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People FUD a lot about the Fed "printing money" but the M2 money supply has grown far less than the entire crypto space and is typically similar to the rate at which Eth is mined. Stay rational with your investments and don't solely listen to pro-crypto a

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by COINS NEWS 342 Views

Probably not a popular sentiment here but I'm trying to bring some rationality to the conversation. In the past year, the M2 money supply (which isn't even really quite all the USD there is) has gone from just under $18T to just over $20T. $2.3T has been "printed" in the past 12 months. It's a 12.8% increase.

But around 8M new Eth are created each year. There was a supply of about 108M a year ago. That's a 7.4% increase but that remains pretty constant when the USD rate is typically far lower than what it has been the past ~1.5 years. Typically it takes over 10 years for the M2 money supply to double, which is about the same as what Eth is on track for. And the total supply for Eth is not capped like bitcoin, meaning that Eth could do what the Fed did at some point if the system demanded it.

This isn't a pro-USD or anti-crypto argument. I'm just trying to bring some context to the arguments often presented here. The supply of USD is not wildly out of control. It's still in line with the US GDP. There was a significant increase in the money supply due to a one-time deadly pandemic which kind of halted the entire economy. The sky isn't actually falling for fiat.

I just don't want people throwing their entire life savings into crypto because of what is essentially a lot of anti-fiat misinfo being thrown around here and not really being fact checked. The US government has a very large interest in keeping the value of the dollar stable, and isn't going to let hyperinflation ruin the economy. The USD Is inflationary on purpose, but they have a fairly decent grasp on the rate of inflation. Eth is also inflationary, as are many cryptos. And most importantly, the crypto space in general is actually experiencing a massive amount of inflation due to all the new coins being introduced. The value of Eth and Btc is constantly being diluted by hard forks and new coins being introduced. So just be aware of your assumptions.

Be careful and considerate about what you believe, and the one-sided arguments people share on a subreddit biased towards crypto. Crypto isn't necessarily going to outperform other currencies or securities for the rest of time. Bitcoin may or may not be a good inflation hedge, due to being deflationary. But it's even more dependent on market psychology. Ethereum is fantastic technology but that doesn't necessarily mean that its market cap is going to go up by 50% every year, or even that the market cap will keep up with the number of new coins being mined each year. And the number of new coins may drop off or it may increase - it isn't set in stone like bitcoin, and even if it were there is a constant supply of new cryptos being introduced that in practical terms also dilute the value to some degree.

Stay rational, don't bet the entire farm on crypto.

submitted by /u/Loose_with_the_truth
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