Very much worth a read if you’re interested in global macro.
Source: https://blog.bitmex.com/contagion/
Some snippets:
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Of all the types of money printing, the most disastrous for the value of fiat currency – and by extension, society – is YCC. […] Central banks that engage in YCC are essentially pledging to infinitely expand their balance sheets such that a particular interest rate metric does not rise above an unnatural ceiling set by the central bank. The market ALWAYS wins, and the market wins by inflicting crushing inflation on the entirety of human civilisation.
The entire goal of modern European history has been preventing Germany and Russia from joining forces. The manufacturing prowess of the Germans combined with cheap Russian commodities could be a game-changing force from a geopolitical point of view
The EU is an artifice – a political ploy of France to keep Germany down, which the Germans only went along with due to their guilt over WWII. The US shares France’s interests, and it too lurks in the shadows, standing ready to prevent any real alliance between Germany and Russia. A weak EU serves the political interests of America quite well
France, to its credit – and I find very few geopolitical things to give France credit for – actually did the intelligent thing and went all in on nuclear energy. Roughly 70% of electricity generation is nuclear powered. Therefore, their manufacturing base can withstand the cessation of Russian gas flows. Germany, on the other hand, cannot
America is self-sufficient in food, fuel, and people. China, Europe, Japan, and the UK are not so blessed. America can be an autarky if it pleases. As a result, the Fed has the luxury of being able to prioritise domestic political concerns regarding inflation over and above supplying the world (and most of its allies) with a constant flow of dollars. A constant flow of dollars allows the rest of the world to print their currencies and still afford to buy energy in USD terms. It’s a relative game, and if the strongest player goes their own way, everyone else is left to suffer.
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