Unfortunately, the question in the headline can be answered quite simply, and despite how much the money printer for ‘brrrr’ the US Dollar will probably never reach high levels of hyperinflation.
There have been a few instances in recent history where countries have seen their currency hit hyperinflation levels and disintegrate into near worthlessness. Zimbabwe is a prime example where it had to print trillion dollar notes just to keep up with the inflation and in fact, had to adopt the US dollar to maintain a semblance of an economy.
The reasons behind Zimbabwe and other countries losing a handle on their economies is a little more complicated than flooding the economy with new money, but, when the new money did start coming in for other economic reasons then the inflation went into hyperdrive.
Some now feel that Bitcoin is primed enough to start taking some of the hegemony from the US dollar as it is deflating while the Dollar is expected to inflate massively amid the monetary policies implemented by the Fed to keep printing more and more money.
Bitcoin is also matured and normalised to a level where it looks like the coin can offer an asset class worthy of investing, but that being said, it is also important to understand where the USD stands in the global economy — pandemic or not.
The USD is the most powerful and most prized currency across the globe. The fact that it is being printed more, and the supply is way up, does not mean it is flooding the market, the demand is still very strong — and it is far stronger than Bitcoin.
Always in demand
Even since before the Covid-19 pandemic struck the US was already starting to move towards lower interest rates and higher money printing. In fact, the FED has even said it is not afraid to print infinite amounts of new money, and that is key — it is not afraid.
This is not just big talk from the Fed, this is quite true. If the US was the only country that had any use for its currency and the demand was not global, then they would have reason to fear in terms of inflation. But the currency is in huge demand and will be snapped up.
The amount of USD that has been printed thus far should already be making an impact in terms of inflation but there has been nothing to note thus far. In the pandemic, there will be people who will be looking to the dollar as a currency that is stronger than theirs and buying it up like a reserve.
Bitcoin is also a reserve
The idea that the US will inflate to a point where it reaches Zimbabwe levels won’t happen. Even with Bitcoin as a potentially new and decentralised alternative. However, what this will do for Bitcoin is to help it in terms of being a resource worth keeping.
The Fed has been printing money, but it has also been reducing the interest rate in order for people to spend more and not look to save so much, but this is where Bitcoin becomes a worthwhile asset to be saved.
Bitcoin has become much more focused on being a digital gold — especially following the halving which made it more deflationary, but its lower inflation levels are not going counter to the USD that is supposed to be going up.
Because Bitcoin is also more of a reserve, it is not going to really compete with the USD should it fall under hyperinflation. The US dollar will more likely be taken over by another global currency if there was hyperinflation but inflation would only happen if some sort of other economic disaster struck and led to a fall.