The Capital
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The Capital

Still afraid of Inflation? Then you don’t know stagflation yet

What it is and why adding Bitcoin to your portfolio makes sense

Causes for stagflation

Stagflation can be caused by the following 2 events:

Source

The Stagflation in the US in the 70s

The most prominent example of stagflation took place in the 70s in the US, where the economy experienced 5 quarters with negative GDP, high unemployment rates peaking at 9% in May 1975, and inflation between 10–12% throughout.

  • 10% tariff on imports
  • removed the US Dollar from the Gold Standard.

What’s next?

During this time, prices of commodities like oil haven’t soared. Quite the opposite: oil futures traded below zero earlier this year. At the same time, the unemployment rates across the world have risen, in the US even up to 13.3%. Who thinks that’ we can just bounce back is naive, to say the least. High unemployment rates are expected to remain with us for a while, which most definitely decreases aggregate demand, but also has a negative impact on the aggregate supply.

Bitcoin during Stagflation?

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Naomi Oba

Writer in Crypto — passionate about financial education, blockchain, books, and food.