Ukraine burns, bludgeoned by the invading Russian...
In 2-3 years, the global monetary system will look nothing like it does today, and not enough people are considering the details of such a rapid disintegration:
Commodities are collateral, and collateral is money. Russia’s commodities are considered sub-prime, while the rest of the world’s are considered prime. This means that the price of commodities are falling inside sanctioned countries like Russia, but are rising outside of sanctioned countries. Commodities traders outside Russia have to borrow more money because of the collateral mismatch. But both the commodity traders inside and outside sanctioned countries are getting margin called while commodities basis soars.
Fertilizer price outside Russia for example:
Green candle through heaven's floorboards
Here’s a quick list of major Russian commodities as world percentages:
10% oil
45% of potash (needed for fertilizer, most beauty products, manufacturing, etc)
5% Wheat
5% Nickel
4% Aluminum
4% Copper
So the spread difference in this commodity pricing inside and outside Russia can be taken advantage of by China, who will effectively benefit by whatever the spread amount is. They can then control their own currency’s inflation by selling US Treasuries to buy Russian commodities. And because China is NOT a sanctioned country, that means they can then sell these Russian commodities to Europe, the US, or any other country putting sanctions on Russia. If they don’t have enough mainland space, they’ll put them on the ocean, driving up logistics costs for the rest of the world but ultimately stabilizing the basis. This means commodity shortages in the West, especially Europe. All this will put enormous pressure on western currencies and spike inflation further.
Then there’s the refugee crisis. The last one in Europe (circa 2007-2015) brought 5M people over those 8 years. Ukraine could bring 2x that in a fraction of the time. Then because of the coming food crisis thanks to much of Ukraine’s resources going offline, the Middle-East and Northern Africa will bring another huge wave. The last immigration crisis brought Brexit and an entirely new European political class. This will do the same, and will put more pressure on the Euro if their money printer’s heat doesn’t burn down their treasury first.
Here’s a quick list of major Ukraine commodities as world percentages:
11% wheat
13% maize
10% potatoes
10% potash
80% of neon gas (needed for semiconductor lasers)
This is all beyond any western Central Bank’s ability to backstop or fix, because it’s not a liquidity crisis. The inflation from the soaring basis will have to be cooled with rate hikes. But if that’s the case, where does money turn to for safety if the stock market is tumbling, Treasury demand has fallen off a cliff, USD/EURO is inflating away, and commodities are volatile? Real estate? Probably not because although interest rates will still be too low for savers at say 3% (because inflation is 10% or more) these rates will start to be too high for the easy money real estate borrowers are drunk on.
Many countries, companies, and players (especially in the East), will turn to the Yuan as a larger percentage of their cash holdings seeing it no less dangerously than they do the USD after G7 nations foolishly seized a sovereign country’s (Russia’s) foreign reserves, and because it's not inflating as rapidly, and most importantly, because they're buying those re-routed Russian commodities with it. This is where the petrodollar can start to really breakdown, adding more inflationary pressure on the USD. Many country's will turn to gold as well.
I won’t get into the Triffin Dilemma here, but its doom vortex is churning the USD into an impending disaster as early as winter this year and into the next couple years. Triffin predicted eventually the USD would collapse like this after it had backed itself into a corner.
And this is why 2022 is an important year for bitcoin accumulation, because more than anything, many large players will choose to hedge and save their buying power in bitcoin, and buying power is the most powerful tool for investors and traders.
Sanctions serve absolutely no purpose other than SYMBOLISM, because they erode supply chains further, benefit China, strengthen their currency, and make you and I pay for it with ours. YOU are the one financing this conflict and these sanctions, which is why I needed to write this post, to give some perspective. This is why you have to make the asymmetric trade for bitcoin every time you touch US dollars THIS YEAR. There’s a disaster coming and we’re sleepwalking into it. You have to ask a very hard question: did Putin actually miscalculate anything with his invasion in terms of larger goals?
Lastly, you have to consider the fact that the CBDC does not fix any of the USD’s larger global problems. None. In fact, they make them worse because a CBDC is not actually fungible money. My view is that CBDC’s will be used to pay entitlements and be either spent quickly, or converted into what people save their wealth in at a small premium: bitcoin, a network which will simply be the base layer that the new monetary system builds around--and this dear reader, is a base layer that’s been missing for quite some time.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments