Definition of Stagflation and its Causes

Conditions such as yesterday's pandemic made many countries worry about stagflation. If you think that inflation is the worst thing in an economic downturn and crypto prices are crashing now, then be prepared for a big problem called stagflation.

So, what is stagflation and what causes this to happen to the world crypto? Basically, this doesn't just happen to crypto, but several sectors of the economy are also affected.

Definition of Stagflation

Stagflation is a rare economic phenomenon when recession and inflation occur simultaneously. The situation of stagflation is contradictory, because economic growth is slow and even causes high unemployment, but prices continue to increase.

In addition, this concept can also be defined as a period of inflation associated with stagnation of the Gross Domestic Product (GDP).

Stagflation is a term of a new economy and a property of a weak economy, the most common of which, for the most part, is usually economic exploitation.

One of the best examples of stage halation occurred in 1970, at that time, many countries that made up this world were affected by the economic crisis, there were no jobs and were affected by inflation.

This incident had a negative effect on crypto and stocks. At the moment crypto has a strong affinity with share, so it is hoped that this stagflation will have a negative impact on crypto, especially related to price declines that will bring crypto to a bear market.

Also read: Understanding Bullish Divergence in the Crypto World

Causes of Stagflation

Unlike macroeconomics, the exact causes of this are still being debated today. This can be caused by monetary policy.

When the central bank tries to promote domestic financial and policy stability by printing more money, the money supply increases and inflation occurs.

In 2022, the security policies implemented to eliminate the spread of the Covid-19 virus actually hindered economic progress.

Especially in terms of disrupting business operations and supply chains. When the demand for goods and services decreases while supply increases, this causes it to happen.

A supply shock, a sudden increase or decrease in supply, can also cause a collapse. Meanwhile, commodities such as oil are at all-time highs, indicating that revenues are shrinking. This situation shows the conflict between increasing costs and decreasing revenues.

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Also read: Comparison of Stocks vs Crypto, Which is Profitable?

Even you can buy VCG Tokens which is owned by VCGamers on Indodax and BitMax. You can stake this token to avoid stagflation or inflation.

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