6 trillion U.S. dollars will be pumped into the U.S. system alone, that is about $48,000 per family if distributed evenly (definitely not). What is your estimated impact on inflation in half year, 1 year, 3 years etc, and on Bitcoin?
I read from the great book "The Bitcoin Standard" that U.S. prints an average of about 7% more money per year and China prints an average of about 20% more money per year over many years., but the actual average yearly inflation seems to me like about half of those numbers. Is it false or something like improved productivity due to improved technologies, more efficient business models, or profits/wealth taken from other countries that keep the inflation much lower than printing money?
Thanks for any comment and discussion.
Let me analyze it little for you. Printing free money is not a great step at all because it reduces the purchasing power of a currency. Every government prints money to deal with the inflation rate and to align the economy accordingly.
Let's assume a government has $100 in its treasury with this amount they can buy a bag of rice in 2019. Now the central bank of that country calculates the inflation rate as 7%. So the government will have to print $7 to be able to buy that same bag of rice in 2020. There are other factors as well, but largely it is the main concept. This is called purchasing power.
Now when a country prints money without looking at the inflation rate, it decreased the purchasing power of that currency which in turn creates hyper-inflation. We have two classic examples available, Zimbabwe and Venezuela. You can Google about it to know more.
So I expect bitcoin to see a huge increase in coming future because bitcoin is deflationary by nature, while the purchasing power of US will certainly go down at the same time. Hope this makes sense!