Geopolitical Compass #11
Geopolitical Compass #11
World's biggest economies shift. Inflation lies. Millionaire migration. Elder abuse in the US. Georgia threatened. Debt ceiling doubts?.... please!
Notable events in geopolitics and capital markets this week. Expand your perspective, gain context, and discover actionable insights.
Bitcoin
Liechtenstein is considering making Bitcoin legal tender and accepted for payment of government services including taxes. If it proceeds, it would be only the second nation after El Salvador to make Bitcoin legal tender.
Money Printer Go Brrrrrrrr
There is no alternative to more inflation, much worse than we have experienced over the last year.
If inflation stays high and the Fed continues raising rates — or even just keeps them where they are today — then more banks will fail, we’ll see more TBTF bailouts, and the government will continue to support the creation of larger and larger TBTF banks. This would expand the supply of money and gold, and Bitcoin would rally.
If inflation falls and the Fed cuts rates quickly, eventually, banks would stop failing. But, this would reduce the price of money, and gold and Bitcoin would rally.
You just can’t lose owning gold and Bitcoin, unless you believe the political elite is willing to stomach a complete failure of the banking system. A true failure would mean that a large swath of chartered banks fold. This would stop any and all bank lending to businesses. Many businesses would fail, as they would be unable to finance their operations. New business creation would also decline in the absence of bank credit. House prices would plummet as mortgage rates spike. Stock prices would dump because many companies gorged on low-interest debt in 2020 and 2021, and when there is no longer affordable credit available to roll over their debt they would go bankrupt. Long-dated US Treasury bond yields would surge without the support of the commercial banking system buying bonds. If a politician reigned during a period in which these things happened, do you think they would get re-elected? No fucking chance! And therefore, while the various monetary authorities and banking regulators may talk a big game about no more bank bailouts, when the shit really hits the fan, they will dutifully press dat brrrr button.
Self Custody
In the UK, HMRC wants the power to seize your Bitcoin.
The Government is mulling proposals that would give the tax agency powers to access online wallets as part of plans to modernise how tax is collected in the digital age.
HMRC is already able to seize funds from bank accounts when individuals fail to pay tax under “direct recovery of debts” powers, but is considering extending this to online payment accounts such as PayPal.
This is not possible if you self custody your Bitcoin. The excuse is tax evasion now, but the law will apply to everyone and as I outline, in the future the government will just seize your funds and you’ll be forced to prove why it should be returned. Good luck with that.
Canada
The Finance Minister in Socialist Canada is looking for suggestions on how government can take “pre-loaded stimulus” from households - otherwise knows as savings. When they make up garbage new terms to soften and camouflage what they’re doing, its time to start considering your options.
Commodity Valuations
At almost 50 year lows. What goes down, must…
Debt Ceiling
The same talk and debate about raising the US debt ceiling has come around like clockwork. I can’t believe this needs to be said out loud, but I have no choice after hearing knowledgeable economists, fund managers and commentators genuinely question if this time it may be different, and even Janet Yellen warning the US may default by June 1st.
Heads up, it’s NOT different this time. It won’t be different NEXT time. The debt ceiling will absolutely, positively, without a question of a doubt be raised.
El Salvador
Things are happening. Now could well be the time to explore opportunities available in the country as it is led by it’s President Bukele’s reform policies including Bitcoin adoption.
Georgia
Russia is reciprocating Georgia’s moderate policies towards Russia since the start of the conflict in Ukraine, this week announcing it is removing Visa requirements and re-establishing direct flights for Georgians wanting to travel to Russia.
A fairly big deal for many Georgians and Russians living in Georgia, and keep in mind Russia is still Georgia’s biggest trade partner despite lots of European promises.
How did the Georgian President respond? It’s a provocation apparently… 🤯
Anyone want to take a guess where her book deals and future charitable foundation funds are coming from?
Global Shift
Expect this trend to continue. Importantly this infographic is based on Purchase Price Parity, so ignoring ‘manufactured’ GDP like a plumber in the United States getting paid USD 15-40 per hour vs USD 6.50-20 equivalent in St Petersburg Russia.
Inflation
Coming in this week at 4.9% in the US. If calculated using the old 1980 CPI formula, it would be ~13%. Government manipulates, gaslights and lies to you to keep you passive and compliant.
Latin America
Inflation hitting people where it hurts. Make people more dependent on government handouts and they will be more compliant.
Millionaire Migration
Capital goes where it’s treated best. Dubai the clear winner, followed by Singapore and Switzerland.
New Zealand
My guess is ‘pregnant people’ will still be lining up for a clot shot too. 🤦🏼♂️
Taiwan
Taiwan thinks it has a choice whether or not its infrastructure and industry is destroyed by the United States in the event of reunification attempts with China. That’s cute.
Taiwan Minister of National Defense Chiu Kuo-cheng on Monday (May 8) said that the armed forces would not tolerate the destruction of any Taiwanese facility, in response to a suggestion by U.S. Congressman Seth Moulton that the U.S. should warn China that it would "blow up" Taiwan Semiconductor Manufacturing Co. (TSMC) if it attacked Taiwan.
Of course it will all just be ‘accidental collateral damage’ as the US rains down freedom on Taiwan.
United Kingdom
There is a lot of talk that the US is the only one to blame for escalating tensions with Russia. Never forget the British establishment has for centuries been among the biggest Russophobes. Does this look like efforts at diplomacy, de-escalation and peace attempts? Or does it look like further pushing a ‘hidden’ agenda that serves those in the upper echelons of Westminster and the City of London?
A piece incidentally co-written by a hard liner Russophobe Luke Harding, author of numerous books of lies and Western propaganda about Russia. But he writes for The Guardian, so must be trustworthy right?
United States
This is Senator Dianne Feinsetin, turning 90 years old next month. She has just finished a three months absence due to ill health, but is now being wheeled back into Senate because the Democrats are terrified of losing power.
This could be classified as elder abuse if it wasn’t the epitome of a corrupt oligarchy refusing to relinquish control - her net worth is estimated between $110-200 million. Collapse of empire indeed.
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