The larger implications of the European energy crisis and bitcoin's impact on the global economy are beginning to become apparent.
"Fed Watch" a macroeconomic podcast that is true to bitcoin's rebellious nature, is called "Fed Watch". Each episode examines current macroeconomic news from around the world, with a focus on central banks and currencies.
This episode features CK and I discussing the current state and panic in Europe, as well as myths and facts about the EU/Russia conflict. Finally, we read an article on how China is a Marxist country and are proud of it.
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Is the European Crisis at its Peak?
We covered charts like the price of bitcoin, the S&P 500 and dollar indices, as well as the confusing energy prices. Then we moved on to Europe.
The European panic is very high, as we can see from the rise in energy prices. But has it gone too far? This episode features a selection of tweets by Andreas Steno on why the energy crisis may have reached its peak. We also discuss how the latecomers to the realization of an energy problem are what we are seeing now.
Steno's sentiments are very true to my heart. Steno has warned about the coming energy crisis for years before most people knew about it. The crisis is likely to be exaggerated now that everyone is talking about. Steno "fading the energy crisis" or, as I prefer to say, fading the latecomer panic.
Similar sentiments are held by me at this point about the dollar. Since years I have been warning of a strong dollar. Now, with so many people coming to this realization together, it feels even more acute than the fundamentals suggest. I'm becoming less skeptical about any further dollar rise at this stage.
But, let's get back to Steno. We discussed several myths that he has about the energy crisis' asymmetry in this episode. These are the ones I will simply list:
- Russia can sell gas to India and China. However, there is no infrastructure to do so. It would take over a decade to construct. The absolute volumes that we are talking to redirect from Europe are simply too large for India or China at the moment.
- "The ruble's strength" Russia is experiencing higher price rises than Europe. Sources indicate that Russia's domestic CPI is currently 18%. Because it is such a scarcely traded currency, the forex exchange rate is not something that concerns me. The international ruble exchange rates are a sentiment indicator for Western traders.
- German gas flows will reach zero," they say. They will likely go anywhere from 40% to 60%. This is terrible, but it's not zero.
- Russia can sell gas to Europe via China, but only in very small quantities. China and Russia don't share the same infrastructure as Europe. Based on my research, this trade roundabout can only replenish about 5% of the gas flow.
Markets are known to react excessively, particularly if the majority of the market was late for a trade. This is perhaps what we see with Europe today. It has eased some of the sanctions and is now talking about price caps, which is the same thing as collective bargaining. Although these measures may not be as effective as expected, they could help to bring prices back within the realm of normalcy, which will in turn reduce market panic.
China is Marxist. Believe it
China is a Marxist country, despite what you may think. While I don't claim to be revolutionary, many people have said things over the years like "Oh no, China has become more capitalist." It's not communism. They must say it, often in order to justify their unfounded faith in the Chinese miracle. A deep dislike of U.S. Hegemony leads them to believe that China will somehow surpass the U.S.
This section of the podcast features a fantastic article by Dissent Magazine entitled "Make China Marxist Again". It is from 2018, long before China's current crisis and coronavirus.
The author tells us in this article that Xi Jinping publicly praised Karl Marx as the "greatest thinker in human history." Xi declared his firm belief in Marxism's scientific truth.
"Party members must study selected Marx works, especially The Communist Manifesto. The public also gets their dose through a television talk program called Marx Got It Right (Makesi Shi duide). A key component in the introduction of 'Xi Jinping Thought on Socialism With Chinese Characteristics For a New Era', which was added to China’s constitution after last year's 19th Communist Party Congress, has been the renewed embrace of Marxism.
During the podcast, I quoted a Beijing University law professor and a well-known apologist of Xi, Jiang Shigong. He had written a defense for Chinese Marxism in 2018 by placing it in a fictional historical context. They call it "historiographical contextual" because Marxists love to reinterpret historical events for their own purposes.
Professor Jiang defines the Chinese Marxist experiment in this instance as a series. First, Mao wasn't a mass-murdering psychopath. He was fighting the first class struggle. Deng Xiaoping didn't abandon Marxism; he opened China up to the rest of the world to help build China's material base. (Capitalism is a phase of communism. Xi Jinping has restored Chinese power and international influence back to their proper places, and he isn't denying human rights.
This article clearly shows that China is a Marxist country. Therefore, anyone who expects China to rise must believe in communism. My argument is that China's return to prominence can be described more simply as "built upon easy global credit and Western-imposed free trade."
What Does This Mean for Bitcoin?
This podcast ended by stating my position that the credit-based credit frenzy of 50 years is over. It will also end credit-based money which made it possible. It will be replaced with sound money, in the form bitcoin. Credit becomes less available and more dangerous as deglobalization increases. Allies will naturally be more inclined to use neutral currencies.
This guest post is by Ansel Lindner. These opinions are not necessarily those of Bitcoin Magazine or BTC Inc.
By: Ansel Lindner
Title: Bitcoin And Making Sense Of The European Crisis
Sourced From: bitcoinmagazine.com/markets/bitcoin-and-the-european-crisis
Published Date: Sat, 10 Sep 2022 22:30:00 GMT