Fed St. Louis Pricing Eggs In Bitcoin To “Show” Severe Dollar Devaluation
The United States Federal Reserve (Fed) St. Louis has both intrigued and amused the crypto community after publishing a post showing how the price of eggs in Bitcoin has fluctuated over the past 14 months against the US dollar.
On June 6, the Fed’s research arm published a blog post titled “Buy eggs with Bitcoin – A look at currency-related price volatility.”
The post includes a chart showing historical prices of eggs in US dollars for each month since January 2021, noting that prices fluctuated around $1.47 to $2.52 over 14 months.
The next chart illustrates the price of eggs in Bitcoin over the same time period, noting that the price fluctuates “more against the US dollar”.
The report does not explain the rise in egg prices, the decline in the dollar’s value, or both, as the cause of this trend.
“What would the graph look like if we purchased that same carton of eggs with bitcoins instead of U.S. dollars?” Christian Zimmermann, author of the blog blog asked.
The report also draws attention to Bitcoin’s transaction fees, which can range from $2 to $50.
“Plus, you’d need to add a bitcoin transaction fee, which has been about $2 lately, but which can spike above $50 on occasion.”
The blog post infuriated the crypto community on Twitter, with many suggesting that the Fed “hidden” the time to tell the story of Bitcoin’s instability, rather than doing it over a longer period of time, and that would indicate a serious devaluation of the US dollar.
Twitter user MapleHodl also pointed this out by saying that the USD keeps falling in price over time and Bitcoin is volatile in the short term.
Other Twitter users suggested that the Fed even recognizing Bitcoin as a unit of account is a positive sign for the crypto king.
Recent posts from St. Louis come as a survey from Bloomberg’s MLIV Pulse on June 6 found that tech and crypto stocks are “very vulnerable” to central bank quantitative tightening plans The United States aims to reduce inflation.
Since 2009, when Bitcoin was first born, the US dollar has lost 26% of its value so the average inflation rate has been 2.32% every year since then according to the inflation calculator.
On the other hand, 1 Bitcoin that started at $0 in 2009 is now worth $30,000 at the time of writing.
The chart below shows the buying power of $1 in today’s conditions. In 1913, $1 could buy 30 Hershey’s chocolate bars. In 2020, that money can only buy a cup of McDonald’s coffee. In addition, the money supply (M2) in the United States has skyrocketed over the past 2 decades, from 4.6 trillion in 2000 to 19.5 trillion dollars in 2021.
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