CEO of Square Says That Hyperinflation is Happening

There seems to be consensus the US is experiencing inflation in 2021, but few people of business intelligence are making a rational argument that we’re in the midst of hyperinflation. Such a scenario, if true, might mean that a cup of coffee could cost $200 by next year.

“It’s happening,” tweeted Jack Dorsey, the CEO of both Square and Twitter. “Hyperinflation is going to change everything.”

Perhaps Dorsey’s bearish view on cash, ironic given that his company operates Cash App, has something to do with his bullish views on cryptocurrency. Fifty eight percent of Square’s total net revenue in the 2nd quarter came from Bitcoin.

“While bitcoin revenue was $2.72 billion in the second quarter of 2021, up approximately 3x year over year, bitcoin gross profit was only $55 million, or approximately 2% of bitcoin revenue,” the company said at the end of Q2.

Square made no mention of inflation in its Q2 earnings, nor in the call with analysts that followed. The company makes more than $1 billion in small business loans per year, a business that would likely be impacted by “hyperinflation.”

A hyperinflationary economy would cause strange situations in low interest rate environments in which borrowers pay back far less than what they borrowed on a value basis. If rates are low and loan payments are fixed, the borrower might as well borrow everything they could from every source available and turn it into something that will keep up with price increases.

Dorsey’s comments weren’t a one-off. He doubled down on his prediction just seven minutes later.

He continued by saying that hyperinflation wasn’t a wish, nor did he think it was positive. He then laughed at Steve Hanke, a well regarded economist at John Hopkins University for condemning his statements.

If Dorsey is right, and we’re all paying $200 for a cup of coffee in 2022, he would actually be one of the first people to see it happening since so many small businesses, including coffee shops, rely on Square as their POS software.

Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.