Fear grips the financial markets. Are we more and more realizing the insurmountable state of the fiat system? And bitcoin in all this?
And the debt, what do we do with it?
Inflation and massive devaluations of the pound sterling, the euro and the yen are the price to be paid for the gargantuan indebtedness of Western countries.
Why so much debt? For three main reasons.
The first is obvious. States are spending/wasting more money than they collect through taxes. covid psychosis and the greens the mismanagement of public funds is probably the highest.
The latter is linked to the rise in energy prices. On the one hand, we have the natural energy shortage of a bloodless planet. And on the other hand, the political decision to expel our main guile supplier: Russia. In 2021, 2/5 of our gas, 1/4 of our oil and 1/2 of our coal came from Siberia.
So much so that European governments are preparing to borrow 500 billion euros to compensate for the rise in prices. As much money as we will print that will prevent prices from falling when the geopolitical context comes down.
“Taking toothpaste out of the tube is easier than putting it in”as the other would say.
And because energy is denominated in dollars, that debt will result in a lower exchange rate for the euro. The latter has already lost 20% against the green background since May 2021.
By the way, the petrodollar is no coincidence. This “excessive privilege” has lasted since 1975, when Henry Kissinger forced Saudi Arabia and the rest of OPEC to accept one dollar as payment for oil. Exporting countries that refuse to do so are embargoed. Iran for example.
To put it another way, the dollar exchange rate is artificially supported by $7 trillion in reserves that central banks are forced to hold in reserve. These reserves explain why the United States can run a trade deficit without the dollar falling.
However, this privilege is really just a slate. For example, the United States owed $300 billion to Russia before the war began. Today, these reserves are “frozen”…
Do something for the whole world to think, especially China, which has a thousand billion dollars. Beijing has just asked state banks to prepare to sell their dollars to support the yuan.
The Middle Kingdom is about to get rid of its dollar, which Uncle Sam could quickly realize that one does not go into debt with impunity.
But what will be the next international reserve currency? Bitcoin is cut out of the post even if BRICS appears to be in favor of a reserve currency made up of a basket of its currencies.
The third reason
If money accrues interest you must always create more of it to pay the interest.
This is why fiat currency is a ponzi. Every dollar, every euro, every yuan in circulation in the economy comes from debt with interest to begin with. So that we have to increase the debt permanently so that there will always be enough money in the magma of the economy to allow everyone to repay their debt + interest.
We are a long way from preventing the exponential debt by gradually lowering rates since the 1980s. That is to say, since we went from a world where energy was almost free, to a world where energy has a price.
But we have come to the bottom. Rates are close to 0% since the 2008 crisis (the peak year of conventional oil…)!
Now, rising interest rates will cause an explosion in debt servicing and a fall in the value of old government debt securities (serving near-zero rates).
Hence the panic that affected the City. Last Thursday, British pensioners were faced with the unthinkable. They saw their life savings almost disappear when the bond market went wild following the tax cuts announced by the government.
Why? Because the race for income used to pay the promised pensions is forcing British pension funds to use leverage. They do this by putting some of their assets (UK debt) as collateral. However, the rise in rates has led to a decline in the value of this debt, leading to cascading margin calls.
The Bank of England therefore had to pull out its printing press to panic buy English government debt. And this is even when inflation hits 10% and the pound sterling has fallen 15% since May 2021!
In short, the old woman, who serves as a model for most central banks around the world, recognizes that the only way to continue paying pensions is to continue the Quantitative Easing.
This will further depress the pound sterling and cause even more inflation. ” death spiral say the English.
Even the UN has just officially asked the FED and all the world’s central banks to stop raising rates. You can’t tap a ponzi…
Ok, what about bitcoin?
Bitcoin solves a problem: inflation. It has just reached 83% in Turkey. And the way things are going, unfortunately this situation seems possible in Europe.
This is the number of years after which the purchasing power is halved according to the average inflation rate over the period:
- 2%: 35 years (The goal in a world where resources are unlimited and allows wages to increase by 2% or more)
- 4%: 17 years old
- 7%: 10 years
- 10%: 7 years (Officially now)
- 14%: 5 years
- 17%: 4 years
- 20%: 3.5 years (Reality)
The official inflation rate in Estonia, an EU member state, is 24%. It is 17% in Holland. Find in this article the top 15 European countries with the highest inflation.
Here is now the list of the most complained about countries. If, in 2015, you had the equivalent of a million dollars in Turkish, Lebanese, Argentine or Venezuelan accounts, your purchasing power now equals:
- Turkish Lira: $140,000
- Lebanese pound: $40,000
- Argentine peso: $30,000
- Venezuelan Bolivar: $2
- Bitcoin: $61 million
Americans have seen the purchasing power of $1 million drop to $700,000 over the past seven years.
Inflation is real and the global geopolitical context does not offer much hope. For example, Brazil, India and China refused to criticize the annexation of Russian-speaking regions of Ukraine. As the Red Army pushes tactical nuclear warheads into Ukraine, former CIA chief faces threat “Destroy all Russian troops present on the territory of Ukraine” :
Geopolitics, overpriced energy, QE infinity, currency collapse… All the ingredients are there for the ultimate hyperinflation. The worst case scenario is slowly falling into place.
How long before the masses reject the anti-bitcoin propaganda? Choose bitcoin for savings over the fiat ponzi that promises debt inflation and physical limits to growth.
Take advantage, Bitcoin is 70% off.
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Journalist reporting on the Bitcoin revolution. My papers deal with bitcoin through geopolitical, economic and libertarian prisms.