Inflation is killing us; cryptocurrency alone cannot beat it
Traditional currencies fail, and research has shown that cryptocurrencies can be subject to the same flaws.
Opinion
Just like a pandemic, inflation has spread around the world, casting a dark uncertainty over the future.
A disagreement over how best to handle soaring prices in the UK nearly caused the collapse of its economy and subsequently led to the resignation of Prime Minister Liz Truss after just 44 days in office. Currently, at least 10 emerging economies are hyperinflationary, and more are expected to follow. And the Federal Open Market Committee (FOMC), the part of the US Federal Reserve responsible for maintaining price stability, just announced higher interest rate hikes amid a return to positive gross domestic product. , signaling continued inflation problems ahead.
The global struggle to reduce inflation is tangible proof that yesterday's central bank tools are inadequate for today's monetary problems. But hope for a better, more sustainable future may lie in a technology policymakers least expect: blockchains.
As the de facto global reserve currency, all countries rely on the US dollar for trade. When all is well, it seems to suit everyone. But in times of high inflation, the purchasing power of dollars drops sharply, forcing other countries to buy more dollars to maintain stability. And yet, periods of high domestic inflation are exactly what forces the Fed to reduce dollar liquidity via interest rate hikes, effectively hampering international dollar purchases. This dilemma between easing domestic inflationary pressures while meeting the world's liquidity needs is called the Triffin's dilemma, and it arises whenever a national credit-based currency, such as the US dollar, is used as world reserve.
Related: Jerome Powell Prolongs Our Economic Agony
In practical terms, Triffin's weakened monetary policy is causing financial crises to spread rapidly from advanced developed countries around the world. (Triffin's dilemma does not trigger high inflation in advanced economies; on the contrary...
Traditional currencies fail, and research has shown that cryptocurrencies can be subject to the same flaws.
Opinion
Just like a pandemic, inflation has spread around the world, casting a dark uncertainty over the future.
A disagreement over how best to handle soaring prices in the UK nearly caused the collapse of its economy and subsequently led to the resignation of Prime Minister Liz Truss after just 44 days in office. Currently, at least 10 emerging economies are hyperinflationary, and more are expected to follow. And the Federal Open Market Committee (FOMC), the part of the US Federal Reserve responsible for maintaining price stability, just announced higher interest rate hikes amid a return to positive gross domestic product. , signaling continued inflation problems ahead.
The global struggle to reduce inflation is tangible proof that yesterday's central bank tools are inadequate for today's monetary problems. But hope for a better, more sustainable future may lie in a technology policymakers least expect: blockchains.
As the de facto global reserve currency, all countries rely on the US dollar for trade. When all is well, it seems to suit everyone. But in times of high inflation, the purchasing power of dollars drops sharply, forcing other countries to buy more dollars to maintain stability. And yet, periods of high domestic inflation are exactly what forces the Fed to reduce dollar liquidity via interest rate hikes, effectively hampering international dollar purchases. This dilemma between easing domestic inflationary pressures while meeting the world's liquidity needs is called the Triffin's dilemma, and it arises whenever a national credit-based currency, such as the US dollar, is used as world reserve.
Related: Jerome Powell Prolongs Our Economic Agony
In practical terms, Triffin's weakened monetary policy is causing financial crises to spread rapidly from advanced developed countries around the world. (Triffin's dilemma does not trigger high inflation in advanced economies; on the contrary...
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