Many cryptocurrency investors favour decentralized cryptocurrencies with a limited supply. This favour has another aspect that criticizes the central bank currencies to be limitless. The central bank of any country can decide at any time to print new money and lower the value of its native legal tender. A new economic report published by Atlantic Council has shown the extent of the liberty that the major central banks have taken in this regard.
As per a new study published by this Quantitative Easing Tracker, centralized banking institutions from Japan, Europe, England, and United States have printed and supplied more than $25 trillion additional money into circulation. It is worth mentioning that Quantitative Easing is the act of money supply by a central banking authority. The Federal Reserve of the USA undertook this strategy for the first time during the economic crisis of 2008.
The central banks go with the strategy of printing more money to jump-start the economy. The immediate side effect of this action is the devaluation of fiat currencies and a guaranteed increase in inflation. The report published by Atlantic Council shows that these central banks have been trying to curtail the purchase of huge asset purchases.
On the other hand, these banks have proceeded to inflate the size of their balance sheet with the acquisition of new assets since 2020 by as much as 60%. Such tactics have increased the interest of investors in a hedge of inflation like gold and cryptocurrencies. Bitcoin is considered the best store of value on account of its limited supply and popular status around the world.
Inflation is Increasing
During the current situation, COVID has put a halt on several businesses. The Department of Labor has recently proven with two major economic indicators that the rate of inflation is the highest in 30 years. These indicators are CPI or Consumer Price Index that is used to measure the rate of average purchases that the retail buyers have conducted.
The other index is the Producer Price Index or PPI that measures the changes in the average cost of goods received by the local manufacturers. At the same time, the amount of national debts in these countries has also increased by a median of 11.6% within a year. Under these circumstances, more and more people are turning to cryptocurrencies as a safety net against money devaluation.