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Steve Hanke, a highly-revered professor of applied economics at Johns Hopkins University, has shared an expert opinion on inflation in the United States. According to him, inflation, as far as the US is concerned, is now a thing of the past.
The veteran economist shared his view in the early hours of Thursday while speaking on CNBC’s “Street Signs Asia”. He was quoted as saying:
“I think the inflation story is history. One reason for that is that money supply has been contracting on a year-over-year basis by minus 4% in the United States.”
Hanke also recalled that the last time changes in the money supply happened like that was in 1938. “Money supply changes cause changes in the price index and inflation,” he added.
Hanke’s commentary follows barely 24 hours after the US inflation rate for June came in lower than expected at 3%. That is, notably, the smallest year-on-year increase in two years. Also, the core consumer price index (CPI), which generally excludes food and energy prices, rose 4.8% in a year, but 0.2% month-on-month.
In his explanation, Hanke revisited how inflation rose, almost simultaneously, with the producer price index and the consumer price index. However, he also pointed out how the core was the slowest to rise at the time.
Similarly, now that policies are proving somewhat effective and the producer price, as well as consumer price indexes, are falling hard, the core lags yet again, he claims.
Nonetheless, Steve Hanke is positive that even the core would eventually come down significantly. But that is as long as policymakers “continue with quantitative tightening”.
As of publication, core inflation is still running well above the Fed’s 2% annual target. But if the Fed sustains its tightening policy, “it can reach the 2% range pretty fast,” Hanke concluded.
The US producer price index is due later today. And if it also shows prices falling, the Fed may have to end the rate hiking cycle soon.
Meanwhile, the CMEFedWatch tool also suggests that traders have a 92.4% expectation that the Fed rates will remain unchanged in the Fed’s July meeting.
Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this.
He’s a reader, a researcher, an astute speaker, and also a budding entrepreneur.
Away from crypto however, Mayowa’s fancied distractions include soccer or discussing world politics.
Despite its rollercoaster ride in the market, there are always people who remain steadfast in their belief in Bitcoin. One of them is a pillar of tech behemoth, Apple Inc.
Steve Wozniak — the Apple co-founder — has stated that he expects the world’s top cryptocurrency to reach $100,000 in the near future.
Wozniak discussed cryptocurrency in a recent interview on the Wild Ride with Steve-O podcast.
“I purchased a large amount of bitcoin at the outset to demonstrate how to use this new technology. How do you make an online purchase? I conquered that. How do you purchase items in foreign nations, and how would you pay for a donut?”
Additionally, the computer programmer and philanthropist pondered how individuals locate ATMs that accept bitcoin. “I want to experience and absorb everything,” he stated.
According to Wozniak, Bitcoin is the “most incredible mathematical marvel.”
In July last year, when speaking at Talent Land Jalisco, he told his virtual audience that Bitcoin was superior to gold due to its verified digital scarcity.
While admitting that he was unable to quantify his prediction mathematically, Wozniak noted that effective interest in cryptocurrency made the price attainable.
Related Article | Bitcoin On Course To Hit $100K Nine Months From Now, Bitbull CEO Predicts
“I believe Bitcoin will eventually reach $100,000… I am unable to quantify it mathematically; I simply feel it as a result of all of the interest. The interest in cryptocurrencies.”
Bitcoin is currently trading below the $40K threshold, at $39,084.76 according to CoinMarketCap’s price monitoring.
BTC currently trades at a 24-hour volume of $14,260,302,441 and is up 0.13% over the last 24 hours.
BTC total market cap at $740.78 billion on the daily chart | Source: TradingView.com
Even during times of war, the intrigue and mystique surrounding Bitcoin continue to hog the headlines.
One of the biggest proponents of the crypto is Bitbull Chief Executive Officer Joe DiPasquale.
Despite a decrease in the price of Bitcoin since November, DiPasquale believes the digital asset is still on track to reach the vaunted $100,000 per coin milestone.
Related Article | Veteran Trader Advises ‘Gen Zs’ To Set Aside Savings On Bitcoin And Hold
And then there’s Standard Chartered. In September 2021, a report by the cryptocurrency research team at the British bank forecasted that Bitcoin would soon surpass the $100,000 mark. Bitcoin was trading at the $50,000 mark that month.
Michael Saylor, the CEO of MicroStrategy, also has higher expectations for Bitcoin’s price in the long term.
Similarly, SkyBridge Capital CEO Anthony Scaramucci, another crypto believer, maintains that the pioneer cryptocurrency would one day be worth $500,000 a unit.
