcoin is not ideal for spending, then what is the true value or usefulness of Bitcoin really? I’m not saying it’s worthless, I’m just saying that if you’re buying it as a hedge against inflation, you have to take into consideration what real currency you’re going to convert Bitcoin back to in the future.
And is Bitcoin really increasing in value, or does a dollar just not go as far anymore?
The same can be said about the stock market, which is another speculative asset class just like Bitcoin. People see the stock market rising, but those stock prices are measured in US dollars, which are worth less by the day at this point. If the stock market’s gains aren’t outpacing inflation, it’s really just illusory gains.
Now, that said, stocks and crypto are definitely hedges against inflation when compared to just sitting on cash. Even if stock/crypto gains don’t outpace inflation, it’s still better than hoarding cash.
But this idea that if we get into runaway inflation that really crushes the value of the dollar, then holding Bitcoin is the solution–I don’t think so.
Final point: hey, it could be worse: