The Federal Reserve has printed trillions upon trillions of dollars amid the Coronavirus Pandemic in order to prevent a complete economic meltdown, and for a long time there has been speculation that this would cause USD inflation. It’s essentially a law of nature that if a tremendous amount of money is printed out of thin air, then each unit of the currency will lose vale. 

Now the Federal Reserve is finally admitting that there is going to be USD inflation, although they are doing it in a roundabout way. 

Basically, the Federal Reserve has a mandate to keep inflation at 2%, but the Federal Reserve is now tweaking that mandate to mean an average of 2% inflation long term. Essentially, the Federal Reserve is saying that inflation will go over 2% at times, but those overshoots above 2% will only be ‘moderate’, and will be balanced out by periods when inflation is below 2%. 

First off, the Federal Reserve is trying to make it seem like this is a decision that they are making, rather than the reality, which is that they have no choice and the inflation is not a decision, since inflation is being forced by the trillions of dollars of money printing. 

Secondly, the Federal Reserve is using very vague terms to define how high inflation will go, and simply says it will be ‘moderately’ above 2%. This could mean anything. 

Thirdly, there is no guarantee inflation will ever go back below 2% and balance out the periods when inflation is above 2%.

Boiling all of this down, the Federal Reserve is basically trying to ease the American public into the reality that there is going to be higher than normal inflation. How high this inflation goes is unknown, and it is also unknown if inflation will ever go back to 2% or below. 

Zooming out, this means the USD will be weakening long term at a faster pace than normal. This makes Bitcoin (BTC) a more attractive safe haven asset than ever before, since people who save their money in USD will lose money due to inflation at an increasing pace, whereas Bitcoin (BTC) is protected from inflation since Bitcoin (BTC) cannot be printed at will.

Thus, the incoming surge of inflation in the United States could be a major positive factor for the crypto space long term.