Lyn Alden - Bitcoin Is The Best Solution To Hyperinflation

Lyn Alden - Bitcoin Is The Best Solution To Hyperinflation

In this interview, Lyn Alden examines the nature of inflation and its effects on the economy. She also discusses the relationship between inflation and oil prices. Lastly, she suggests investing in -inflationary assets such as Bitcoin and gold. Here are some of the key points in the video:

The question of inflation being transitory is broken into different parts. Transitory can be separated in terms of rate of change terms and transfer in absolute terms.

However, when the price is normal but goes up and stays at that level, this means that the inflation is transferring the rate of change in terms but not transitory in absolute terms.

A large increase in broad money supply can pose hyperinflation risks. Mostly, the increasing base money staying in the banking system is not getting out into the broad money supply. This happened in 2008, 2020, and 2021.

The combination of fiscal spending with deficit monetization has increased the broad money supply at a rate not seen since the 1940s. This is one of the causes of higher levels of prices.

The question now is whether the rate of change continues. Now, the rate of inflation has been going down because people are no longer getting stimulus checks. However, people are still getting child tax credits and the Congress is still working on an infrastructure bill, though these are slower means of rolling out money.

In the longer term, the inflation rate will probably be above interest rates on cash or sovereign bonds like treasuries. And the inflation rate will be high enough to have a devaluation effect on the currency over time.

Historically, most of the big inflationary pulses are from high oil prices – which is bigger than all other commodities combined. The big oil market impacts everything from transportation to manufacturing to energy costs.

Emerging markets that are now the biggest oil buyers are recovering from the pandemic and lockdowns. Hence, they may demand more oil, thereby increasing oil prices. So, oil prices may rise persistently in the years ahead.

We've been in a 13 years oil-bear market, but the next 5 or 10 years will be more bullish, and this will be a pro-inflationary environment, especially compared to low yields on bank accounts and treasuries.

Consequently, hard assets such as gold and Bitcoin rise in value in an environment of negative yields. Now, it is not advisable to hold too much of fiat currencies, except what you will use for short-term obligations. If this negative environment continues, it will favor assets that have some degrees of scarcity.

Treasury bills and bonds have yields lower than the official inflation rate. So, Bitcoin is highly recommended, partly because it can be accessed anywhere.

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