If actors can create as much money as they want out of nowhere, that’s dangerous. Mainly because the money is covered by nothing but our trust. At least people know that money is not covered by anything. In the past, money was backed by gold or oil, but that’s no longer the case. You only trust that a $ 100 bill is still worth $ 100 tomorrow. But what if the panic in a crisis goes so far that nobody wants more money, that there is an excess? Then you will look for alternatives. Bitcoin can be such an alternative. In contrast to gold, it can be easily divided, stored and transported. In addition, no central authority decides on Bitcoin, because Bitcoin is decentralized.
Man kann sagen, dass Bitcoin das “bessere” Geld ist. Doch werden die Leute das erkennen? Genau das scheint sich anzubahnen. Die Suche nach dem Stichwort “Bitcoin kaufen” ist so hoch wie seit dem Bullrun 2017/18 nicht mehr.
First deflation, then hyperinflation?
It becomes problematic if there is initially deflation, which then degenerates into hyperinflation. If the downward economic trend is reinforced by deflation, the economy will spiral. Due to the current state of emergency, which has led to the fact that there are more unemployed, people’s demand for goods is falling. In addition, people in such a crisis usually wait to see if prices continue to fall. Because companies cannot assess the situation either, they are also reluctant to invest and make new job settings. This in turn is also bad for the economy. Fewer and fewer revenues are being generated, which in turn means that the repayment of the loans puts companies under such pressure that companies go bankrupt. Demand continues to fall as there are more unemployed. This in turn leads to more layoffs, as companies do not generate any income. The problem has now become clear.
But here’s the crucial point: what happens if the markets continue to be flooded with cheap money? Demand is increasing, but supply is not, and there is an enormous amount of money on the consumer side. This inevitably leads to inflation. If monetary policy has completely failed, hyperinflation will even occur. The money is no longer worth anything.
In order for the currency to remain stable, price stability is crucial. Should the value of the money decrease, there would be a payment problem. People lose their trust in money and prefer to invest the money in real assets. As a result, inflation continues to increase.