Russian President Vladimir Putin recently blamed the United States and other G7 countries for huge inflation in global commodity markets. Under these circumstances, he predicts that the world will begin to shift its reserves from sovereign debt to “real resources,” deepening the commodity inflation spiral.
end of a polar world
The president aired his criticisms over the course of more than an hour speech On Wednesday, 15 June at the St. Petersburg International Economic Forum Plenary. He began his address by claiming that “the principles of the global economic system have suffered a setback.”
“Basic business beliefs such as business reputation, property violence and trust in global currencies have been seriously damaged,” he said.
By this, he refers to two unusual events surrounding Western money in 2022: sanctions against Russia, and record-breaking inflation.
Last March, Russian banks were Expelled From SWIFT – The world’s largest financial messaging system used by 11,000 institutions globally. The move effectively separated Russian financial institutions from developed Western economies. this, together was banned on Russian oil and gas imports, intended as punishment for the eastern superpower’s invasion of Ukraine in February.
Putin said such measures have proved to be a double-edged sword, harming sanctions enforcers equally. For example, both Europe and the United States are Suffering In recent months from the high cost of living – especially the cost of fuel.
However, inflation in the product and commodity markets is much more than just restrictions and was a “fact of life” long before this year.
“The world has been driven by irresponsible macroeconomic policies adopted by the G7 countries, including uncontrolled emissions and accumulation of unsecured debt,” the president claimed.
money printing problem
To address their accrued debt, Western economies have been forced to print more money into the economy at an exponential rate. As Putin puts it, the US money supply has grown by 38% in the past two years alone, with Europe increasing by 20%. This new money quickly spread across national borders, proceeding to “wipe out global markets”.
Putin supported this theory, saying that the United States has recently become a net importer of food. It now imports about $350 billion worth of goods each month, up from $250 billion at the end of 2019. This is an increase of 40% – in exact proportion to the country’s money supply growth. “Why exchange goods for dollars and euros that are losing value right before our eyes?” He asked.
Putin said the combination of record-high inflation and the risk of a seizure around the dollar and the euro poses a threat to countries holding these currencies in their reserves.
“The conversion of global reserves will begin … they will be converted from weak currencies to real resources such as food, energy commodities and other raw materials,” he concluded.
Meaning for bitcoin?
As Russian sanctions were being implemented in March, many Western politicians scrambled to find solutions to the Kremlin’s potential use of bitcoin as a means to circumvent its sanctions.
For better or worse, many believe that bitcoin could be the perfect solution to what the Russian government needs. It is censorship-resistant, allows peer-to-peer exchange, and is immune to the debasement of fiat currency.
Legacy investor and fund manager Bill Miller Having said The fall of the Russian ruble to bitcoin in March was sharp. A week later, an investment strategist at Credit Suisse Predicted A very similar flight to commodities as Putin’s – and bitcoin is likely to benefit from it.
So far Putin Recognized Bitcoin mining can provide benefits to Russia. A member of the State Duma also has suggested The country could accept bitcoin as compensation for oil payments.
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