With the European energy crisis peaking, the biggest implications for the world economy and bitcoin are becoming evident.
“Fed Watch” is a macroeconomic podcast, true to the rebellious nature of bitcoin. In each episode, we question mainstream and Bitcoin narratives by examining current events in macroeconomics around the world, with an emphasis on central banks and currencies.
In this episode, CK and I looked at the current state of the bitcoin market, the state of panic in Europe, including some myths about the EU / Russia conflict, and finally we read an article about how China really is a Marxist country and what it is. be proud done.
Audio listeners can follow along with slides here.
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Has the European crisis peaked?
After covering a few charts, such as the price of bitcoin, the S&P 500, the dollar indices, and the staggering energy prices, we turned to Europe.
Panic is high in Europe, we can see it by looking at energy prices, but has the panic gone too far? In this episode, we took a look at some tweets from Andrea Steno about why the energy crisis may have already peaked and how what we are seeing now is the mass number of laggards who realize that there is an energy problem in the first place.
I identify a lot with Steno’s sentiment. He warned of the impending energy crisis long before many people talked about it. Now, since everyone is talking about it, the crisis will tend to swell out of proportion. This is why Steno is “easing the energy crisis”, or I would say that he is easing the hysteria of the latecomers.
This is also similar to my feelings on the dollar at this stage. I have publicly warned of a strong dollar for years, and now with so many making it together, it seems sharper than perhaps the fundamentals imply. Therefore, at this point I am becoming more skeptical of a further rise in the dollar.
Anyway, let’s go back to Steno. In this episode we examined several myths he raised about the asymmetry of the energy crisis. I’ll simply list them here:
- “Russia can simply sell the gas to India and China.” This is false because there is no pipeline infrastructure for it and construction would take a decade. Also, the absolute volumes we are talking about redirecting from Europe are simply too large for China or India right now.
- “The ruble is strong”. Russia is currently experiencing a price increase equal to or greater than that of Europe. Some sources indicate that the domestic CPI in Russia is 18%. The forex exchange rate is pretty much a concern to me, because it is such an under-traded currency. If anything, I would add, the international ruble exchange rate is an indicator of the sentiment of Western traders, that’s all.
- “German gas flows will go to zero”. No, they won’t. They are likely to reach a value of between 40% and 60%. It’s horrible, but not zero.
- “Russia can sell gas to Europe through China”. Only very small amounts. Again, China and Russia do not share the same volume of infrastructure that Europe has with Russia. This circular exchange can only fill about 5% of the gas stream, based on my research.
Markets tend to overreact, especially if most of the market is overdue for a trade. Maybe that’s what we are seeing with Europe today. He loosened some sanctions and is now discussing price caps (which is the same as collective bargaining). These measures won’t work exactly as expected, but they could push prices back into the realm of sanity, which in turn will ease some market panic.
China is Marxist, believe it
Believe it or not, China is a Marxist country. I’m not saying anything revolutionary with this statement, but a lot of people out there have said to me over the years things like, “Oh no, China is more capitalist now. They are different, it is not true communism ”. They have to say this, in many cases, to justify their groundless belief in the Chinese miracle. They also want to believe that China will somehow surpass the United States and knock them down by a couple of thorns, due to a deep aversion to US hegemony.
In this section of the podcast, I read a great Dissent Magazine article titled “Make China Marxist Again”. This is a post from 2018, long before the coronavirus and the current Chinese crisis.
In this article, the author informs us that Xi Jinping openly praised Karl Marx, calling him “the greatest thinker in the history of mankind”. Wait what? Xi went on to declare his “firm belief in the scientific truth of Marxism”.
“Party members are required to study a selection of Marx’s works, in particular The Communist Party Manifesto. Audiences get their fix of him too, among other things through a TV talk show, Marx Got It Right (Makesi shi duide). The renewed embrace of Marxism was also a key element in the launch of “Xi Jinping’s Thinking on Socialism with Chinese Characteristics for a New Era”, which was added to the Chinese constitution after the 19th Communist Party Congress last year ” .
During the podcast, I quoted at length a law professor at Peking University and a well-known Xi apologist, Jiang Shigong. In 2018 he had recently written a defense of Chinese Marxism, placing it in an invented historical context. Of course they call it the “historiographical context”, because Marxists love to reinterpret history for their own purposes.
In this case, Professor Jiang redefines the Chinese Marxist experiment as a series of steps. First, Mao was not a mass murdering psychopath, he was fighting the initial class struggle. Subsequently, Deng Xiaoping did not turn his back on Marxism, he opened China to the world to build its material base (capitalism is just a phase of communism, don’t forget that). Now, Xi Jinping isn’t cracking down on human rights, he’s putting Chinese power and international influence back into place.
It is clear from this article that China is definitely a Marxist country, and therefore, anyone who expects the rise of China to continue must believe in the viability of communism. My argument remains that China’s path to return to prominence can more simply be described as “built on easy global credit and free trade imposed by the West.”
Where did this Bitcoin come from?
I concluded this podcast, once again, by outlining my position, that when the credit-based frenzy of the past 50 years comes to an end, it will also end the credit-based money that made it possible. It will be replaced by healthy money in the form of bitcoin. As deglobalization intensifies, credit becomes increasingly scarce and dangerous. This will naturally prompt enemies to use a neutral currency.
This is a post from Ansel Lindner. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.