What Bitcoin Did: The Crisis Across All Markets With Peter Doyle
Central bankers and governments are finally backing away from statements that inflation would be transitory. However, it may be too late. Markets are in a state of fear.
With every asset class getting hit hard right now, the question is how much worse things could get. After all, governments have taken on a lot of debt, and now interest rates have started rising. Taming inflation without creating more negatives for the economy will prove a tough balancing act.
Trying to tame inflation is no small feat. There’s more to rising costs than monetary policy. For instance, rising energy prices create higher costs to produce and transport goods. Keeping those prices down requires a bigger investment in fossil fuels, not monetary policy.
The other big issue today? Finding investments that can beat inflation. One such investment is potentially Bitcoin. Its long-term track record since its inception has been phenomenal.
However, the cryptocurrency has been caught up in short-term market fears. As a “risk-on” asset, it’s now down 70 percent from last year’s highs.
With stocks down, bond yields up (meaning bond prices are down), there’s no attractive winner here. While cash looks attractive, its slow loss to inflation makes it unattractive in the long-term.
In short, the timing of an energy crisis, debt crisis, and inflation make for a challenging environment for investors now.