In response to escalating economic and financial woes, El Salvador’s pro-crypto president commented.
A News report showing Federal Reserve head Jerome Powell’s comments on inflation prompted an immediate response from the vocal Nayib Bukele on Dec 1. Even more surprisingly, El Salvador’s president requested that the Fed’s chief cease printing money out of thin air.
Rising Inflation Fears
In the wake of last week’s WHO announcement that a new highly infectious Covid-19 variant, Omicron, had been discovered, there has been a new round of economic anguish.
The Fed chair’s remarks to the Senate Banking Committee on November 30 were covered by Bloomberg. There was concern about price increase and inflation among the two major parties, according to the report.
The chairman of the Federal Reserve Bank of New York has retired the term “transitory” to describe the persistent problem of high inflation in the United States.
On top of that, he said the Fed should begin winding down its bond-buying program earlier than the deadline of mid-2021/23.
This means that the Federal Reserve is gradually decreasing its purchases of bonds and securities. For the purpose of lowering interest rates, the central bank has printed money to buy bonds,
Because central banks have printed money, they can buy bonds at lower interest rates.Low interest rates stimulate economic growth and consumer spending.
According to Bukele’s remarks, printing money leads to higher inflation and currency depreciation.
And according to the Federal Reserve System of St. Louis Economic Research (FRED), the five-year breakeven inflation rate has risen to more than 3% over the last two decades. Furthermore, as a result, the overall urban consumer price index (Core CPI), which measures the cost of goods excluding food and energy, has reached new highs (see chart below).
Figures show that, contrary to what the Federal Reserve claims, the situation is not “transitory.” Increased lockdowns in the aftermath of the latest Omicron outbreak could exacerbate the country’s financial woes.
El Salvador Benefits
It’s not surprising that gold and silver are in high demand as safe-haven assets. According to CryptoPotato, Nayib Bukele bought the dip on November 27 and contributed 100 BTC to El Salvador’s treasury.
Latin America is off to a great start this year despite some protests. September saw a 15% increase in the value of the $30 BTC airdrop Bukele gave its users to help them get started, according to a tracking feed.
Those who received the $30 USD #BTC stimulus in El Salvador on September 7, 2021, will now receive $34.43 USD in cryptocurrency.