Hyperinflation is here (again)

Weekly Updates

Hyperinflation is here—and it is telling us something. The latest crypto convulsions would constitute hyperinflation, if crypto were a currency. Annualizing Bitcoin’s recent spending power collapse is equivalent to roughly 800% inflation. This emphasises the fatal flaw that prevents crypto being a currency.
The spending power of a currency is not only dictated by money supply. That is only half the story. Spending power is determined by balancing money supply and money demand—and money demand is not stable.
After the pandemic, money demand fell. If central banks had left money supply unchanged, inflation would have soared far higher. Central banks knew this and cut money supply. From peak to trough, US money supply fell 13.6%, Euro money supply 12.8%, and UK money supply 15.1%.
When crypto demand collapses, there is no possibility of reducing crypto supply to bring about balance. Thus, the proceeds from selling a single bitcoin today purchase substantially fewer goods and services than a month ago. Today, around half of global GDP is generated in countries with a falling population. That makes periods of falling money demand more likely in the future. Money supply needs to fall when money demand falls—if it cannot, hyperinflation will be a regular risk. Hyperinflation is why crypto cannot be a currency.