The Relationship Between US Government Debt and Bitcoin, Explained


The kind of inflation outbreak that might prove bitcoin’s power as a hedge asset isn’t coming in the near term, according to some economists. 

“Right now, low interest rates tell us there’s no evidence that we’re borrowing too much money,” Stanford economist Erik Brynjolfsson said. “Separately, but related, inflation is also very low. The [Federal Reserve] has set a target of about 2% for inflation, and it’s consistently been missing that target on the low side. We don’t see any evidence that inflation is taking off.” 

In fact, future economic growth could be in danger if the U.S. doesn’t embrace new stimulus, former Treasury Secretary Lawrence Summers told CoinDesk. He said the potential for inflation isn’t as concerning as the potential for economic growth coming to a halt. 

“I think the greater risks are still on the side of secular stagnation and low interest rates,” Summers said. “There may be some temporary sense of heat in the economy because of all the stimulus that’s been provided in the last year.”

Bitcoiners are closely watching inflation indicators such as the U.S. Treasury yield curve steepening in early January, which shows that investors expect economic growth that will require the Federal Reserve to raise rates to control inflation. The five-year breakeven rate, which represents how the bond market foresees long-term inflation, has been above 2% since the beginning of the year.

These indicators point to future rising inflation, but “we’re not seeing it yet,” Brynjolfsson said.

“It’s possible, even likely, that government…



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