The energy crisis will turn the money printers back on, but Bitcoin can solve it September 8, 2022
The energy crisis will turn the money printers back on, but Bitcoin can solve it<br><br><br>
The energy crisis will turn the money printers back on, but Bitcoin can solve it
The momentum at which the energy crisis in Europe is evolving seems to be catching the markets off guard. With the astronomical prices, everyone was expecting winter to be hard, and was believed that the problem of these challenging times will not be felt before the winter months. Well, this belief of the experts and people is now proving to be a grave error as the compounding effects of long-lasting reduced supply and markets efforts to front run the problems are leading to price levels that are making it difficult for markets to operate.
Further increment of the prices due to lack of liquidity across the European energy sector has caused the European trading desks to face at least $1.5 Trillion in margin calls, which will be equivalent to 31.6 times of bitcoin’s current market cap and 13% of gold’s total market cap. It is done to ensure adequate liquidity for the energy trading market. Such a huge amount as a margin call indicates nothing but a major liquidity issue in the future. At some point in time, the liquidity crisis will compel the Central Bank of Europe to turn on the money printer to bail out the energy sector which could mark a pivotal point on the road towards Weimar 2.0 on a global scale (Bitcoin Magazine).
UK is not very far away from Europe, UK too has joined the bandwagon and has entered on a very similar journey. The newly appointed Prime Minister of UK, Liz Truss, is coming out of gate with huge price controls on electricity. To save British citizens from the pain of paying huge electricity bills, Truss is preparing to distribute $170 billion, equivalent to 5% of England’s GDP by freezing the household energy bills amounting to $130 billion and $40 billion for small businesses. Will the Truss step of freezing the bill is actually helping the economy and people? For now, we all have understood the major cause of whopping energy prices is the insufficient supply of fuels. In such scenario, the subsidizing cost for consumers may sound politically right but from future prospects, these actions will only serve to worsen the ability of the energy producers to deliver their goods to market. Eventually, the price control will fall and money printing will attract more money printing.
Actions of both Europe and UK will cause nothing but inevitably more price inflation and issues. If actions are not ratified on time, it can also lead the economies of both nations to a point where there is no amount of money that will compel producers to buy the fuel required for utility companies to produce and deliver electricity. The liquidity crisis within European energy producers is hinting that we might are experiencing the early stage of this process.
When the entire global economy is built on a monetary system that is not based on reality and when markets don’t have the ability to accurately price the goods and services then, these situations of ripple effect crop up that cause one event to affect the entire world.
It was further found that weaponizing easy money by debasing the savings and giving the power to decide who can and cannot debase the money has made the matter worse. Bu cutting off whole countries from the monetary system, the powerful countries will retaliate by weaponizing their resources. This is what we are witnessing with Russia, when it has refused to sell its resources of natural gas and oil and to Western World, if they do not give access to their payment or monetary networks.
Things are getting worse day by day, due to the very nature of hyperconnected high-velocity economies, it’s inevitable for the US economy to save itself from the European Energy crisis. Due to astronomical prices, electricity and energy producers are going bankrupt causing to set of domino effects that will inevitability hit the shores of the US economy.
The only way out of this situation is to adopt a class of money that will be challenging to corrupt, and that class of money is Bitcoin. Once bitcoin is made the reserve currency of the world, it will help to unveil the true market prices that will further help to efficiently allocate the capital.