"Co-director of the Center for Economic and Policy Research Dean Baker argued in his blog Beat The Press this week that as the major cryptocurrencies fall, purchasing power for the rest of us goes up. In his analysis, he compares crypto to counterfeit currency - fake money that allows shady gangs to buy up all kinds of scarce goods, like houses and sports tickets."
""If some supersleuth detective figured out a way to recognize the counterfeit bills, they could then remove trillions of dollars of fake money from circulation," Baker explains. "This would benefit the general public by reducing demand in the economy and reversing the run-up in the price of housing and Superbowl tickets. It is the same story with plunging crypto prices.""
"From this reading, crypto - which infamously has no real value - allows people to suck up "large chunks" of the economy with a currency that's built on thin air. When their share of fake money shrinks, it eases pressure on the rest of us. "To put it simply: there's more for everyone else," Baker explains. We're not talking small, intangible changes, either."
Cryptocurrency prices have plunged after a year of record gains; Bitcoin fell from over $120,000 in October to about $88,000, roughly 12 percent lower year-over-year. The decline removes speculative, effectively 'fake' money from circulation, which had enabled buyers to bid up scarce goods such as housing and event tickets. Removing that purchasing pressure reduces overall demand and can reverse prior price run-ups. Major cryptocurrencies have lost over $1.2 trillion in market capitalization, an amount equivalent to about $10,000 per U.S. household, producing tangible relief for those who do not own crypto.
Read at Futurism
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