The Fed, Inflation and Bitcoin with Steven McClurg
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SHOW DESCRIPTION
Steven McClurg is a Co-Founder of Valkyrie Investments. In this interview, we discuss how Steven called Bitcoin’s top, watching the Fed for policy indications, protecting wealth against high inflation, how governments should fight inflation, supply chain issues, and inflation hedges.
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Today, US CPI data shows that rather than inflation slowing as had been expected, it continues to accelerate. Year-on-year inflation currently stands at 8.6% - the highest in 40 years. Prices in May alone rose by 1%. But maybe this wasn’t a surprise for everyone.
Janet Yellen, who previously characterised inflation as “transitory”, told Congress on Tuesday “inflation is really our top economic problem at this point and that it’s critical that we address it.” This is happening across the world: the ECB plans a “gradual but sustained” path of interest rate rises; India may need to dampen growth to control inflation; in Turkey inflation is out of control.
So, how bad could it get? The great inflationary period of the 1970s? Or could it be worse? Some commentators talk of extreme examples such as when hyperinflation tore the fabric of the Weimar republic apart. Most think this can’t be a rational possibility: surely politicians and policy wonks are students of history and they’ll stop spending.
But yet, there is talk another $5-10 trillion could be printed.
Whatever the outcome, we’re entering a new paradigm in respect of the cost of living. Whilst there are opportunities in every market, the focus is turning to wealth protection ahead of wealth creation. Is this the time for Bitcoin? It has long been regarded by advocates as an inflation hedge. Yet, its current price performance would suggest otherwise.
Maybe we need to recalibrate our understanding of what constitutes an inflationary emergency. Block’s recent survey has shown a strong correlation between inflation rates and viewing Bitcoin as a safe haven: Argentina came out top with nearly 50% of respondents stating they saw Bitcoin as protection against inflation. At the time inflation was north of 40%; it’s currently 58%.
TIMESTAMPS
00:03:50: Introductions
00:04:37: Watching the Fed for market indications
00:13:05: Understanding Fed decisions, some examples
00:17:58: Market reaction to inflation
00:20:42: US hyperinflation
00:29:05: Global civil unrest and the impending reset
00:33:37: Impact of suggested scenarios
00:44:53: Supply chains
00:49:13: Bitcoin as an inflation hedge
00:56:05: Gold as a store of value, and the Monero alternative
01:00:25: Electrification as an inflation hedge
01:04:31: Senator Lummis/Gillibrand bill
01:07:55: Bitcoin ETF, and Fed rate hikes
01:11:07: Final comments
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SHOW NOTES
Connect with Steven:
Mentioned in the interview:
What Are Examples of Pork Barrel Politics in the United States?
Petrol prices: Calls for more help as cost to fill a tank hits £100, BBC, Jun 9th 2022
US Inflation Hits to 40-Year High of 8.6% - Bloomberg, Jun 10th 2022
What Does $40 Billion in Aid to Ukraine Buy? - CSIS, May 23rd 2022
Turkish lira's slide accelerates as Erdoğan vows to continue slashing rates - FT, Jun 8th 2022
Lebanon Inflation Rate - May 2022 Data - 2008-2021 Historical - Trading Economics
Blackstone takes aim at publicly listed real estate vehicles - FT, Apr 24th 2022
United States Government Spending To GDP - 2021 Data - Trading Economics
Budget Surpluses Push States’ Financial Reserves to All-Time Highs - Pew Research, May 10th 2022
Intel Drags Down Chipmakers With Views on Weakening Demand - Bloomberg, Jun 8th 2022
Central Banks to Increase Gold Holdings Over Crisis Concerns - Bloomberg, Jun 8th 2022
Here's What US Senators Put in New Crypto-Friendly Bill - Cryptonews, Jun 7th 2022
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