Bitcoin And The European Crisis – Bitcoin Magazine

by James · September 16, 2022

“Fed Watch” is a macroeconomics podcast, true to bitcoin’s insurgent nature. In each episode, we question mainstream and Bitcoin narratives by examining current events in macroeconomics from around the world, with an emphasis on central banks and currencies.

In this episode, CK and I examined the current state of the bitcoin market, the state of panic in Europe, including some myths about the EU/Russia conflict, and finally read an article about how China is actually a Marxist country and proud of that fact.

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Table of Contents

The European crisis peaked?

After covering some charts, such as the price of bitcoin, the S&P 500, dollar indices and the confusing energy prices, we turned to Europe.

The panic is great in Europe, we can see that much by looking at energy prices, but has the panic gone too far? In this episode we took a look at a few tweets from Andreas Steno about why the energy crisis has 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.

I very much identify with Steno’s sentiment. He has warned of the coming energy crisis long before many people talked about it. Now, since everyone is talking about it, the crisis will tend to be blown out of proportion. This is why Steno “wipes the energy crisis”, or I would say he fades the latecomer hysteria.

This is similar to my feelings on the dollar at this stage as well. I’ve been warning about a strong dollar publicly for years, and now with so many coming to the realization together, it feels more urgent than perhaps the fundamentals suggest. Therefore, I am becoming more skeptical of a further dollar increase at this time.

Anyway, back to Steno. In this episode we went through several myths he addresses about the asymmetry in the energy crisis. I will just list them here:

“Russia can only sell the gas to India and China.” This is false because there is no pipeline infrastructure for it and it will take a decade to build. Also, the absolute volumes we are talking about diverting from Europe are simply far too large for China or India at this point.
“The ruble is strong.” Russia is actually experiencing price increases as high as, or higher than, Europe. Some sources indicate that the domestic CPI in Russia is 18%. The exchange rate is mostly a non-concern for me, because it is such a little traded currency. If anything, I would add, the international ruble exchange rate is a sentiment indicator for Western traders.
“German gas flows will go to zero.” No, they won’t. They will probably go to anywhere between 40% and 60%. It’s horrible, but not zero.
“Russia can sell gas to Europe via China.” Only very small quantities. Again, China and Russia do not share the same volume infrastructure that Europe has with Russia. This roundabout can only fill about 5% of the gas flow, based on my research.

Markets tend to overreact, especially if most of the market was late to a trade. Perhaps that is what we see with Europe today. It has eased some of the sanctions, and is now discussing price caps (which is the same as collective bargaining). These measures will not work quite as planned, but may bring prices back to the realm of reason, which in turn will alleviate some market panic.

China is Marxist, believe it

Believe it or not, China is a Marxist country. I’m not saying anything revolutionary with that statement, but a lot of people out there have told me over the years things like, “Oh no, China is more capitalist now. They are different, it is not real communism.” In many cases they have to say this to justify their unfounded belief in the Chinese miracle. They also want to believe that China will somehow catch up with the US and knock it down a peg or two, due to a deep aversion to US hegemony.

In this episode of the podcast, I read through a great article from Dissent Magazine titled “Make China Marxist Again.” This is a post from 2018, so long before the coronavirus and China’s current crisis.

In this article, the author informs us that Xi Jinping has openly praised Karl Marx, as “the greatest thinker in human history”. Wait, what? Xi went on to declare his “firm belief in the scientific truth of Marxism.”

“Party members are required to study selections of Marx’s works, especially The Communist Manifesto. The public also gets its dose, including via a TV talk show, Marx Got It Right (Makesi shi duide). The renewed embrace of Marxism has also been a key element in the rollout of the “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” which was added to China’s constitution after last year’s 19th Communist Party Congress.

During the podcast, I quoted at length a law professor at Beijing University, and a well-known apologist for Xi, Jiang Shigong. Back in 2018, he had recently written a defense of Chinese Marxism by placing it in a fictional historical context. Of course they call it “historiographic context”, because Marxists love to reinterpret history for their own ends.

In this case, Professor Jiang redefines the Chinese Marxist experiment as a series of steps. First, Mao was not a mass-murdering psychopath, he fought the first class struggle. Then Deng Xiaoping did not turn his back on Marxism, he opened China to the world to build its material base (capitalism is only a phase of communism, don’t forget). Now Xi Jinping is not cracking down on human rights, he is restoring Chinese power and international influence to their rightful place.

It is clear from this article that China is definitely a Marxist country and therefore anyone who expects China’s progress to continue must believe in the feasibility of communism. It remains my contention that China’s return to prominence can be more simply described as “built on easy global credit and Western-imposed free trade”.