It’s established, China is number 1. And not just by a little. The international monetary order will change. Bitcoin is biding its time.
龙
From time to time we see predictions of the collapse of China which cheats on its growth figures.
The truth is that the GDP of the Middle Kingdom is now 22% larger than that of the United States, at purchasing power parity. That is, using an exchange rate that equalizes the cost of living.
If you ever visit Beijing, you will quickly realize that a euro converted into yuan allows you to buy more things than in Paris. A haircut is cheaper in China.
But why should we value the work of the Chinese hairdresser below that of the Parisian hairdresser? To avoid this distortion of reality, economists compare GDP at purchasing power parity.
This is essential to avoid misleading headlines. This was recently the case with the angst spread by the European Council that the EU had a larger economy than the US in 2008, but is now 30% smaller? It was simply a base effect linked to the rising dollar.
This is how exchange rates can fluctuate enormously against a backdrop of temporary speculation. American GDP is artificial. It is based on a strong dollar which itself is based on the petrodollar system.
Things are very different when using purchasing power parity:
The petrodollar, the American crutch
The strength of the dollar is artificial for the simple reason that the United States has an abysmal trade deficit.
Normally, the dollar should fall continuously until the trade balance is in balance. Except that the United States enjoys the famous “exorbitant privilege” obtained by force.
It is due to the fact that oil exports are denominated in dollars. And this since 1975, when Henry Kissinger twisted the arm of Saudi Arabia.
Since then, many other commodities have been denominated in dollars. So much so that the dollar has for decades made up the bulk of central banks’ foreign exchange reserves (7,000 billion dollars).
This is as much money returning to the United States as central banks place their reserves in US debt to earn interest. Hence the artificial strength of the dollar will cease as soon as the exporting nations accept other currencies such as the yuan, the ruble, the rupee, gold, etc.
Hence, moreover, the immense American public debt which represents 34% of global public debt. Compared to only 15% for that of the People’s Republic.
In addition, total US debt reaches 400% of GDP, compared to 300% for China. Debt levels are also important when making GDP comparisons.
Another excellent way to compare two economies is in terms of electricity consumption. The following graph clearly shows where the quality of life increases:
Without growth in energy consumption, GDP growth is just an inflationary artifice! GDP can increase for both good and bad reasons. The inflation of Netflix subscriptions cannot be compared to the construction of nuclear power plants…
However, Moody’s has just placed China’s debt on a negative outlook. Considering that China has grown 40% since Moody’s last downgraded its credit ratings in 2017…
Divide and rule
Washington maintains wars on the right and the left precisely in an attempt to preserve its exorbitant privilege.
The Americans are agitating to try to intimidate nations that would like to free themselves from the dollar. The head of Russian intelligence services Sergey Naryshkin recently had very frank words on this subject:
“ The emerging world increasingly resembles a classic revolutionary situation, when the “top”, in the form of the weakening of the United States, can no longer ensure its leadership, and the “bottom”, in which the The Anglo-Saxon elite, without exaggeration, includes all the other countries, no longer wants to submit to the diktat of the West.
In order to avoid a radical collapse of the entire global “superstructure” that currently exists and only benefits the Anglo-Saxons, the Euro-Atlantic top brass will choose to maintain controlled chaos – destabilizing the situation in key regions of the planet by pitting certain “recalcitrant” states against others, then by forming operational and tactical coalitions around them under the control of the West.
It is obvious that the coming year will be marked by the intensification of the confrontation between two antagonistic geopolitical principles: the Anglo-Saxon “divide and rule” and the continental “unite to rule”. »
Gold Standard / Bitcoin Standard
The West is agitated, but the Russian victory against an army of half a million Ukrainians led by NATO has not gone unnoticed. The petromonarchies no longer fear suffering the same fate as Iraq.
Vladimir Putin’s fanfare visit to the United Arab Emirates and Saudi Arabia is eminently revealing in this regard. As well as the presence of the president of the Russian central bank Elvira Nabiullina.
Remember that Saudi Arabia and the United Arab Emirates have just joined the BRICS. In doing so, there is no longer any question of financing the US debt. It is therefore obvious that the dedollarization of Saudi oil exports and the depeg of the rial against the dollar were on the menu. The memes have exploded on X:
The Russian president’s visit was therefore certainly aimed at giving them courage. Moreover, Ramzan Kadyrov also made the trip. This is also a strong sign given that the President of the Chechen Republic has proven his ability to defeat troops trained by NATO in Ukraine.
The world clearly wants to let go of the greenback and most likely embrace the gold that Russia and China have been buying liberally since the Fed began printing money (QE).
A store of value will sooner or later return to the center of global trade. Gold first, and then finally bitcoin, for good reasons explained here: Bitcoin will never stop, Laura.
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