Nobel-prize-winning economist Paul Krugman questioned a blockchain-based inflation measurement’s ‘unbiased’ claim. The platform readings have consistently been lower than those reported in US inflation news, whose monthly occurrence helps the crypto market understand the US Fed’s next move.
Krugman questioned the accuracy of Truflation shortly after predicting that US inflation could fall to below 2%.
Krugam Lightly Suggests Truflation Bias
Krugman said the statistics on Truflation recently came below the inflation numbers published by the US Commerce Department. He said that the inflation estimates have consistently undercut the official data, raising questions about the reliability of the decentralized blockchain infrastructure.
“[Truflation] was backed by a bunch of blockchain types, who I’m pretty sure expected to “prove” that the BLS was understating inflation. Instead, their numbers keep coming in lower than the CPI,” Krugman said.
Truflation’s website provides a ‘truth set’ with verifiable financial data to sustain business decisions. BeInCrypto contacted Truflation for further comment but had not heard back at press time.
Read more: How to Protect Yourself From Inflation Using Cryptocurrency
This jibe is not the first time Krugman has criticized crypto. He believes cryptocurrencies serve no economic purpose, and their value is tenuous.
Following the collapse of FTX, Krugman referenced the description Satoshi Nakamoto provided in the Bitcoin whitepaper of the asset being used for peer-to-peer payments. Krugman opined that who would benefit from Bitcoin’s pseudonymity other than criminals was not clear.
Krugman’s View of Inflation
Earlier this month, Krugman predicted that Producer Price Index (PPI) numbers for February signal an end to inflation. He said that the drop in the yield for the two-year US Treasury following the PPI announcement signals a price decline of sub-2% in the coming months.
After the January 2024 PPI numbers were released, the yield on the two-year treasury fell from 4.37% to 4.14%. Krugman said that the two-year yield decline precedes a price drop.
Lower expected inflation can incite investors to buy into higher-yield short-term treasuries. This investment demand will cause a decline in short-term yields. Investors favor lower interest rates when they feel high prices will lead to higher interest rates and, eventually, a recession.
What Crypto Can Expect From Fed News
Markets hope the US Federal Reserve will pause or cut interest rates at its next meeting on March 12. The central bank has held the federal funds rate at 5.25-5.5% since July 2023. Before that, it had increased interest rates 11 times since March 2022.
However, former World Bank Treasury Secretary Lawrence Summers said there’s a 15% chance that the Fed will continue increasing rates. He likened a 0% chance of a rate increase to the dangers of stopping an antibiotic before an illness is cured. Mark Nash, a funds manager at Jupiter Asset Management, said there is a 20% chance of a rate hike.
Read more: What Is Fiat Currency? How Does It Differ From Cryptocurrency?
The CME Group’s FedWatch tool disagrees with Summers. It still holds the probability of a March rate pause at 97.5%.
The post Economist Questions Inflation Data Via Blockchain Platform Truflation appeared first on BeInCrypto.
