U.S. Inflation and Record Spending Cement Bitcoin Fundamentals

The Chairman of the U.S. Federal Reserve is tasked to testify before Congress and the nation.

  • Federal Reserve Chairman Powell to speak to Congress this week to update on monetary policy.
  • Part of his testimony might be selling the Fed’s still-easy policies in light of the ever-surging inflation.
  • For cryptocurrency hodlers, this news serves to solidify the underlying fundamentals of BTC as a strong store of value and the premier investment option against inflation.

This week the Chairman of the U.S. Federal Reserve, Jerome Powell, is tasked to testify before Congress and the nation. He’ll defend the Fed’s monetary policies regarding currency printing, government bond-buying, and inflation management.

Two bits of news might make those hearings a bit challenging for Chairman Powell.


First, the Bureau of Labor Statistics reported that inflation for the month of June increased 5.4 percent – marking the largest year-over-year jump in the price of consumer goods since 2008.  Many critics complain that the Consumer Price Index (CPI) underreports “real inflation” because it only calculates the cost for a basket of goods and services that has changed over the years. The basket also excludes key factors such as food, energy, and housing. 

Regardless of CPI’s flawed design, 5.4 percent for June is still higher than the 5.0 percent jump in May 2021. Powell is going to have to convince lawmakers, and the American people, that this rising trend is temporary and transitory. Speculators believe, he is likely to say that a moderate amount of inflation can be expected as the post-COVID-19 economy reopens, and consumers start spending again. Powell might assuage concerns and critics claiming that the Fed’s monetary policies are sound and the country needs to “stay the course.”

However, the second bit of news makes that messaging ring hollow and harder to swallow as Senate democrats just announced an agreement on a massive $3.5 trillion budget. That projected spending program would span the next 10 years, and it does not include a separate $1.0 trillion for infrastructure nor rumors of another wave of stimulus checks. 

Democrats control both houses of Congress, and Congress controls fiscal spending for the country. The Senate majority leader provided no details on how these costly programs might be paid – providing only platitudes.


“We are very proud of this plan,” 

Senate Majority Leader Chuck Schumer, D-N.Y., told reporters.

“We know we have a long road to go. We’re going to get this done for the sake of making average Americans’ lives a whole lot better.”  

It’s likely that the Fed will help firm up the democrat’s arguably fuzzy math by simply authorizing the U.S. Treasury Department to print more money. The chart below shows central banks across the globe seem to be embracing Modern Monetary Theory, flooding economies with fiat currencies in ever-increasing amounts and ever-decreasing value.

For Bitcoin and cryptocurrency hodlers, this news serves to solidify the underlying fundamentals of BTC as a strong store of value and the premier investment option against inflation.

Other speculators believe, that Powell might do fine during his testimony before Congress since he’ll be among like-minded individuals interested in keeping control of your economic future. 

Because of that, cryptocurrency hodlers will do fine as well.

On The Flipside

  • Arguably reckless monetary and fiscal government policies ONLY validate the use case for Bitcoin and cryptocurrencies.
  • Bitcoin price is below $33,000 per coin – suggesting an excellent entry point of the all-time-high earlier this year. However, record low volume suggests interest in BTC is decreasing.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Tor Constantino

Tor Constantino is a former journalist, consultant and current corporate comms executive with an MBA degree and 25+ years of experience - writing about cryptocurrencies and blockchain since 2017. His writing has appeared across the web on Entrepreneur, Forbes, Fortune, CEOWorld and Yahoo!. Tor's views are his own and do not reflect those of his current employer.