Meanwhile, Wozniak confirmed that he has made some Bitcoin purchases through a Coinbase account.
Also known as “Woz,” the seasoned engineer previously indicated that he sold all of the Bitcoins he purchased during the market’s early days for experimental purposes.
While fears persist that the Bitcoin market will continue to dive in the short to medium term due to a variety of macroeconomic forces, positive outlooks for the cryptocurrency’s long-term potential persist.
Featured image from TechSpot, chart from TradingView.com
Bitcoin does not lack an army of firm believers despite its ups and downs in the market. Co-founder of Apple, Steve Wozniak, has said that he expects the price of Bitcoin to reach $100,000 soon.
The veteran engineer made the statement in a recent episode of “Steve-O’s Wild Ride!” where he also talked about his various adventures with Bitcoin and crypto.
While conceding that he could not put any mathematics to his prediction, Wozniak stated that growing interest in crypto made the price achievable.
I think Bitcoin is going to $100k… I can’t put any mathematics to it, I just really feel it from all of the interest. The interest in crypto, Wozniak explained.
He further revealed that he has resumed making some purchases of Bitcoin using a Coinbase account. Wozniak has previously stated that he had sold all of the Bitcoins he bought in the early days of the market for experimental purposes. He maintains that his current Bitcoin investments are not for outsized gains.
The former Apple executive has long been a staunch Bitcoin supporter. In another recent interview with Business Insider, he described Bitcoin as the only cryptocurrency with “pure-gold mathematics.” He noted that other cryptocurrencies do not have his trust.
Wozniak has also defended Bitcoin from critics of its high energy usage. He holds that Bitcoin only uses as much energy as it is worth, like every other human endeavor.
Wozniak’s view on where the price of Bitcoin is headed is shared by many other Bitcoin supporters. Michael Saylor, the CEO of MicroStrategy, has even higher expectations for Bitcoin’s price in the long term.
Saylor has often stated that Bitcoin will surpass the gold market eventually with more adoption. Recently, he reiterated that the ongoing Russia-Ukraine war will only accelerate the adoption of Bitcoin.
Wozniak is also joined by Binance CEO, Changpeng Zhao, who lately shared that crypto is not going anywhere, but was instead going to keep growing.
Similarly, SkyBridge Capital’s CEO Anthony Scaramucci, another crypto bull, continues to affirm that the pioneer crypto will one day be valued at $500,000 per unit.
On the day, Bitcoin is trading at around $39,100, down -0.18%. The market has traded around the price range of $44,950 to $37,300 in the last two weeks and is down around 43% from its all-time high.
While fears remain that the Bitcoin market could tank further in the short to medium term amidst various macroeconomic pressures, optimistic outlooks continue to linger for its long-term potential.
Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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Bitcoin’s price falling as much as it has in the past few days is putting pressure on El Salvador. El Salvador’s dollar-denominated bonds have been falling in free fall for the past few months. The country’s president, Nayib Bukele, hopes to change its economic reality by issuing Bitcoin denominated bonds.
However, Steve Hanke, a professor of applied economics at John Hopkins University, has warned that president Bukele’s continued alliance with Bitcoin could be very costly for the country’s economy and the state of its dollar-denominated bonds. He called out Bukele’s often Bitcoin purchases, saying that the president should “gamble” on Bitcoin with his money and not taxpayers’ funds if he was so interested in Bitcoin.
Steve Hanke first raised concern over the state of the country’s bonds in December after Bukele announced plans to issue $1 billion worth of Bitcoin denominated bonds. Half of the proposed amount that the bond issuance will raise will be used to finance the construction of a Bitcoin City, while the other half would be used to purchase more Bitcoin for the country’s reserve.
The professor’s latest warning is coming after El Salvador recently announced that it was sending about 20 bills to its legislature that would give the Bitcoin bonds legal backing. Hanke, who has advised emerging market nations on currency issues, has not missed any previous chance to criticize El Salvador’s adoption of Bitcoin. He has described the Bitcoin adoption move in very strong terms including “insane” and “irresponsible.” His sharp criticisms have not gone without a response from Bukele who has pointed out that the country’s investment in Bitcoin has been doing well.
Indeed, El Salvador’s dollar-denominated bonds have been struggling since Bukele announced the plans to issue Bitcoin bonds. As of November 2021, El Salvador’s bonds that are to mature in 2023 slid past its May all-time high. This resulted in the yield rising above 17% from around 6.3% at the time according to data from Boerse Frankfurt. The country’s debt is still trading in the distressed territory, meaning that the country is likely to default or is already defaulting in its security status.
