In keeping with the decentralized and anarchic spirit of bitcoin, “Fed Watch” is a podcast covering macroeconomics. In each episode, we investigate recent developments in macroeconomics from around the world, with a particular focus on central banks and currencies, and we call into question the mainstream narrative as well as the Bitcoin narrative.
In this episode, CK and I discussed the current situation of the bitcoin market, the state of panic in Europe (including some myths about the confrontation between the EU and Russia), and we finished the show by reading an article about how China is actually a Marxist country and is proud of that fact.
After discussing certain charts, such as the price of bitcoin, the S&P 500, dollar indexes, and the perplexing cost of energy, we shifted our attention to Europe.
It is clear that there is a lot of concern going on in Europe if we take a look at the price of electricity, but has this panic gone too far? In this episode, we took a look at a few tweets from Andreas Steno about why the energy crisis might have already reached its peak, and how what we are witnessing now is the mass number of latecomers to the realization that there is an energy problem in the first place. In particular, we focused on why the crisis might have already reached its peak.
I can relate to what Steno is feeling to a great extent. He has been sounding the alarm on the impending energy problem for a significant amount of time, much before many others began to discuss it. Now that everybody is talking about it, the situation will tend to get blown out of proportion because of all the attention it is receiving. As a result of this, Steno is “fading the energy crisis,” or, to put it another way, he is fading the latecomer frenzy.
This is quite comparable to how I now feel about the dollar at this point in time. For years, I have been publicly sounding the alarm about the possibility of a strong dollar, and now, with so many people coming to the conclusion together, it feels even more urgent than the fundamentals might reflect. Because of this, I am developing a greater skepticism regarding the possibility of a further rise in the value of the dollar at this point.
However, let’s get back to Steno. During this episode, we dispelled a few of the misconceptions that he propagates regarding the lopsided nature of the energy problem. I’ll just run down the items here:
“All that has to be done is for Russia to sell the gas to India and China.” This statement is not accurate because there is no pipeline infrastructure for such, and the construction of such a system would take ten years. Additionally, the absolute volumes that we are discussing rerouting from Europe are simply much too large for China or India at this moment. This is something that we are discussing.
“The ruble is in good shape.” In point of fact, Russia is seeing price increases that are comparable to or even larger than those seen in Europe. According to a few different sources, the domestic CPI in Russia is currently around 18%. Due to the low volume of transactions involving the currency in question, I don’t really give much thought to the fluctuating foreign exchange rate. I’ll add one more point, and that is that the international ruble exchange rate is nothing more than a sentiment gauge of traders in the West.
It is expected that there would be no gas flows in Germany. No, they won’t. They are likely to go anywhere from forty percent to sixty percent. That’s terrible, but it’s better than nothing.
“Russia can resell gas to Europe via China.” Just a very minute quantity total. Again, the massive infrastructure that Europe has with Russia is not shared by China and Russia. According to the findings of my investigation, this roundabout trade can only backfill in approximately 5 percent of the gas flow.
The market has a tendency to overreact, particularly in situations in which the majority of participants entered a trade late. Perhaps what we are witnessing right now in Europe is an example of this. It has lifted some of the restrictions, and it is currently debating putting pricing caps in place (which is the same as collective bargaining). These efforts will not work exactly as anticipated, but they could bring prices back into the realm of rationality, which will, in turn, soothe some of the market’s anxiety.
Believe It, China Is a Marxist Country
China is a Marxist country, whether you want to believe it or not. With that comment, I’m not trying to start a revolution, but throughout the years, a lot of people have told me things like, “Oh no, China is more capitalist now. They are not the same thing, therefore it is not true communism.” In many circumstances, they have little choice but to say this in order to rationalize their misguided faith in the Chinese miracle. They have a strong aversion to the hegemonic role that the United States plays in the world, and because of this, they want to believe that China will somehow surpass the United States and bring it down a notch or two.
During this segment of the program, I will be reading through an excellent essay from Dissent Magazine titled “Make China Marxist Again.” This essay is from 2018, long before the coronavirus and the situation that is currently unfolding in China.
The author of this piece enlightens us on the fact that Chinese President Xi Jinping has publicly lauded Karl Marx, calling him “the greatest thinker in the history of mankind.” Hold on, what? After that, Xi made a statement on his “solid trust in the scientific reality of Marxism.”
Members of the party are obligated to read certain writings by Karl Marx, most notably The Communist Manifesto. The general public also receives their share, which includes, among other things, the Marx Got It Right conversation show on television (Makesi shi duide). “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” was added to China’s constitution after the 19th Communist Party Congress that took place in 2017. The renewed embrace of Marxism has also been a key element in the rollout of “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.”
During the course of the podcast, I made extensive use of a quote from Jiang Shigong, who is a law professor at Beijing University and a well-known defender for Xi. Back in the year 2018, he had recently finished penning an article in which he defended Chinese Marxism by placing it within a fictional historical backdrop. Because Marxists are so fond of rewriting history in accordance with their own agendas, it should come as no surprise that they refer to it as “historical context.”
In this particular scenario, Professor Jiang reinterprets the Chinese Marxist experiment as a sequential process. To begin, Mao was not a mass murderer or a psychopath; rather, he was engaged in the first stage of the class war. Next, Deng Xiaoping did not abandon Marxism; rather, he opened China up to the rest of the world in order to strengthen the country’s material foundation (don’t forget that capitalism is merely a temporary phase of communism). Now that he is in power, Xi Jinping is not suppressing human rights; rather, he is putting China’s power and international influence back where they belong.
This article makes it very evident that Marxism is the official ideology practiced in China; hence, anyone who anticipates China’s rise to continue must hold the view that communism is a viable economic and political system. My position has not changed; I continue to maintain that the most accurate way to explain China’s rise to prominence is to say that it was “built on easy global credit and Western-imposed free trade.”
In What State Is Bitcoin Currently In?
I concluded this episode by restating my stance, which is that when the credit-based frenzy that has characterized the last half-century finally comes to an end, it will also bring an end to the credit-based money that has made it possible for people to live the way they do today. It is going to be changed out by a more stable type of currency, such as bitcoin. Credit is becoming harder to come by and riskier to use as the process of deglobalization accelerates. This will naturally encourage adversaries to use a currency that does not favor either side.
This is a guest post by Ansel Lindner. Opinions expressed are exclusively those of the author(s), and do not necessarily reflect those of Bitcoin Magazine or BTC Inc.