BlackRock wondered what will be the defining parameter for the markets over the next three years. Unsurprisingly, all of these issues lead to bitcoin.
BlackRock predicts inflation
Here is the tweet in question and its French translation:
“Russia’s invasion of Ukraine looks set to reinforce a reorganization of the global economy, including an acceleration of fragmentation. What will be the most important trend for investing over the next three years? »
- Supply chain fragmentation?
- Fragmentation of energy markets?
- Decline in the share of the dollar in foreign exchange reserves?
- Fragmented geopolitics?
Supply chain fragmentation refers to shortages of certain critical parts that no longer make it to factories for x reasons.
In case of war, for example. If the tone continues to rise over Ukraine, we will no longer receive Russian oil and gas, let alone the rest, such as nickel, which is essential in industry and of which Russia is the world’s largest exporter. .
Fascinatingly enough, the EU still intends to do without Russian energy while the consequences are known in advance. Which, by the way, suggests that they are desired to bring about a hyper-inflationary Great Reset…
All that would be missing is Iran entering the fray by closing the Strait of Hormuz. Blocking a third of world oil exports would quickly propel the barrel to levels that would destroy whole sections of the economy.
Closing a port can also wreak havoc on global logistics. It has become China’s specialty for a year, under the pretext of fighting covid. Hundreds of boats are currently waiting off Shanghai, which is causing a slowdown in production. This results in a reduction in supply which once again exacerbates inflation.
Cyberattacks can also disrupt the supply chain. For example, all you have to do is hack the on-board controls of a tanker to cause it to run aground in the Suez Canal…
On closer inspection, all the issues set out by BlackRock are linked.
The fragmentation of the energy market will stem from the proxi war that the United States and its European vassal are waging in Ukraine. The attacker is not always guilty. NATO is equally responsible for what is happening in the Donbass to want to settle on the Russian border despite long-standing warnings.
The decline in the use of the dollar as an international reserve currency would likewise be the direct consequence of this new cold war with Russia, China and Iran, among others. Sixty percent of foreign exchange reserves are held in dollars, including 14% (1000 billion) by China. So much money that will be frozen in the event of an invasion of Taiwan…
If China decides to imitate Russia by refusing the dollar, the latter will collapse because of the chronically deficit trade balance of the United States with the Middle Kingdom. Americans will be forced to pay more for Chinese goods and again we come back to inflation, which is the ultimate adjustment variable.
Europe will not be spared. Ten additional European gas buyers have opened accounts with Gazprombank, doubling the total number of customers willing to pay in rubles for Russian gas. As a result, the euro is at its lowest since 2020 against the ruble, and for 20 years against the US dollar. Even German companies have thrown in the towel.
It is indeed impossible to find the equivalent of Russian energy production elsewhere. No country can replace Russian gas, let alone its oil. Why ? For the good and simple reason that we crossed the peak of conventional oil in 2007.
Moreover, it was precisely this scarcity of energy that had triggered the subprime crisis (a barrel of oil at $150 at the time). The world was able to get out of the rut thanks to American Shale oil, but it seems that a peak has already occurred in 2019.
In other words, the Russian oil taken off the market will not be found anywhere else. Hence the sharp pressure on prices since oil sustains our entire civilisation. You need it for almost everything and it is no coincidence that the Russian bear chose this pivotal time to come out of its den full of confidence.
Ultimately, countries lacking energy will enter into decline and will not be able to repay their staggering debts. Current events are not fortuitous. They are only the logical continuation of the West’s productive decline on the one hand, of China’s technological catch-up on the other, and finally, of peak oil.
The billions that the ECB prints every month does not mean that the coffers are empty because we no longer have enough cheap energy to produce what would be needed to stabilize the debt-to-GDP ratio. Trees do not rise to the sky. Sooner or later everything comes back into balance. Inflation and the depreciation of the euro are the balancing mechanism.
Inflation will remain high, whatever the ECB does. Rising rates will not suddenly cause oil to gush out in France. The credit crunch will simply cause unemployment. The stock market, debt securities and real estate will all falter. Look at Nasdaq values:
- Netflix -72% = worst year ever
- Facebook -44% = worst year on record
- Amazon -37% = worst year since the subprime crisis (2008)
- Tesla -30% = worst year on record
- Microsoft -22% = worst year since the subprime crisis
- Google -21% = worst year since the subprime crisis
- Apple -17% = worst year since the subprime crisis
- Nasdaq: -28%
Inflation is what BlackRock talks about in its tweet. A huge recession is brewing. There will be no investment opportunities for the next three years. Finally yes, there is bitcoin, the most liquid asset, the rarest. The currency that will replace the dollar as the stateless international reserve currency.
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Journalist reporting on the Bitcoin revolution. My papers deal with bitcoin through geopolitical, economic, and libertarian prisms.