{"id":63756,"date":"2022-04-19T09:01:45","date_gmt":"2022-04-19T09:01:45","guid":{"rendered":"https:\/\/www.cryptocabaret.com\/?p=63756"},"modified":"2022-04-19T09:01:45","modified_gmt":"2022-04-19T09:01:45","slug":"economist-predicts-the-feds-response-to-inflation-will-push-crypto-higher","status":"publish","type":"post","link":"https:\/\/www.cryptocabaret.com\/?p=63756","title":{"rendered":"Economist Predicts the Fed\u2019s Response to Inflation Will Push Crypto Higher"},"content":{"rendered":"

\"Economist<\/p>\n

Allianz Chief Economic Advisor Mohamed El-Erian says that the Federal Reserve\u2019s response to inflation will cause the prices of cryptocurrencies, like bitcoin, to \u201cgo higher.\u201d He noted: \u201cThat\u2019s what you get when you\u2019ve waited too long to recognize what inflation is and to take action.\u201d
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<\/strong>\n<\/p>\n

Predictions by Allianz\u2019s Chief Economist<\/h2>\n

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\nEconomist Mohamed El-Erian discussed the U.S. economy, the markets, and the Federal Reserve\u2019s response to inflation in an interview with CNBC Monday.<\/p>\n

El-Erian is the president of Queens\u2019 College, Cambridge University. He is also Chief Economic Advisor at Allianz, the corporate parent of PIMCO, one of the largest investment managers, where he was CEO and co-chief investment officer.<\/p>\n

He explained:\n<\/p>\n

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I think the markets have understood that we have three issues. One is high, persistent inflation is with us. Two is the Fed is way behind, and three, the pathway for orderly disinflation is pretty narrow.<\/p>\n<\/blockquote>\n

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\nDue to these factors, the economist said that companies are now having questions about growth. He noted that investment bank Goldman Sachs<\/a> came out Monday saying that there is a 35% probability of a recession in the next two years. \u201cThat\u2019s a meaningful number, 35%,\u201d El-Erian stressed.<\/p>\n

\u201cSo, the big question is: can we navigate this inflation growth landscape that has become much more difficult?\u201d he noted, adding that \u201cBank CEOs, they are worried about the macro environment.\u201d\n<\/p>\n

The Restoration of Value<\/h2>\n

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\nThe Allianz chief economic advisor was asked about the long-term outlook for the crypto market following the weekend selloff<\/a> in some major cryptocurrencies, including bitcoin.<\/p>\n

\u201cI think the concern for the crypto people is that this decline is happening at a time when gold is up and hitting almost $2,000,\u201d he opined. \u201cBecause the big argument for crypto is it\u2019s a diversifier. At the time of inflation, it\u2019s attractive. And recently, crypto hasn\u2019t played that role.\u201d<\/p>\n

The economist explained: \u201cThere\u2019s a reason why, and that\u2019s because crypto, unlike gold, benefited enormously from all the liquidity injections. So what you\u2019re getting in crypto is a tug of war between a recognition that liquidity is going out from the system as a whole and attractiveness as a diversifier. So far, it\u2019s the liquidity element that is winning out.\u201d<\/p>\n

He further detailed:\n<\/p>\n

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What you are seeing across the board is the restoration of value, and that\u2019s a good thing. You\u2019re seeing it in stocks, you\u2019re seeing it in bonds, you\u2019re seeing it in crypto.<\/p>\n<\/blockquote>\n

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\n\u201cWe are just adjusting to a paradigm in which liquidity is no longer abundant, and is no longer predictable,\u201d he added.<\/p>\n

El-Erian reiterated: \u201cSo I view this as part of the restoration of value that we are seeing in quite a few assets, not all of them yet, but quite a few already.\u201d<\/p>\n

The Fed\u2019s Inflation Target and Crypto Market<\/h2>\n

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\nEl-Erian was also asked about what would force the Federal Reserve to change its inflation target and what that target would be.<\/p>\n

\u201cWhat will force them to change their target is the recognition that by being so late, they can\u2019t get to their target and their credibility is threatened,\u201d he replied. \u201cThey would also worry that by hitting the brakes too hard, they may push this economy not just into a short-term recession but into a longer-term recession.\u201d He continued: \u201cThey will be very tempted and lots of people will push them to raise the target from 2% to 3% as a way out. Now, that\u2019s not going to be an easy way out, and it\u2019s going to be incredibly controversial.\u201d<\/p>\n

El-Erian opined: \u201cThat\u2019s what you get when you\u2019ve waited too long to recognize what inflation is and to take action. We should have started QT last year; we didn\u2019t. And we are now seeing the consequences of the Fed being so late.\u201d<\/p>\n

The economist was asked what will happen to crypto and gold if the Fed does what he described. He replied:\n<\/p>\n

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They both go higher.<\/p>\n<\/blockquote>\n

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Do you agree with El-Erian? Let us know in the comments section below.<\/strong><\/em><\/p>\n

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Allianz Chief Economic Advisor Mohamed El-Erian says that the Federal Reserve\u2019s response to inflation will cause the prices of cryptocurrencies, like bitcoin, to \u201cgo higher.\u201d He noted: \u201cThat\u2019s what you get when you\u2019ve waited too long to recognize what inflation is and to take action.\u201d Predictions by Allianz\u2019s Chief Economist Economist Mohamed El-Erian discussed the […]<\/p>\n","protected":false},"author":2,"featured_media":63757,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[309],"tags":[],"class_list":["post-63756","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts\/63756","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=63756"}],"version-history":[{"count":0,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts\/63756\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/media\/63757"}],"wp:attachment":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=63756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=63756"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=63756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}