Fred Krueger: Inflation Is Crushing Bottom 50%, HODLing Bitcoin Is the Best Answer

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As a seasoned analyst with a background in finance and economics, I find Fred Krueger’s analysis both insightful and convincing. His unique blend of practical business acumen, academic rigor, and real-world experience makes his perspective on the current economic landscape particularly valuable.

Krueger’s comparison of inflation-adjusted costs over the past five decades is a stark reminder of the erosion of purchasing power that many people have experienced. His emphasis on the disproportionate impact this has on the bottom 50% of earners resonates with me, as I’ve seen similar trends in my own research and career.

His proposal of Bitcoin as a solution to combat long-term inflation is intriguing, especially given his confidence in its potential to outperform traditional hedges like gold and the S&P 500. While it’s true that gold has served as a reliable store of value for thousands of years, I can’t help but wonder if Bitcoin, with its exponential growth potential, might just be the digital equivalent of the alchemist’s Philosopher’s Stone in today’s economic landscape.

On a lighter note, it’s always amusing to see such a serious figure as Fred Krueger make a joke about his Ford F150 trucks and Porsche 911s remaining fundamentally the same over the years. After all, isn’t that what they say about old trucks—they never really change, just like their owners!

On December 30, 2024, Fred Krueger, a well-known entrepreneur and Bitcoin supporter, expressed his opinions about inflation and the cost of living in a couple of posts on the social media site X.

Krueger is well-known for his history as a successful entrepreneur who has established and sold various businesses, including Fauve Software, iwin.com, and Traffic Marketplace. Furthermore, he collaborated on “The Big Bitcoin Book,” a popular guide in the world of cryptocurrency.

He holds a Bachelor’s degree in Mathematics from Cornell University and a Doctorate in Operations Research and Applied Mathematics from Stanford University, and he has experience in bond trading, having worked at firms such as Salomon Brothers and Greenwich Capital.

As an ardent Bitcoin proponent, Krueger often delves into economic matters and proposes cryptocurrency as a potential remedy for future financial difficulties. In his examination, Krueger contrasted the escalating prices of diverse goods and services from 1971 to 2024, emphasizing the significant devaluation of buying power throughout the years.

Krueger highlighted that the expenses for necessities like fuel, food, housing, and education have dramatically increased, sometimes rising as much as 10 to 20 times their initial prices set in 1971. For example, he observed a significant increase in the price of gasoline from 36 cents to $3.00 per gallon, and a slice of New York pizza jumping from 25 cents to $5.00. Similar increases were noted for items like Big Macs, dining experiences, dental visits, and even luxury products such as Porsche cars. He emphasized that the cost of education, particularly attending Stanford University, experienced an astounding 26-fold increase, escalating from $2,400 per year to $66,000.

On the other hand, Krueger focused on the progression of wages during the same timeframe and discovered that salaries haven’t managed to catch up with inflation rates. He pointed out that the federal minimum wage experienced only four adjustments, climbing from $1.60 to $7.25, whereas average incomes for office workers and professionals like engineers, lawyers, and pilots saw a seven to nine-fold increase. Interestingly, he singled out investment banking as one of the few fields where entry-level wages have experienced substantial growth, escalating approximately 15 times since 1971. However, Krueger underscored that even these notable wage increases don’t come close to matching the 10-20 times inflation in living expenses.

Krueger countered points suggesting that contemporary items, like cars, have become notably better in terms of quality to warrant their increased prices. From his personal ownership of Ford F150 pickups and Porsche 911s, he insisted these goods essentially remain unchanged at their core. Furthermore, he challenged the idea that inflation-adjusted figures provide a comprehensive explanation for the gap between income growth and escalating living expenses.

According to Krueger’s perspective, the current economic conditions hit hardest on those in the bottom 50% income bracket, as they find it difficult to match the increasing expenses. He contends that while the top 1% have thrived in this economic climate, many others are struggling instead. Furthermore, he suggests that the situation is just as dire, if not worse, in Europe, with costs growing at a similar rate but wages falling even further behind.

Krueger suggested that Bitcoin could be used as an alternative method to combat the long-term effects of inflation and protect wealth. He highlighted that traditionally, assets such as gold and the S&P 500 have acted as safeguards against inflation, showcasing their substantial growth over the last five decades. The value of gold has seen a 74-fold rise, from $35 per ounce to around $2,600, while the S&P 500 experienced a 60-fold increase, growing from $100 to approximately $6,000.

Regardless of past results, Krueger remains optimistic that Bitcoin will surpass gold and the S&P 500 in the long term, providing a more effective shield against inflation for those who choose to invest in it.

Although Krueger sees Bitcoin as the premier defense against inflation, it’s important to consider that gold has filled this role for millennia, consistently outperforming the S&P 500, which started in the 1950s, and Bitcoin, launched in 2009. Gold’s consistent value across different cultures has earned it a strong reputation as a secure place to keep wealth during economic turmoil. Compared to this long-standing role for gold, Bitcoin’s function as an inflation hedge is a more recent development, and its long-term reliability is yet to be fully determined due to its relatively recent creation.

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2024-12-30 21:27