Bitcoin (BTC) gained more free publicity this week as inflation data showed that prices are rising faster than even experts had anticipated.
The latest Consumer Price Index (CPI) report on June 10 from the United States Bureau of Labor Statistics (BLS) also revealed that hourly average earnings for United States workers are at their lowest this century.
Inflation returns to 2008 levels
One of Bitcoin’s best friends is inflation. Its inherently deflationary nature allows its users to save for the future without worrying that inflation is eradicating the value of those savings.
Since the COVID-19 pandemic began, central banks have launched unprecedented money-printing programs, and the consequences are now becoming worryingly clear.
In May, 12 months after the coronavirus pandemic began to take hold outside of China, the U.S. CPI rose 0.6%.
This is 5% higher than the same month last year and means that U.S. inflation is now at its highest since 2008, the year of the financial crisis.
“The May CPI report shows reopening-sensitive categories dominating price pressures for a second straight month,” Bloomberg analysts said in comments accompanying the report.
Perhaps unsurprisingly, Bitcoin proponents were quick to raise the alarm.
“The US just hit a 13 year high inflation rate. This was unexpected by policymakers and economists,” Dan Held, growth lead at crypto exchange Kraken said in a series of tweets.
“To an individual of average intelligence, it was entirely intuitive given the massive money printing (stimulus) that happened since COVID.”
Held noted that wages had failed to keep up with any changes, meaning that U.S. workers were earning on average less per hour than at any time in the 21st century, when adjusted for inflation.
“Wages didn’t keep up with inflation, so workers got poorer. TL;DR wages are more ‘sticky’ than prices which can be adjusted much more easily,” he concluded, highlighting a similar period in the 1970s.
The CPI hides true inflation rates
Other Bitcoin figures have seized on inflation in recent years as a prime example of how the fiat monetary system deceives those it forces to participate.
While the CPI still looks relatively low in percentage terms, a plethora of assets are not included in the gauge. Examples of these are products and services which provide a citizen with reassurance for the future, such as real estate and college tuition.
MicroStrategy CEO Michael Saylor and Saifedean Ammous, author of The Bitcoin Standard, have been especially vocal about the disparity.
“CPI is a misleading measure of inflation,” Saylor argued in March.
“Volatility is a misleading measure of risk. The former distracts us from the problem, while the later distracts us from the solution.”