Inflation Expected to Create a Political Vacuum: Can This Void be Filled by Bitcoin

After the Federal Reserve’s governor Paul Volcker knocked down the nation’s inflation in the 1980s, what followed was a decade of bliss, characterized by gentle price trends, with predictable and modest increases of approximately 2% per year. Also, trust in the independence of central banks and their monetary policies rose and became adopted into the system. The overall effect was a stock and economic boom. 

Some spots, though, were reported after the boom. The most notable of these recessions were the collapse at the turn of the century and the Great Financial Crisis of 2008. Also, the gap between the haves and have-nots widened over time, giving way to a political mode that has enriched Wall Street. 

Here is a closer look at the technological, social, and economic events shaping our relationship with money and redefining the global financial system. 

Uncertainty is Back 

With the inflation hitting 8.5% in March, the Fed is determined to push it down with higher interest rates. Americans of all social economic spectrums, from those in lower-earning segments to higher earners, are faced with economic dilemmas not experienced in decades. For example, should I buy that house/car now or wait and risk it getting more expensive? 

This uncertainty is a nasty experience for people, especially the less tech-savvy who are unsure of how to wade through the high inflationary environment. Remember how Jimmy Carter’s single-term presidency was doomed from the start by inflation in the 1980s? Some people hold the view that President Joe Biden is also doomed. His approval rating has fallen to 41.3%, according to the latest Gallup poll

The Political Equation is Shifting 

Once leaders are elected into office, they discover that inflation is completely different from the scenarios of the 1980s. Back then, trust for leaders was higher compared to today. Over time, disruption from globalization and the internet has eroded confidence in government, and law enforcement, according to the annual Trust Barometer report.

The high level of ennui is also adding a new cover of unpredictability to the economic and economic decisions that people make. There is this growing sense that traditional politics will not deliver the solutions that can help address current economic challenges.

Money Matters

How will this political discontent impact people’s thoughts about money? For millennia, money has been mainly a political project. Fiat money was at the apex, and trust for this system has waned over time, making people turn to alternatives, such as Gold. 

Now, cryptocurrencies, such as Bitcoin, are offering another alternative, which provides properties way beyond storing value. The most notable attribute is that Bitcoin is digital, meaning that it is pretty easy to integrate with the rapidly growing internet economy. 

Bitcoin is offering an alternative governance system for the fiat money and financial system as we know it today. Although it encountered serious resistance from both governments and banks because they considered it a threat, the trend is changing. Now, more banks, and governments are adopting blockchain, Bitcoin, and other cryptos after realizing the associated huge potential. 

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