Boom for Bitcoin! Wall Street veteran attacks Powell over inflation risks

Bitcoin could continue to maintain its role as a global safe-haven hedge. Now a Wall Street veteran has criticised Jerome Powell and his pro-inflation policies in an opinion piece.

The benchmark cryptocurrency could rise as Andrew Parlin, founder/chief investment officer at Washington Peak Investment Advisors in New Jersey, warns that the Federal Reserve chairman wants to keep Bitcoin Lifestyle app inflation near the central bank’s preferred 2 percent target.

That becomes more difficult as Powell vows to keep interest rates near zero and continue buying $1.4 trillion a year in government and corporate debt through 2024.

“If this policy stance seems inconsistent, it’s because it is,” Parlin comments.

Are we in for a modest hyperinflation?

The investment adviser calls Powell’s extended dovish outlook a completely asymmetric monetary policy experiment. For him, the Fed’s loose policy could cause incalculable losses through “entrenched inflation” the likes of which the US has not seen in decades.

“Given inflated asset prices, the ensuing collapse would likely be unusually severe and protracted,” Parlin says.

The financial veteran argues that Powell’s blithe dismissal of inflation risks stems from lower consumer prices since the 2008 collapse.

He found the fractal irrelevant when applied to post-pandemic conditions – especially given the US government’s increased stimulus packages over the past 12 months, which are about five times the fiscal spending indicative of the 2008-2009 recession.

“Common sense points to the risk of a huge surge in inflation well above the Fed’s 2.4 per cent projection for 2021,” Parlin said.

Bitcoin…

… surged more than 1,500 percent from its March 2020 low of $3,858.

Investors flocked to the cryptocurrency – believing it would serve as an insurance asset against rising consumer price indices. The narrative was simple: bitcoin has a finite supply cap of 21 million tokens, while the US dollar, a global store of value, has an infinite supply.

A gold-like scarcity makes Bitcoin (to buy Bitcoin at eToro guide) an alternative hedge.

“In a world where there are $90 trillion worth of stocks and God knows how many trillions worth of fiat currency and so on… it’s the wrong market size, for example, compared to gold, which is worth $8 or $9 trillion,” billionaire investor Paul Tudor Jones told Yahoo Finance in an interview last year.

Bitcoin was trading just under $20,000 at the time.

The cryptocurrency rose three times into 2021, reaching a new record high of over $61,000 in mid-March. Again, Bitcoin’s growth accelerated after companies such as Tesla, MicroStrategy and Square added billions of dollars worth of BTC to their balance sheets.