Hey! Thanks for commenting! Here's my quick quick view: None of the three conditions for hyperinflation apply to the U.S., so the country is nowhere near hyperinflation. It's just not in the cards. (1) U.S. debt and deficits are very sustainable. It's the richest country in the world, has significant debt repayment capacity, and its debt/GDP ratio is still relatively low (esp. compared to Japan, for example). (2) Demand for U.S. treasuries remains extremely robust. Everybody wants to lend to the U.S. to finance the deficit. Even to earn just 1-2%. And importantly, (3) the central bank is not providing direct financing to the deficit. It has expanded the money supply in the last decade+ for other reasons (countercyclical monetary policy -- not political capture). So hyperinflation is just not a real possibility in America. Hope this helps!
Thanks very much Isaac!! And thanks for subscrtibing!! I think cryptocurrency increases currency competition, but only in emerging markets, not advanced economies. Some share of people in Argentina or Venezuela or Nigeria will stop holding pesos or bolivares or Naira in favor of USD stablecoins or BTC/ETH. But in the US, Europe or Japan, I don't think BTC or ETH are an attractive alternative (too volatile, not widely accepted, not user friendsly with keys, wallets, expensive on/off ramps etc). So ultimately, if crypto has any effect on central bank monetary policy, it will be in developing countries with poorly managed currencies, where policymakers see/feel the threat of cryptodollarization in response to bad monetary policy.
In terms of the sanctions on Tornado cash... I think it's too soon to tell how it will play out and whether it signals a change of approach from the US or whether it's a one off. We'll see! Thanks for commenting and reading!!!
Frank! Un excelente artículo that gave me a new perspective on how crypto might influence some of these third-world country economies.
Scary to even think about the people that might be negatively affected by these short, intense bursts of hyper, hyperinflation!
Keep up the writing, it's right up my alley :)
Gracias Dani!! Un abrazo
Please write about how the hyperinflation drivers/issue applies to the USD itself. Obviously TINA applies, or does it?
Hey! Thanks for commenting! Here's my quick quick view: None of the three conditions for hyperinflation apply to the U.S., so the country is nowhere near hyperinflation. It's just not in the cards. (1) U.S. debt and deficits are very sustainable. It's the richest country in the world, has significant debt repayment capacity, and its debt/GDP ratio is still relatively low (esp. compared to Japan, for example). (2) Demand for U.S. treasuries remains extremely robust. Everybody wants to lend to the U.S. to finance the deficit. Even to earn just 1-2%. And importantly, (3) the central bank is not providing direct financing to the deficit. It has expanded the money supply in the last decade+ for other reasons (countercyclical monetary policy -- not political capture). So hyperinflation is just not a real possibility in America. Hope this helps!
Thanks very much Isaac!! And thanks for subscrtibing!! I think cryptocurrency increases currency competition, but only in emerging markets, not advanced economies. Some share of people in Argentina or Venezuela or Nigeria will stop holding pesos or bolivares or Naira in favor of USD stablecoins or BTC/ETH. But in the US, Europe or Japan, I don't think BTC or ETH are an attractive alternative (too volatile, not widely accepted, not user friendsly with keys, wallets, expensive on/off ramps etc). So ultimately, if crypto has any effect on central bank monetary policy, it will be in developing countries with poorly managed currencies, where policymakers see/feel the threat of cryptodollarization in response to bad monetary policy.
In terms of the sanctions on Tornado cash... I think it's too soon to tell how it will play out and whether it signals a change of approach from the US or whether it's a one off. We'll see! Thanks for commenting and reading!!!