However, analysts have noted that the announcement of Bitcoin bonds has not been the only factor that played a role in the sliding bond rate. According to Marc Ostwald, chief economist at London-based ADM Investors Services International, the bonds of other emerging economies are also facing the same plight due to concerns over COVID-19 and the plans of the US Federal Reserve Bank.
“There has been a sharp widening of spreads between the emerging market bond yields and Treasury yields in the past two weeks and an uptick in yields on investment-grade and high-yielding bonds,” Ostwald told CoinDesk last month.
However, the Bitcoin bonds the country plans to issue could be instrumental in bringing El Salvador out of the rut. This is because Bitcoin remains an attractive prospect for investors as the asset has been the best performing asset of the last decade. The Bitcoin bond, which Nayib Bukele recently predicted will be oversubscribed when it launches, will allow investors to bet on the potential price surge of Bitcoin. The President remains bullish on Bitcoin, predicting recently that the asset will smash $100,000 in the near term.
Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Did Steve Hanke find a way out of the hole he’s been digging himself into for all these years? The economist holds the world record for the person with the highest number of terrible Bitcoin takes, with almost 13 years of failed predictions. And now, out of nowhere, he seems to like the world’s second cryptocurrency by market capitalization. What does he like about Ethereum, though? The “560% price surge this year,” of course. But there’s more…
Ethereum is giving Bitcoin a run for its money. Ethereum has become increasingly popular amongst DeFi and NFTs, resulting in a 560% price surge this year. Has the look of a bubble. But, is it?https://t.co/2fkvuNoRWz
— Steve Hanke (@steve_hanke) November 12, 2021
Wait… is Steve Hanke into NFTs? The man said, “Ethereum has become increasingly popular amongst DeFi and NFTs” without a hint of irony. He also said, “Ethereum is giving Bitcoin a run for its money,” which is the most positive thing Steve Hanke has said about Bitcoin in over a decade. And, in the end there, he leaves space for possible deniability, “Has the look of a bubble. But, is it?”
The economist also links to an extremely basic and clumsy CNN article. Is Steve Hanke warming up to cryptocurrencies? Or is there some other dynamic at play here?
This run-of-the-mill article doesn’t really say much. Its main message is the price action anyone reading NewsBTC is probably already familiar with.
“Ethereum, or ether for short, is also trading at record levels. It’s now hovering around $4,850, having soared more than 560% this year, compared to the “mere” 135% pop for bitcoin. Crypto investors are betting that ether will continue to be used as the backbone for even more non-fungible tokens, or NFTs, as well as so-called smart contracts.”
Ok, what else do you got for us? Not much. It’s all over the place. It breaks down the total cryptocurrency market capitalization, introduces the concept of the mythical “flippening,” and tries to keep people away from meme coins. To accomplish this, CNN quotes Paxfull’s Ray Youssef saying, “Ether and bitcoin versus meme coins are like the difference between blue chips and penny stocks you get a call about from a guy in a boiler room.” The article also talks about inflation, how could it not?, and introduces ETFs into the picture.
“The rise of bitcoin ETFs also could be good news for ethereum, because experts predict that similar ether ETFs could soon launch. That will make it even easier for average investors and big money management firms to buy into the crypto.”
So, all in all, it doesn’t say much and the only clear fact it presents is that Ethereum had a better year than Bitcoin. Why did Steve Hanke link to it, then?
ETH price chart for 11/13/2021 on Bitfinex | Source: ETH/USD on TradingView.com
Here at NewsBTC, we constantly argue with Steve Hanke. Just in the last year, we responded to him calling Bitcoin not legitimate, not a currency, and the concept of it being legal tender “stupid.” And now, Hanke seems to like Ethereum. Why? Is it because Ethereum’s internal policies are more akin to the traditional banking system he’s accustomed to? Or did Hanke realize that cryptocurrencies are here to stay and is too afraid to admit he was wrong about Bitcoin for all these years?
In any case, the main reaction in his replies so far is mockery. Even notorious Ethereum defender Udi Wertheimer said, “this is the most bearish ethereum signal i’ve seen in my entire life.” Let’s keep an eye on Hanke’s Twitter feed and see what the economist says about Ethereum in the next few days. This is going to be interesting.
Featured Image: RobinHiggins at Pixabay | Charts by TradingView
