Robert Kiyosaki, the author of the book Rich Dad Poor Dad once again showed his support for digital currencies and advised investors to go for Bitcoin and precious metals to protect the value of their assets against inflation, citing 7 reasons. These 7 reasons mainly originate from the economic conditions of the United States.
Dear users of blockchain country, this article is not an investment recommendation and is just a translation of the news.
According to Mihan Blockchain and quoted by CryptoPotituto, Robert Kiyosaki, the famous author of the book “Rich Dad, Poor Dad” published a tweet He mentioned 7 reasons for buying Bitcoin and precious metals such as gold and advised investors to protect their currency against inflation by buying Bitcoin. These 7 steps are:
1) The high debt of the US government to the central bank: The debt of the US government to the central bank of this country is equal to 31 billion dollars. Meanwhile, its gross domestic product (GDP) is 24.8 billion dollars. Therefore, the US debt-to-GDP ratio is 137.76%. Therefore, it can be concluded that the fiat dollar will weaken in the long run.
2) The desire of the Federal Reserve to keep the interest rate low: The interest rate reached its lowest historical levels during the years 2020 (1399) and 2021 (1400) and acted as a catalyst for the rising cryptocurrency and stock market during that time, which caused high liquidity to enter the cryptocurrency market and the growth of the price of Bitcoin. Kiyosaki believes that in the long term, the Federal Reserve’s approach will be to lower interest rates, which will benefit Bitcoin.
3) Buying treasury bonds and expanding the balance sheet: Keeping the interest rate low requires the central bank to increase the purchase of treasury bonds and expand its balance sheet, one of the results of which is an increase in inflation.
4) Increase in inflation: An increase in the purchase of bonds fuels inflation. The annual US Consumer Inflation Rate (CPI) has been rising since 2021 (1400), peaking at 9.1% in June. However, this figure has decreased over the past 2 months thanks to the contractionary policies of the Federal Reserve through interest rate hikes. Rising inflation can be a trigger for investors to enter anti-inflationary assets such as gold and bitcoin.
5) Increase in interest rate: When the central bank announces an increase in inflation, the general expectation is to see an increase in interest rates. Because one of the most important reasons for determining the interest rate is the amount of inflation. When the interest rate increases, the cost of keeping money in people’s hands increases, and thus they prefer to deposit it in the bank and receive interest instead of spending it. This means reducing demand and fueling economic recession.
6) Increasing the cost of loans and debt: A higher interest rate means an increase in the loan cost and people’s reluctance to get a loan. The absence of money in people’s hands generally means that people are less willing to buy. Decreased demand fuels economic recession.
7) The value of the dollar is declining: Over the past 3 years, the central bank has been printing dollars excessively and increasing its supply has led to a decrease in the value of the dollar.
Kiyosaki finally concluded from these reasons that in such a situation one should buy Bitcoin, gold or silver.