Bitcoin is the antidote to the cashless society and inflation. Inflation which should further harden in the face of the embargo on Russian oil.
15% inflation over two years
Inflation stood at 10% at least in November in the euro zone. It was already 5% during the same period a year ago. In other words, prices have increased by 15.5% over two years.
Results over one year for a basket of French food products according to NielsenIQ:
- Frozen meats: +29%
- Toilet paper: +20%
- Pasta: +20%
- Oil: +20%
- Butter: +17%
- Eggs: +16%
- Canned vegetables: +15%
- Animal feed: +14%
- Rice: +14%
At a rate of 10% per year, prices will increase by 100% within six years. We will then buy half as many things for the same amount of euros. In other words, the decline in purchasing power will be 50% if wages stagnate in the meantime.
The Minister of the Economy Bruno Le Maire has been promising us for six months that inflation will subside “in a few weeks or a few months”. We are a long way off. And chances are the worst is yet to come.
The reason being that the G7 and the EU have just to declare an embargo on Russian oil sold above the price of 60 dollars per barrel.
Without much success so far since Russian oil transported via the Far Eastern port of Kozmino was selling for 79 dollars per barrel in Asia on Monday. That is almost a third more than the ceiling price.
The West’s strategy is to try and wean Russia off the tankers it needs to transport its oil. The G7 countries are forcing their insurance companies to no longer insure shipowners transporting Russian oil as long as the latter is sold for more than 60 dollars a barrel.
Hence Moscow’s recent decision to buy more than one hundred of tankers to circumvent the G7 system.
Embargo on the world’s largest oil exporter
It’s hard to say if this fleet will be enough. In the meantime, a traffic jam of tankers has formed in Turkish waters. the FT reports that about twenty tankers were already blocked in front of the Bosphorus Strait on Monday.
NATO member Turkey has asked all tankers to provide letters from the International Group of P&I Clubs, which represents 13 insurers covering nearly 90% of global shipping. The P&I club said on Monday that the Turkish demands were going ” well beyond “ general information normally required.
In sum, we may be heading for yet another disruption in the global supply chain. And this time, it is the blood of the economy that is concerned: oil, on which 95% of global transport depends. Will we soon experience shortages at gas stations?
Russia is indeed the third largest oil producer in the world, behind the United States and Saudi Arabia. In January 2022, Russia produced 11.3 million barrels per day, including 10 million barrels of crude oil.
More crucially, Russia is the largest exporter of gasoline and the second largest exporter of crude oil behind Saudi Arabia. According to theOUCHRussia exported 7.8 mb/d in December 2021. That is nearly 9% of world production.
Before the outbreak of war in Ukraine, 34% of EU oil imports came from Russia. As much oil as the old continent will have to buy elsewhere, more expensively.
The $60 cap is intended to limit Russia’s revenue while ensuring that Moscow continues to supply the global market. However, Russia has no intention of playing along.
Niet
“The Russian economy can fully meet the needs and requirements of the special military operation”has declared Kremlin spokesman Dmitry Peskov. “Russia will not sell its oil to countries that impose this cap”he added.
To sum up, here we are in the presence of an electricity crisis for lack of having invested in nuclear reactors of the third and fourth generation. Thank you Francois Hollande. Thank you Macron.
We are also in the grip of a gas crisis. Knowing that Qatar will not be able to supply a single drop of LNG before the end of 2026.
And finally an oil crisis. Knowing that OPEC sided with Russia by refusing to increase production. Not to mention the fact that conventional oil production has been falling steadily since 2007…
Saudi Arabia and the United Arab Emirates have resisted US pressure urging them to “choose sides”. Uncle Sam would like Ryiad not to play into the hands of China and Russia. Except that the first and the first importer of Saudi oil and that the second is part of the OPEC + cartel…
Saudi Arabia will also receive Chinese President Xi Jinping from December 7 to 9. Dozens of agreements should be signed with the Gulf countries regarding. Energy, security and multiple investments will be on the table.
The days ahead promise to be eventful for the oil market. Geopolitical tectonic plates are shifting and supply chains that have existed for decades will be disrupted.
The energy being at heart of productivity, its overbidding will result in a further generalized surge in inflation. In Turkey, inflation has already reached 84% over the past year…
How long do we have before the hyperinflationary Great Reset hits Europe too?
The next few years will be painful. Those who acquire bitcoin today cannot thank themselves enough. Small addresses (<0.1BTC) have never accumulated as much as in the last month. Cheer !
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