Inflation through the roof

Inflation in the United States, as measured by the Consumer Price Index (CPI) for February, is on the rise, and markets preparing for extreme volatility. With monetary supply tightening and a war raging in Europe, risk has been removed from the equation.

The Bureau of Labor Statistics issued statistics at 8:30 a.m. (EST) indicating that headline inflation (the difference between last month’s level and the previous 12 months) climbed 7.9 percent in the year ending December, the biggest annual increase since 1982 and above the Bloomberg consensus prediction (of 7.8%).

At this point, some economists and investors believe that gold is not a good hedge at this time, and bitcoin would be a superior investment, which was one of the great arguments about cryptocurrencies in discussion in recent years.

In a study of 100 institutional investors and wealth managers, however, 73 percent said Bitcoin was a feasible inflation hedge, according to research commissioned by Nickel Digital Asset Management, a London-based digital asset management company.

Markets are also taking a step back as a consequence of Russia’s invasion of Ukraine, which is likely to result in a recession throughout Europe, with inflation in that area projected to rise dramatically as a result. 

Bitcoin fell back below $40,000 on Thursday, wiping out nearly all of the gains spurred by optimism about U.S. President Joe Biden’s executive order on cryptocurrency. Digital currencies fell alongside stocks as inflation data and geopolitical uncertainty continued to weigh on the market, according to Bloomberg. “Naturally, given the way cryptocurrency operates, it has the potential to be a strong inflation hedge,” according to what Callie Cox, U.S. investment analyst at eToro told MSN.com. 

Meanwhile, the European Central Bank has been debating the causes of skyrocketing inflation, with the conflict in Ukraine being cited as a contributing factor.

For many years people have used gold as an inflation hedge, but now gold seems to be losing this status.

Winter jobs boom

Job creation was widespread, Americans returned to the workforce, and the labor market was able to shake off the Omicron variety and the larger pandemic.

The February employment data indicated that companies created 678,000 new positions in the previous month of February. The number of jobs added in December and January was more than expected, and the unemployment rate decreased to 3.8 percent.

This makes inflation a bigger problem yet, with prices rising 7.9 percent over the previous year as of January, and it is likely to grow much more as the effects of the Ukraine conflict impact the rest of the economy.

However, increasing costs are occurring in the midst of an amazingly quick increase in work opportunities.

Sources: [1] [2] [3] [4] [5]