Bitcoin in the world economy

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Bitcoin in the world economy

The dramatic rise of digital token offerings saw the creation of hundreds of new virtual currencies, but experts say most of them have little to no value and some are outright examples of fraud. That’s due to the relative ease in conducting a token offering and the few regulatory checks. Because of this, market observers expect that the cryptocurrency’s world market will consolidate over the next year.

 

Bitcoin’s bubble could burst in 2018, according to Northeastern University’s associate professor Alicia Sasser Modestino, a labour market expert in the College of Social Sciences and Humanities. She feels, “For many economists, the question is not whether the bubble will burst but when.” Here’s what else she foresees for the world economy in the new year.

 

Indeed, for the first time since 2010, the world economy is outperforming most predictions across most advanced and emerging economies. Similarly, the U.S. economic outlook is healthy, according to the key economic indicators. According to the latest forecasts from the Federal Reserve in early December, GDP growth is expected to remain in the range of 2 to 3 percent with continuing low unemployment and relatively little inflation; it’s what economists call the “Goldilocks” economy—not too hot and not too cold. However, given the already tight labour market, spare capacity is diminishing rapidly. The question is no longer whether the output will overshoot potential, but by how much. And with the recent passage of the Republican tax reform bill providing additional economic stimulus, that process is likely to be accelerated and require action from the Federal Reserve to raise rates and prevent excessive overheating and bigger recession risks down the road.

 

Alicia had expected the U.S. economy to experience stronger GDP growth for the first half of 2018 or perhaps through the midterm elections, on the order of 2.5 to 3 percent, followed by a slowdown that will depend on the size and pace of future interest rate hikes—a big question mark as Janet Yellen’s term as Federal Reserve chair expires next month.

 

Harminder Singh

Harminder Singh
Harminder Singh

harminder.happy01@gmail.com

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