Inflation is Good
๐ธ For the last 13 years, Central Banks have been printing money like crazy people and now they are telling us that we will see a little higher inflation. Should we be worried about it? Well, ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ ๐๐จ ๐๐๐ฉ๐ฉ๐๐ง ๐ฉ๐๐๐ฃ ๐ฃ๐ค ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ ๐ค๐ง ๐ฌ๐ค๐ง๐จ๐ ๐๐๐๐ก๐๐ฉ๐๐ค๐ฃ. One of the problems of Bitcoin $BTC as a currency is that it is deflationary.
There are 4 ๐ข๐๐๐ฃ ๐ฉ๐ฎ๐ฅ๐๐จ ๐ค๐ ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ:
1. Monetary inflation - an increase in the money supply
2. Asset price inflation - increase in prices of investment assets, usually a result of monetary inflation
3. CPI inflation - increases in prices of goods and services
4. Core inflation - CPI inflation, ignoring changes in energy $OIL and other food futures prices.
๐ฅ Historically, ๐๐ค๐ก๐ $GOLD ๐๐๐จ ๐๐๐๐ฃ ๐๐๐๐๐๐ฉ๐๐ ๐๐ฎ ๐ข๐ค๐ฃ๐๐ฉ๐๐ง๐ฎ ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ (when it was used as a currency) since the more gold is mined, the more will be its supply. Of course, monetary inflation is bigger for fiat.
As for Bitcoin, if we look at it as an investment asset, it is gaining from asset price inflation, but if we look at it as a currency, it is deflationary and one of the main reasons why ๐ฝ๐๐ฉ๐๐ค๐๐ฃ ๐๐๐ฃ๐ฃ๐ค๐ฉ ๐ง๐๐ฅ๐ก๐๐๐ ๐๐๐๐ฉ ๐๐จ ๐ ๐๐ช๐ง๐ง๐๐ฃ๐๐ฎ.
๐ฅบ If a currency is deflationary, people will save more rather than invest it or spend it. Everybody is investing in Bitcoin or gold because they want the price to go higher, not because they want to use it as a currency. ๐ฟ๐๐๐ก๐๐ฉ๐๐ค๐ฃ ๐ก๐๐๐๐จ ๐ฉ๐ค ๐๐๐๐๐๐ง ๐ช๐ฃ๐๐ข๐ฅ๐ก๐ค๐ฎ๐ข๐๐ฃ๐ฉ ๐๐ฃ๐ ๐ก๐ค๐ฌ๐๐ง ๐๐๐ค๐ฃ๐ค๐ข๐๐ ๐๐ง๐ค๐ฌ๐ฉ๐.
Normally, as the population and economy grows, the money supply should increase, therefore, ๐ ๐ก๐๐ฉ๐ฉ๐ก๐ ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ ๐๐จ ๐๐ค๐ค๐. Of course, High inflation or hyperinflation is bad.
๐ As an investor, you should not be scared of inflation as you can always beat inflation by investing. If you're investing in a good business at the right price, it doesn't matter if the currency is seashells, Dollars, gold or Bitcoin, the business will grow if it is a good one and you will get the returns from the investments. Always focus on business fundamentals.
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