Bitcoin Fair Value - Issue #9

The system only works when there is faith in it.

Faith will continue to be lost as it becomes more and more evident that the government and central banks can not control inflation with their stated monetary and fiscal policies.

They ignore the root cause of inflation (government deficit spending) and hop from scapegoat to scapegoat.

The consequences of both ignoring and manipulating the true economic data are staggering and imminent.

At first inflation was not a problem. In fact, the current FED policy is to “target 2% average inflation.”

As inflation continued to rear its head, the FED said it was only “transitory.”

Next, inflation was no longer transitory.

Inflation became more persistent and the FED said it was “something to keep an eye on.”

After keeping eyes on it, the FED saw that inflation had become a problem and they then decided they had to “raise rates” to quell inflation.

Now the FED says inflation is too high and they need to “raise rates more aggressively” (0.5% increases instead of 0.25% increases) to actively fight inflation.

Finally, the FED has admitted inflation is a problem, but now the White House is telling us inflation is “extraordinarily elevated” (aka Putin’s Price Hike) so there is no need to worry.

1. Artificially inflate money supply (40% increase of dollars over last 2 years).

2. Artificially raise interest rates (aggressive rates hikes - projected for 7+ hikes in 2022).

3. Artificially reduce supply (covid19 lockdown and war “sanctions” effecting supply chains).

4. LIE ABOUT IT (as seen in CPI chart below).

What does the government do when inflation becomes a nuisance? They manipulate the CPI equation to make the output look better…

Today’s CPI equation is seen as the red line in the chart above (showing the current 8.5% inflation metric). However, the CPI equation used in the 80’s is seen as the blue line in the chart above (showing the real rate of inflation is just over 17%).

Hard to imagine the FED is fighting inflation considering the interest rate is 0.25% and needs to be > 8.5% (really 17%) to effectively fight inflation.

When the interest rate is greater than the inflation rate people are incentivized to save rather than to spend or invest. A critical incentive in a consumer economy. At this point, the FED could be raising rates just to mask/shield the fact that yields are rising because bonds are being dumped.

The dollars loss of reserve status will not be announced to the world until it is too late. It is happening gradually as market participants offload their dollar debts for better stores of value; thats why bond yields are rising (bonds are being sold).

As seen in Drew’s tweet below, by the time the majority of people understand what is happening it is too late to preserve purchasing power.

These major headlines speak for themselves…

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