Hello everyone,
I hope this post finds you well. Today, I want to discuss an intriguing thesis that has been on my mind lately. It’s about the intersection of traditional and crypto economies, and the unexpected implications it might have on inflation.
Over the past year, we’ve seen an unprecedented amount of money being printed without backup, also known as Fiat money, in countries like the US, the European Union, and others. Now, here’s an interesting observation: a significant portion of this money appears to be flowing into the crypto economy.
Why is this noteworthy? Well, the crypto economy is not yet as deeply intertwined with the real economy as other sectors. This means that the influx of Fiat money into the crypto economy could be acting as a buffer, absorbing the excess liquidity and thereby helping to combat inflation. In essence, it’s a way to take money out of circulation, lowering the supply of money, and therefore, helping fight inflation.
If this is indeed the case, it’s a truly unexpected implication of the new economy. It suggests that the crypto economy, often viewed as a disruptive force, might be playing a crucial role in maintaining economic stability in advanced economies.
Governments around the world are beginning to recognize the importance of this phenomenon. A prime example is the US Congress, which is voting on the Fit21 Act tomorrow. This act is a clear indication of the growing need to regulate the crypto economy due to its increasing significance.
So, what do you guys think about this thesis? Could the flow of Fiat money into the crypto economy be an unexpected ally in the fight against inflation? Or are there other factors at play that we should consider?
I look forward to hearing your thoughts and engaging in a fruitful discussion.