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This week’s CPI data is bad news for economists and a bittersweet advertising for Bitcoin.
This week, Bitcoin (BTC) received additional free exposure as inflation statistics revealed that prices are soaring faster than even experts predicted.
The latest Consumer Price Index (CPI) report on June 10 from the United States Bureau of Labor Statistics (BLS) also revealed that hourly average earnings for United States workers are at their lowest this century.
Inflation returns to 2008 levels
Inflation is one of Bitcoin’s closest friends. Its intrinsic deflationary character allows its users to save for the future without fear of inflation destroying the value of their investments.
Since the beginning of the COVID-19 epidemic, central banks have embarked on unprecedented money-printing initiatives, and the effects are already becoming concerning.
The CPI in the United States grew 0.6 percent in May, 12 months after the coronavirus epidemic began outside of China.
This is 5% higher than the same month last year, indicating that inflation in the United States has reached its highest level since 2008, the year of the financial crisis.
“The May CPI report shows reopening-sensitive categories dominating price pressures for a second straight month,” Bloomberg analysts said in comments accompanying the report.
Perhaps unsurprisingly, Bitcoin proponents were quick to raise the alarm.
“To an individual of average intelligence, it was entirely intuitive given the massive money printing (stimulus) that happened since COVID.”
Held observed that wages had failed to keep pace with developments, implying that when adjusted for inflation, US employees were earning less per hour than at any period in the twenty-first century.
“Wages did not keep pace with inflation, and as a result, employees became poorer. Wages are more “sticky” than prices, which can be altered much more readily “He finished by referring to a comparable situation in the 1970s.
The CPI hides true inflation rates
In recent years, other Bitcoin personalities have seized on inflation as a prominent illustration of how the fiat monetary system deceives people it compels to participate.
While the CPI remains relatively low in percentage terms, it excludes a wide range of assets. Products and services that offer a person with certainty for the future, such as real estate and college tuition, are examples of these.
MicroStrategy CEO Michael Saylor and The Bitcoin Standard author Saifedean Ammous have been particularly vociferous about the inequality.
“CPI is a misleading measure of inflation,” Saylor contended in March.
“Volatility is a misleading measure of risk. The former distracts us from the problem, while the later distracts us from the solution.”