The U.S. Personal Consumption Expenditure (PCE) core price index has soared to its highest level since 1992, stoking inflation fears. Some say Bitcoin, with its fixed supply of 21 million tokens, will resist inflation.
But is there any truth to that?Source: @lisaabramowicz1 on Twitter.com Is Hyperinflation On The Way?
The PCE measures price changes in consumer goods and services exchanged in the U.S. economy. Along with the Consumer Price Index (CPI), the PCE is used by the Fed to make monetary policy.
However, when compiling the PCE, the Bureau of Economic Analysis excludes food and energy costs because they are deemed too volatile. Some critics argue that this policy underestimates the true cost of living.“A measure of prices that people living in the United States, or those buying on their behalf, pay for goods and services. It’s sometimes called the core PCE price index, because two categories that can have price swings – food and energy – are left out to make underlying inflation easier to see.”
Nonetheless, the PCE has spiked to its highest level in 30 years. Against a backdrop of record government spending, there are real fears that inflation risks will not be “transitory,” as Fed Governor Lael Brainard mentioned earlier this month to quieten concerns.
Back in February, U.S investor Michael Burry, who predicted the U.S. housing bubble, warned that he expects the onset of rapid and out-of-control inflation, also known as hyperinflation.
Looking to history, Burry draws parallels with post-WWI Germany, in which markets soared before the onset of hyperinflation. During the mania of rising markets, exchanges could not cope with demand and were forced to close. Burry likened this to the Wallstreetbets movement that saw Robinhood halt trading on some assets.“Before the German hyperinflation in the 1920s, ‘everyone from the elevator operator up was playing the market’ and volumes ...