Even before the global market fear that was sparked by the Covid-19 pandemic, there were policies being enacted across the globe, by major central banks, to try and stimulate the economy as fears of a recession loomed.
These fears were predicated on a number of factors, but none of them had anything to do with the virus that would be spreading across the world and sending the planet into lockdown while grinding the economy to a halt.
When the markets did fall, and the panic set in, the quantitative easing and monetary policies, especially in regards to printing cash from the US Fed, went into overdrive. The Fed said it had unlimited money to print and that made people nervous. Overprinting money is one sure way to get inflation in the US Dollar.
For Bitcoiners, this was a sign that their belief in a deflationary asset was correct and indeed, it could be the answer in a time of a crisis and act much like a safe haven. That is not to say that Bitcoin’s safe have status is untrue, but it does not look like it is getting the same backing from the USD which so far has not seen much inflation.
Officials with the U.S. central bank, led by Fed Chair Jerome Powell, said they see little chance of runaway inflation in the near future because the economic downturn has harshly crimped consumer demand and high unemployment is eliminating any upward pressure on wages.
Unemployment at the root
So far, inflation has remained very low. Rising unemployment damps wage growth and consumer demand, reducing upward pressure on prices for goods and services.
“We’re not even thinking about thinking about raising rates,” Powell said.
However, there may be different aspects at play in regards to keeping inflation down, but with unemployment being at the root of them, the damage to the economy looks to be long and lasting.
For individuals, this means a major impact to their lives and ongoing financial situation, and while those facing unemployment may not have savings at the forefront of their plans, the route to saving is also taking a hit with low to negative interest rates.
Bitcoin still can be a hedge
Because saving is made that much harder by the Fed and these policies, the inflation may not be what Bitcoin can be used to hedge against, it may well be that the potential for it to work like an asset of value that gains might help those who want to grow their savings.
