Core

<h2 id="quick-take">Quick Take</h2>
<ul>
<li>Due to the economy being built on credit, both growth, and expansion are necessities. As such, central banks&#8217; biggest fear is deflation and stagflation. Take the U.K. as an example — though this can be attributed to many Western countries.</li>
</ul>
Three metrics that contribute to stagflation;
<ol>
<li>Persistent high inflation: Inflation has been higher than the CPI goal of 2% for over a year now, and the biggest worry for central banks is entrenched inflation. For example, in the U.K., CPI Inflation has been double digits for almost a year — while core inflation has been as high as 6% for over a year.</li>
<li>Stagnant demand in a country&#8217;s economy: U.K. real GDP is still below Q4 2019.</li>
<li>High unemployment: We aren&#8217;t here yet, but the U.K. unemployment rate did spike from 3.7% to 3.8%. As interest rates continue to rise and stay elevated, this will further pressure the labor market.</li>
</ol>
Stagflation was last seen in the 1970s, and consumer good prices tend to rise — while asset prices tend to deflate. Central banks are getting caught between a rock and a hard place.
<a href="https://cryptoslate.com/insights/how-gold-and-bitcoin-are-responding-to-inflationary-pressures-comparing-the-1970s-and-the-2020s/">CryptoSlate</a> previously covered an insight into asset prices between the 1970s and the 2020s.
<figure id="attachment_319554" aria-describedby="caption-attachment-319554" style="width: 775px" class="wp-caption aligncenter"><img class="wp-image-319554 size-full" src="https://cryptoslate.com/wp-content/uploads/2023/04/infa.png" alt="Core CPI: (Source: Trading Economics)" width="775" height="404" srcset="https://cryptoslate.com/wp-content/uploads/2023/04/infa.png 775w, https://cryptoslate.com/wp-content/uploads/2023/04/infa-300x156.png 300w, https://cryptoslate.com/wp-content/uploads/2023/04/infa-768x400.png 768w" sizes="(max-width: 775px) 100vw, 775px" /><figcaption id="caption-attachment-319554" class="wp-caption-text">Core CPI: (Source: Trading Economics)</figcaption></figure>
<figure style="width: 934px" class="wp-caption aligncenter"><img class="wp-image-319555 size-full" src="https://cryptoslate.com/wp-content/uploads/2023/04/real-1.png" alt="Real GDP: (Source: BBC)" width="934" height="519" srcset="https://cryptoslate.com/wp-content/uploads/2023/04/real-1.png 934w, https://cryptoslate.com/wp-content/uploads/2023/04/real-1-300x167.png 300w, https://cryptoslate.com/wp-content/uploads/2023/04/real-1-768x427.png 768w" sizes="(max-width: 934px) 100vw, 934px" /><figcaption class="wp-caption-text">Real GDP: (Source: BBC)</figcaption></figure>
&nbsp;
<figure id="attachment_319556" aria-describedby="caption-attachment-319556" style="width: 941px" class="wp-caption aligncenter"><img class="wp-image-319556 size-full" src="https://cryptoslate.com/wp-content/uploads/2023/04/ii.png" alt="Inflation: (Source: MacroInvestment)" width="941" height="520" srcset="https://cryptoslate.com/wp-content/uploads/2023/04/ii.png 941w, https://cryptoslate.com/wp-content/uploads/2023/04/ii-300x166.png 300w, https://cryptoslate.com/wp-content/uploads/2023/04/ii-768x424.png 768w" sizes="(max-width: 941px) 100vw, 941px" /><figcaption id="caption-attachment-319556" class="wp-caption-text">Inflation: (Source: MacroInvestment)</figcaption></figure>
The post <a rel="nofollow" href="https://cryptoslate.com/insights/the-central-banks-dilemma-inflation-stagflation-and-the-cryptocurrency-response-in-todays-economy/">The central banks&#8217; dilemma: inflation, stagflation, and the cryptocurrency response in today&#8217;s economy</a> appeared first on <a rel="nofollow" href="https://cryptoslate.com">CryptoSlate</a>.

The central banks’ dilemma: inflation, stagflation, and the cryptocurrency response in today’s economy

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