Bitcoin - Week 40

Fear grips the financial markets. Are more and more of us realizing the inextricable situation of the fiat system? And bitcoin in all this?

And the debt, what do we do with it?

Inflation and the massive devaluations of the pound sterling, the euro and the yen are the price to pay 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 lockdowns being probably the height of the mismanagement of public funds.

The second is linked to the rise in energy prices. On the one hand, we have the natural energy scarcity of a bloodless planet. And on the other, the political decision to banish our main supplier of joules: 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 offset rising prices. As much money as we will print and which will prevent prices from falling once the geopolitical context calms down.

“It’s easier to get toothpaste out of the tube than to put it in”as the other would say.

And since energy is denominated in dollars, this debt will translate into a lower exchange rate for the euro. The latter has already lost 20% against the greenback since May 2021.

Devaluation of major currencies against the dollar
Devaluation of the euro, the pound, the yuan and the yen against the US dollar

By the way, the petrodollar is no coincidence. This “exorbitant privilege” has lasted since 1975, when Henry Kissinger forced Saudi Arabia and the rest of OPEC to accept only dollars as payment for oil. Exporting countries that refuse to do so are under embargo. 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 keep in reserve. These reserves explain why the United States can run a trade deficit without the dollar falling.

Nevertheless, this privilege is really nothing more than a slate. For example, the United States owed Russia $300 billion before the war broke out. Today, these reserves are “frozen”…

Something to make the whole world think, especially China, which holds thousand billions of dollars. Beijing comes from ask state banks to prepare to sell their dollars to support the yuan.

The Middle Kingdom is about to get rid of its dollars, which could quickly make Uncle Sam understand that one does not go into debt with impunity.

But what will be the next international reserve currency? Bitcoin is cut out for the job even if the BRICS seem to favor a reserve currency made up of a basket of their currencies.

The third reason

Collecting interest on money forces you to always create more of it to make it possible to pay the interest.

This is why fiat currency is a ponzi. Every dollar, every euro, every yuan in circulation in the economy originally comes from a debt with interest. So that we must perpetually increase the debt so that there is always enough money in the magma of the economy to allow everyone to repay their debts + interest.

We have long been able to prevent the exponential runaway 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 have been close to 0% since the 2008 crisis (year of the conventional oil peak…)!

fed funds
Fed key rate

Now, raising interest rates will cause an explosion in debt servicing and a collapse in the value of old government debt securities (serving near-zero rates).

Hence the panic that gripped the City. Last Thursday, British pensioners were faced with the unimaginable. They saw their lifetime savings almost disappear when the bond market went wild following the tax cuts announced by the government.

Why ? Because the race for yield used to pay the promised pensions is pushing British pension funds to use leverage. They do this by placing part of their assets (UK debt) as collateral. However, the rise in rates has caused the value of this debt to fall, causing cascading margin calls.

The Bank of England was therefore forced to pull out its printing press to panic buy the English government’s debt. And this even as inflation hits 10% and the pound sterling has fallen 15% since May 2021!

In short, the old lady, who serves as a model for most central banks in the world, recognizes that the only way to continue to pay pensions is to continue the Quantitative Easing.

This will further weigh down the pound sterling and cause even more inflation. ” death spiral say the Anglo-Saxons.

Even the UN has just officially asked the FED and all the central banks of the world to stop raising rates. You can’t tap a ponzi…

Alright, what about bitcoin?

Bitcoin solves a problem: inflation. It has just reached 83% in Turkey. And the way things are going, this scenario unfortunately seems possible in Europe.

Here 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 of unlimited resources and allowing 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 suffering from the highest inflation.

Here is now the list of countries most to complain about. If, in 2015, you had the equivalent of one million dollars in Turkish, Lebanese, Argentinian, or Venezuelan accounts, your purchasing power is now equivalent to:

  • Turkish Lira: $140,000
  • Lebanese pound: $40,000
  • Argentine Peso: $30,000
  • Venezuelan bolivar: $2
  • Bitcoin: $61 million

Even Americans have seen the purchasing power of $1 million melt 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 condemn the annexation of Ukrainian Russian-speaking regions. And as the Red Army funnels tactical nuclear warheads into Ukraine, the former CIA boss threatens to “destroy all Russian troops present on Ukrainian territory” :

“NATO will destroy all Russian troops and equipment on the territory of Ukraine, and sink the Black Sea Fleet of the Russian Federation if Russia uses nuclear weapons against Ukraine – David Petraeus, former head of the American CIA. »

Geopolitics, overpriced energy, QE infinity, currency collapse… All the ingredients are there for the final hyperinflation. The worst-case scenario is slowly falling into place.

How long before the masses reject the anti-bitcoin propaganda? Choose bitcoin for savings rather than the fiat ponzi that promises debt inflation and physical limits to growth.

Take advantage, Bitcoin is 70% off.

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