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Bitcoiners have maintained that inflation is here to stay for months, and politicians wake up to that reality.
Janet Yellen – Treasury Secretary of the United States – recently admitted that rising prices in the US are no “transitory” phenomenon. Her words echo those of Federal Reserve Chairman Jerome Powell, who said days ago that we should “retire” the term.
Inflation Isn’t Ending Soon, Says Yellen
Yellen offered her inflation forecast during a Reuters-sponsored event on Thursday. According to the secretary, the Omicron variant has thrown a wrench into her more hopeful predictions made over the summer. She previously believed that the economy and prices would return to normal with the pandemic subsiding.
“Now the new variant, the Omicron variant — the pandemic could be with us for quite some time and hopefully not completely stifling economic activity, but affecting our behavior in ways that contribute to inflation,” said Yellen.
While still uncertain what effect Omicron would have on the economy, Yellen could see it creating more supply chain blockages. Mainstream economists have cast supply chain disruptions as the primary cause behind inflation alongside labour market shortages.
Contrarily, most Bitcoiners – including El Salvador’s President – have maintained that inflation is being caused by monetary debasement. As Mark Mobius echoed last month, the US money supply has risen by 40% within the previous 18 months. Meanwhile, Shark Tank star and newfound crypto lover Kevin O’Leary believes it’s a combination of both.
Powell: Speed Up the Taper
On Tuesday, Powell’s words to the senate were nearly identical. The Fed chairmen admitted it wasn’t an apt phrase when pressed by pro-crypto senator Pat Toomey on so-called “transitory” inflation figures. But, seeing as annual inflation has run above its 2% target for years, he said they ought to find a more transparent term.
“It is appropriate, I think, for us to discuss at our next meeting, which is in a couple of weeks, whether it will be appropriate to wrap up our purchases a few months earlier,” said Powell.
The Federal Reserve promised to start tapering its bond purchase program in early November to combat rising inflation. Bitcoin’s price fell at the time and similarly on Tuesday when Powell said he would speed up the process.
Labor Department statistics from October showed annual inflation at 6.2% – the highest in 30 years. Similarly, Bitcoin pumped on this news, indicating investors’ recognition of it as an inflation hedge.