Bitcoin has many attributes that make it an attractive investment even today, tatianakoffman writes. Perhaps most worth mentioning is the importance of digital portability during times of crisis. Opinion.
Last week, the U.S. Federal Reserve raised interest rates by 0.25% amid banking turmoil, marking the ninth increase in a year and placing rates between 4.75% and 5%. The Fed aimed to balance fighting inflation while addressing banking sector upheaval, which already had a “tightening” effect on the economy.
And so, the most important question remains – will these measures be effective in actually reversing inflation back to the target rate of 2%? Facing mounting pressure to roll back rate hikes, including protests by farmers and car dealers along with bipartisan political intervention, the Federal Reserve yielded. As unemployment exceeded 7% in May, the Fed chose to substantially lower the federal funds rate, even though inflation had reached a staggering 14.7% in April. This move tarnished Volcker's reputation as a champion against inflation, and throughout the remainder of 1980, inflation persisted at over 12%.
But what happens if the inflation fight is prolonged as it was in 1980? How do we protect ourselves from the value of our assets eroding away? He provides a list of inflation hedges “a host of assets that at one time or another have worked well in reflationary periods,” ranging from the most obvious such as gold to more esoteric such as foreign exchange investments like the AUD/JPY foreign exchange trading pair. His full list of nine hedges, some of which you can invest in and some of which are meant to inspire ideas, include:The yield curve: Historically a great defense against stagflation or a central bank intent on inflating.
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