Inflation does not back

We spent a lot of time on cryptocurrencies - this is still our business. At the same time, we still live in a fiat economy, and will continue to exist in it at least on the horizon for a few years. And this is still optimistic.

The state of the fiat economy is largely determined by inflation. We, as consumers, very clearly feel it in our pocket when we see the price tags in stores. Loan interest rates are understandably rising in the face of inflation.

Investors and industrialists expected the United States Federal Reserve to lower the benchmark interest rate, sharply understood to fight inflation. The measures taken by the government and the Fed had an effect: inflation in the US fell from 9 to 3.5 percent. However, the target was never reached.

On Tuesday, Jerome Powell, the head of the Federal Reserve, announced. He’s not going to cut interest rates. And that’s the bad news.

The fact is that there is a problem not only with markets, but also with the implementation of the federal budget. Public debt has exceeded $34 trillion, and interest is tied to the base rate. The higher the rate, the more you have to spend on debt servicing.

The current inflationary dynamics are determined not only by fiscal and industrial policies, but also by crises, primarily the military. The Middle East has flared up. The problem is not just to touch the region. Logistics chains are disrupted, the price of oil will inevitably rise. These are all factors that drive up inflation.

All this is compounded by the inertial policy of the US budget. There are no plans to reduce the budget deficit, nor is there any intention to limit its growth. It’s hard to turn down an opportunity to get money here and now. It’s like the behavior of a shopaholic with a credit crunch. 

Is there any chance of averting a crisis and getting out of this with minimal casualties?

In the paradigm of fiat economy - there are practically no chances. So, we will wait and be prepared.

#InflationReality #FiatEconomyStruggles #FederalReserveDilemma #DebtCrisisLooms #EconomicInertia