The Energy Crisis Demands Bitcoin – Bitcoin Magazine
Below is a direct excerpt from Marty’s Bent Issue #1258: “The energy crisis is going to turn on the money printers again sooner than most expect.” Sign up for the newsletter here.
Despite a highly predictable catastrophe, the speed with which the energy crisis in Europe is unfolding seems to be catching the markets off guard. Everyone is expecting a harsh winter with astronomical prices, but it seems that most people believed that these problems would not be felt until the winter months. Thinking this way turns out to be a massive mistake, as the compounding effects of ever-decreasing supply and markets trying to cope with the chaos lead to price levels that make it impossible for markets to… operate.
News fell this morning that European trading desks are facing at least $1.5 TRILLION in margin calls as prices run away from available liquidity in the European energy industry. I know we live in an age of trillions being thrown around like confetti at the Super Bowl, but to put that into perspective, that would be ~13% of gold’s total market cap and 31.6x bitcoin’s current market cap. All just to ensure that the energy trading markets have sufficient liquidity today. This doesn’t even begin to take into account the amount of liquidity that will be needed as we move further into the year. At some point soon, the liquidity problem is going to hit a point where the European Central Bank’s hand will be forced and they will turn on the money printer to save the energy sector. This could mark a key point on the road to Weimar 2.0 on a global scale. And this is only in Europe. If you pan slightly west towards the UK, you will notice that they are embarking on a very similar journey, but starting from the fiscal side of the equation.
Liz Truss, Britain’s new WEF hand-picked Prime Minister comes out of the gate swinging big on electricity price controls. Prepared to hand out as much as £170 BILLION, or more than 5% of England’s GDP, to try to ease the pain British citizens feel at the end of the month when they have to pay their electricity bills. This may seem all well and good to the layman. The new Prime Minister is here to save the average Briton’s wallet and keep it from the “greedy” electricity and energy giants. But if you know economics and history, you’ll know that this kind of price-fixing attempt is going to make the problems worse. Prices are rising because there is an inability to supply fuel properly to the market and downstream from it becoming more difficult to supply electricity at reasonable prices.
While it may seem like the right move to make politically, trying to fix prices by subsidizing costs for consumers, as is the case in the UK, or inevitably printing money to bail out energy producers, as may prove to be the case in EU , these actions will only serve to worsen the ability of these producers to deliver their goods to the market. Eventually price controls will break like a dam and money printing will beget more money printing. Both actions will inevitably lead to more price increases and more suffering. Even worse, the actions could drive their economies to a point where there isn’t much money that will allow producers to buy the fuel needed for utilities to produce and deliver electricity. The liquidity crisis among European energy producers seems to signal that we may be experiencing the beginning of this process.
This is what happens when the global economy is built on a monetary system that is completely disconnected from reality and when markets have not had the ability to price goods and services accurately for five decades. To make matters worse, we have found that the easy money can be used for weapons in two ways; first by degrading the savings of the individual and then by deciding who can and cannot use the degraded money. Even cutting off entire countries. When you cut off entire countries from the monetary system, especially countries that are relatively powerful, they will retaliate by weaponizing their resources. Today we see this unfolding with Russia deciding that it will simply refuse to sell the Western world its oil and natural gas if the West will not allow them access to its money and payment networks.
Things are getting heavier and heavier every day, freaks. The West has backed itself into a corner and the only way out seems to be a hyperinflationary collapse that forces people to get their heads out of their asses and recognize that the unproductive class in charge is leading us to doom. Nothing makes this clearer than the fact that here in the United States of America we seem driven to follow Europe’s playbook by going ahead with absolutely idiotic energy and monetary policies.
And for those of you who think the US is relatively inoculated from the crisis unfolding in Europe, you better get your head out of your ass too. Due to the nature of our hyper-connected high-speed junk economy, our wagon is pretty much hitched to the fate of the European economy due to the amount of credit exposure that exists out there. Energy and power producers going out of business due to astronomical prices will set off a domino effect that will reach our shores sooner than most people think.
The only way out of this mess is to adopt money which is extremely difficult for the unproductive class to corrupt. That money is bitcoin. When bitcoin is the world’s reserve currency, true pricing will be brought back to the markets which will allow capital to be properly allocated because the cost of misallocating the scarce capital will be extremely high. There will be unsustainable consequences that come with trying to signal you through capital allocation. Unfortunately for the people of Europe, the UK and eventually the US, things will only get worse until the individuals living in those areas wake up to this economic fact.
