
Is Bitcoin a currency that can magically increase global purchasing power? It's not that simple.
Purchasing power = Productivity
Purchasing power depends on our productivity. That is, the quantity of things produced per person. This productivity can only come from machines since we only have two arms and two legs. A sewing machine, a truck, a digger, a pickaxe, etc.
But these machines need energy. More than 95% of global transportation runs on fossil fuels such as oil. A pickaxe does not consume energy, but it does require some to manufacture. Iron ore must be heated to its melting point (1,538°C), which is a very energy-intensive process.
All this to say that it is not enough for the quantity of money in circulation to be fixed for us to magically increase our standard of living. Productivity is not a monetary sleight of hand. It is energy!
The problem is that we passed the peak of conventional oil (the kind that is cheap to extract) in 2007.
Second problem, more than half of the world's GDP is “contained” in international trade. The world economy is now totally interconnected. Not a single object of everyday life, whether it is a chair, a coffee machine, a T-shirt, a sports accessory, or a bottle of dishwashing liquid, escapes globalization. All or part of these things required a foreign raw material or a foreign manufacturing step.
In other words, the energy decline will be accompanied by deglobalization and a physical reduction in trade. This will result in inflation, lots of inflation. Here we are. It is time to exchange your bank savings (whose value is being eroded by inflation) for a safe haven.
This is where bitcoin can help. But first, let's talk about the spike.
Peak oil? Excuse me?
What peak? We have never produced so much oil, some will say. True, but it all depends on what oil we are talking about.
Global oil production figures are distorted by the inclusion of types of oil that are not used to produce the fuels needed for ships, cars and trucks without which the economy would collapse.
Jean-Marc Jancovici points out on his page Linkedin that “real oil” consists of molecules with at least five carbon atoms.
“But here's the thing: the IEA is used to counting as oil 'gas liquids', namely ethane, propane and butane, which come from gas fields, and which are not the basis of fuels, but of plastic. That's 13 million barrels/day, not a trifle! Not counting agrofuels.”he says.
For the polytechnician, crude oil production (82 million barrels/day) will continue to stagnate for a few more years before declining from 2030.
The direct consequence will be a decrease in the physical flows that underpin the economy. The law of supply and demand being what it is, this decline will manifest itself in inflation.
Certainly, oil production is not yet declining. However, the profitability of conventional oil is $30 per barrel compared to $65 for new “shale oil” wells. And $200 in Antarctica. Hence the increase in prices at the pump.
This increase in the price of naphtha results in generalized inflation since everything that is produced must be transported, often from the other side of the world…
Productivity = Machines = Energy = Oil (cheap).
Less energy and/or more expensive energy means less purchasing power per person.
“No worries, let's go all out on nuclear”
Unfortunately, nuclear power only accounts for a tenth of the world's electricity and barely 4% of total energy. Atomic fission will therefore not replace fossil fuels (82% of final energy in 2023) in a few decades.
There are currently 440 nuclear reactors in the world. To go from 4% to 100% of electricity would require building about 11,000!
We will not achieve this since only 61 reactors are currently under construction and we need eight years to build one. At this rate, it will take the world 1,400 years to run on nuclear power…
-61 nuclear power plants are under construction worldwide, and about 90 more are in planning.
-The price of uranium has increased by 233% over the last five years, more than triple the price of gold or copper.
Another problem, we have a stress on copper and lithium. These essential elements of all-electric are limiting factors.
What about the ITER project? Doesn't nuclear fusion promise infinite, carbon-free energy? First, we would need to know how to generate plasma at several million degrees without stopping, compared to barely six minutes currently… And be able to “recover” this energy in the form of electricity.
Moreover, the problem of deadlines remains, as does the constraint on the copper/lithium tango. For JM Jancovici, a possible lead-in fusion reactor will not arrive before 2100…
Bitcoin
The physical limits of our bloodless planet will impose themselves on our wallets, whatever we vote for… It already has. Blaming politicians or central banks will not change the geological reality.
Austrian economists who repeat all day long: “adundance through scarcity” are in denial. It is not enough to freeze the money supply to make oil spring forth. There is no lithium, no gas, no nuclear power plant in the blockchain…
[Ne manquez pas notre article : Les économistes autrichiens freinent l’adoption du bitcoin.]
Energy is a limiting factor in globalization. The reduction in trade (which will happen, “sooner or later”) will be accompanied by a drop in productivity. In France, the peak in the number of square meters built and tons loaded in trucks dates back to 2007, the year of the peak of cheap oil…
In short, inflation will get worse and benefit the rich who own desirable assets. These assets are luxury real estate, paintings by great masters, collectibles, etc. So many things that are not within the reach of small purses which, on the contrary, suffer the Cantillon effect.
The only asset that appreciates faster than inflation and is still available to the average person is the stock market. But who can claim to know how to bet on the right horse?
This is why Bitcoin is perfect for the masses. This is what makes it so magical. It is not hard to understand that Bitcoin is the only thing in the world that exists in absolutely finite quantities and is accessible to everyone.
Bitcoin is divisible into 100 million satoshis, not the Mona Lisa. Anyone can buy 10, 100 or 1000 euros worth of bitcoin. Bitcoin is the poor man's Mona Lisa.
If you liked this article, you will definitely enjoy this one: Bitcoin and endless inflation.
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