The United States has taken the bull by the horns, both economically and geopolitically

The United States has taken the bull by the horns, both economically and geopolitically. A lot of things are going to change, and bitcoin is already emerging as a winner.

The United States is taking the bull by the horns, both economically and geopolitically. A lot of things are going to change, and bitcoin is already emerging as a winner.

Tariffs and Annexation Threats

The United States is known for its toughness in business. Donald Trump has just increased tariffs by 25% for Canada and Mexico, and by 20% for China.

A 25% customs tax on imports from the European Union is also in the works. Together, these four economies produce 61% of U.S. merchandise imports.

Trump jokingly said he could annex Canada to settle the matter. And while Denmark raises the retirement age to 70 “to prepare for the Russians”, D. Trump is eyeing Greenland:

It is “the art of the deal” in all its glory. The American president is putting maximum pressure on Nordic countries to gain easier access to their mineral and energy resources.

Regarding his Canadian neighbor, the goal is to revive the construction of the Keystone XL pipeline, which was suspended by Joe Biden in 2021. Canada is indeed the fourth largest oil exporter in the world. The country pumps more than 4 million barrels per day, of which 90% is exported to the United States.

Trump wants to revive this pipeline which will transport an additional million barrels to the American economy. It will also allow the development of North Dakota’s oil industry, one of the last U.S. states still having interesting reserves.

The same story applies to Denmark. The U.S. Vice President JD Vance is convinced that the Greenlanders have “an incredibly rich country”. According to him, the Danes “do not let the Greenlanders develop and explore”.

Energy Above All

In Europe, the rumor is that after having let go of Ukraine, Uncle Sam will soon exit NATO. Or how to scare the gallery to make the printing press work in favor of the defense sector.

Thus, after the hundreds of billions printed for the COVID war, the real arms dealers want their share of the pie. More than 800 billion euros are announced to fill the order books of American and European armament industries. It will be interesting to see to what extent…

Yet, Vladimir Putin has repeatedly stated that attacking NATO would be pure madness. Fostering this irrational fear is merely an excuse to buy American bombs, allowing them to reduce their trade deficit at our expense.

Making bombs and investing in the increasingly distant extraction of energy resources. That is the good old strategy to keep growth in front of debt.

Growth = Productivity = Machines = Energy

Not to mention all the necessary atoms. The lithium, cobalt, and nickel from batteries. Neodymium and dysprosium from wind turbine magnets. Copper from power lines, etc.

But beware, energy is dwindling, especially oil which is indispensable for long-distance transport. A decline in production would result in less transport and therefore a decrease in the global production of almost everything. The alternative would be to produce more locally, which is nearly impossible given the dispersion of natural resources and the division of labor on a global scale.

This constraint on the queen of energies makes the economy no longer profitable enough to accommodate social spending. Particularly the pension schemes established in a time of energy abundance and low life expectancy.

The Root of Evil

Of course, no one tells us what is really happening. Partly because politicians themselves do not understand, but also because it is easier to blame our neighbors. But the heart of the problem lies in energy.

Each type of energy has its preferred use. Diesel, fuel oil, and kerosene power trucks, boats, and planes respectively. Without oil, goodbye globalization and its low prices. We will have to adapt, as we have always done.

Let us remember, for instance, that we used to burn oil to produce electricity before the oil price spike in 1971. Home heating was done with fuel oil, and factories sometimes used diesel to power their machines. In response to rising oil prices, we turned to gas, coal, and nuclear power plants. Car manufacturers began making smaller cars and more efficient engines.

Today, even cars must switch to electric. Hence the American pressures to secure access to Ukrainian lithium deposits that Elon Musk needs for his Teslas…

The following graph is enough to convince us that the tensions on global oil supply are real:

Although there is still plenty of naphtha in the earth’s crust, it still needs to be extracted at a low enough cost for consumers to afford it!

The Inevitable Inflation

The last thing one can expect from a politician is for them to tell their voters: “We have a shortage problem. The resources are there, but too expensive to extract and transport to provide food, universities, energy, and housing at affordable prices”.

This is the consequence of energy supply under constraint. The additional purchasing power made available by debt causes inflation rather than an increase in the quantity of finished products and services.

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