The following is an excerpt from Marty’s Bent Issue #1258: “The energy crisis will restart the money printers faster than most expect.” Subscribe to the newsletter here.
Despite a foreseen disaster, the speed with which Europe’s energy crisis is unfolding appears to be catching markets off guard. Everyone is expecting a difficult winter with astronomical prices, but it appears that most people thought these issues would not be felt until the winter months. Thinking in this manner is proving to be a huge mistake, as the compounding effects of ever decreasing supply and markets attempting to outrun the chaos are resulting in price levels that make markets impossible to simply… operate.
This morning, news broke that European trading desks are facing at least $1.5 TRILLION in margin calls as prices in the European energy industry run away from available liquidity. I understand that we live in a time when trillions are thrown around like confetti at the Super Bowl, but to put that in context, it would be 13% of gold’s total market cap and 31.6x bitcoin’s current market cap. All to ensure that the energy trading markets have enough liquidity today. This does not even begin to account for the amount of liquidity that will be required as the year progresses. The liquidity crisis will soon force the European Central Bank’s hand, forcing them to turn on the money printer in order to bail out the energy sector. This could be a watershed moment on the global road to Weimar 2.0. And this only applies to Europe. If you look west toward the United Kingdom, you’ll notice that they’re on a similar path, but they’re starting from the fiscal side of the equation.
Liz Truss, the UK’s new WEF-appointed Prime Minister, is kicking things off with price controls on electricity. Prepared to distribute up to 170 BILLION POUNDS, or more than 5% of England’s GDP, to try to alleviate the pain British citizens feel when it comes time to pay their electricity bills at the end of the month. To the uninitiated, this may appear to be all well and good. The newly appointed Prime Minister is here to save the average British taxpayer’s wallet and to punish the “greedy” electricity and energy companies. However, any understanding of economics and history will tell you that this type of attempted price fixing will exacerbate the problems. Prices are rising due to an inability to properly supply fuel to the market, and as a result, it is becoming more difficult to supply electricity at reasonable prices.
While attempting to fix prices by subsidizing consumer costs, as is the case in the UK, or inevitably printing money to bail out energy producers, as may be the case in the EU, these actions will only serve to exacerbate these producers’ ability to deliver their goods to market. Price controls will eventually fail like a dam, and money printing will beget more money printing. Both actions will inevitably result in increased price inflation and suffering. Worse, their actions may cause their economies to reach a point where there is insufficient money to allow producers to purchase the fuel required by utilities companies to produce and deliver electricity. The liquidity crisis among European energy producers appears to indicate that we are in the early stages of this process.
This is what happens when the global economy is based on a monetary system that is completely disconnected from reality and markets have been unable to price goods and services accurately for five decades. To make matters worse, we’ve discovered that easy money can be weaponized in two ways: first, by debasing an individual’s savings, and second, by deciding who can and cannot use that debased money. Even isolating entire countries. When you cut off entire countries from the monetary system, especially relatively powerful countries, they will retaliate by weaponizing their resources. Today, we see Russia decide that they will simply refuse to sell their oil and natural gas to the Western world if the West refuses to allow them access to their monetary and payment networks.
Freaks, things are getting heavier and heavier by the day. The West has cornered itself, and the only way out appears to be a hyperinflationary collapse that forces people to take their heads out of their asses and recognize that the unproductive class in charge is leading us to ruin. Nothing emphasizes this more than the fact that we in the United States of America appear to be compelled to follow Europe’s lead by pursuing completely illogical energy and monetary policies.
And those of you who believe the United States is immune to the European crisis should get your head out of your asses as well. Because of the amount of credit exposure that exists out there, our wagon is pretty much hitched to the fate of the European economy due to the nature of our hyperconnected high velocity trash economy. Energy and electricity producers going bankrupt due to astronomical prices will trigger a domino effect that will reach our shores sooner than most people believe.
The only way out of this mess is to use money that is extremely difficult to corrupt by the unproductive class. That currency is bitcoin. Once bitcoin becomes the world’s reserve currency, true pricing will be restored to the markets, allowing capital to be allocated properly because the costs of misallocating that scarce capital will be extremely high. Trying to virtue signal your way through capital allocation will have unintended consequences. Unfortunately for the people of Europe, the United Kingdom, and, eventually, the United States, things will only get worse until the people who live in these areas wake up to this economic reality.