Think tank economist Peter St Onge of the Heritage Foundation says economic stagnation and high inflation could have a positive impact on Bitcoin (BTC) and gold.
In a new interview on Kitco News, the economist says say that periods of stagflation have traditionally been ‘very, very good for hard assets’.
A period of stagflation is characterized by high or rising inflation rates, slowing economic growth and high levels of unemployment.
“I would be surprised if Bitcoin doesn’t rise much if we end up in some kind of stagflationary trap, following the 1970s pattern that was a bit like a camel’s hump (because once it went up, then back down) came and came up again).”
On how high Bitcoin could rise, Peter St Onge says:
“Gold went up sixfold in the 1970s – actually I think it went more than that over the entire decade: silver went up sevenfold. And so at that point it’s quite an interesting parlor game to ask: Bitcoin tends to move a lot more than gold, and so if we get a kind of second wind to the stagflation and the gold surge, what happens to Bitcoin?
I’m very excited to see what exactly happens there, but I would be surprised unless Bitcoin were to rise a lot as well.”
The Federal Reserve’s actions will be the telltale signs of the economic outlook, according to the Heritage Foundation economist.
“If we get to a point where inflation is still persistent and the Fed starts to cut spending, that’s when that death cross comes into play. That’s where you would really worry, because you’d say, “Wait, so the inflation work isn’t done yet, but you guys just gave up the tools they’re using to fight inflation?” So that basically tells you, “Okay, so you’re afraid of something bigger?”
And specifically what they would fear is some sort of massive, maybe not a depression but a severe recession. Something like the 2008 crisis.”
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