El Salvador’s president responded to a report on the Federal Reserve’s response to the country’s deteriorating economic and financial situation.
The outspoken Nayib Bukele reacted to a Bloomberg piece detailing Federal Reserve head Jerome Powell’s inflation statements. El Salvador’s president, interestingly, requested the Fed’s chairman to stop producing money out of thin air.
The WHO’s discovery of a new highly transmissible Covid-19 strain dubbed Omicron last week has sparked a new round of economic distress.
Bloomberg reported on the Fed chair’s remarks before the Senate Banking Committee this week on November 30. It went on to say that both Democrats and Republicans were concerned about rising prices and inflation. The term “transitory” was retired by the central bank chair to describe excessive inflation, which is still a problem in the United States.
He went on to say that the Fed should begin to wind down its bond-buying programme sooner than the mid-2022 deadline.
The term used was “tapering,” which refers to a progressive reduction in securities and bond purchases. The central bank has been creating money in order to buy bonds in order to lower interest rates, which are now at 0.25 percent.
Lower interest rates encourage people to borrow more, which boosts the economy and expenditure. Money printing, on the other hand, raises inflation and erodes the currency’s value over time, as Bukele pointed out today.
The five-year breakeven inflation rate jumped to above 3% in November, according to the Federal Reserve Bank of St. Louis Economic Research (FRED), the highest level in more than two decades. As a result, the consumer price index for all urban consumers (Core CPI) is at an all-time high, measuring the average cost of items excluding food and energy.
Despite what the Fed argues, the numbers clearly show that the issue is not “transitory.” If the current Omicron strain spreads and more lockdowns are implemented, it might exacerbate America’s economic troubles even more.
Naturally, assets that provide a buffer against the dollar and inflation are in high demand. Nayib Bukele, according to CryptoPotato, bought the dip on November 27 by depositing 100 bitcoins in El Salvador’s treasury.
Despite a few demonstrations, it has worked out pretty successfully for the Latin American country thus far. In economic terms, a tracking feed that analyses the worth of the $30 BTC airdrop Bukele provided people in September to encourage adoption is indicating a current profit of about 15%.