Wharton Prof Calls On Fed To Defend Dollar From Bitcoin

Jeremy Siegel – Finance Professor at the Wharton School of the University of Pennsylvania – said the Federal Reserve needs to tighten its interest rates fast. With inflation spinning rapidly out of control, he called on the central bank to protect the dollar from devaluation, and from a possible Bitcoin “take over”.

Dollar in Danger, Says Siegel

In conversation with Rebecca Quick of CNBC’s Squawk Box on Thursday, Siegel discussed Fed chairman Jerome Powell’s policy response to recent events. Powell has been signaling for a hasty interest rate hike this month, but some have questioned whether he will actually follow through given Russia’s invasion of Ukraine last week.

As Quick noted, Powell displayed little interest in slowing down rate hikes when speaking to the House Financial Services Committee yesterday. However, he noted that the Ukraine situation could complicate the picture.

By contrast, Siegel showed more skepticism of the Fed’s commitment to tackling inflation. He cited the Fed’s missed calls and wildly incorrect predictions about “temporary inflation” last year, which runs stronger than ever today.

Indeed, both Powell and Treasury Secretary Janet Yellen have now admitted that inflation is not “transitory” as they’d described it throughout last year. Meanwhile, European Central Bank President Christine Lagarde still maintains that inflation won’t impact Europe like the United States.

Despite the conflict with Russia, Siegel said that the Fed needs to “bite the bullet” on monetary policy in order to “catch up”. Otherwise, Bitcoin may pose a serious threat.

“We got to defend the dollar here,” stated the professor. “We talk about Bitcoin taking over… we got to defend the dollar.”

The ‘Threat’ of Bitcoin

Bitcoin is often called an inflation hedge, or “digital gold,” thanks to its fixed supply cap of 21 million coins. This makes it immune to devaluation by money printing and has led some to claim it will be the new world reserve currency.

Twitter founder Jack Dorsey is one such believer, who has also claimed that the US dollar is eventually doomed to hyperinflation. US Senator Cynthia Lummis shared similar concerns in a speech last October, which she concluded by thanking God for Bitcoin’s existence.

Others agree too, but aren’t as excited about the idea. Major former politicians including Donald Trump and Hillary Clinton have sounded the alarm on what threats Bitcoin could pose to the dollar’s global supremacy.

Featured Image Courtesy of CNBC.