Columnist Kim Chang-ik: Seoul Economic Newspaper Reporter/ Vice President of the Consumer Made Newspaper/ Representative of Donsei Don, Author: Wall Street Journal Dummies
The currency war is a struggle for the absolute ring known as the reserve currency. After two World Wars, the British pound handed over the ring to the U.S. dollar. After the Vietnam War in the early 1970s, the dollar broke free from the gold standard and paired with oil, securing absolute power. It became possible to create money with just paper and ink.
The problem is that the U.S. has abused the power of the absolute ring over the past 50 years. The world has learned that the dollar can also suffer from inflation, a cancerous disease, if too many are printed, as the U.S. national debt has reached $33 trillion. As the dollar, now over 50 years old and aging, is being threatened by the Chinese yuan, a struggle between the eagle and the panda is unfolding.
Bitcoin, which emerged as an alternative to the dollar after the 2008 global financial crisis, is being recognized as an asset, creating another front. The dollar is fighting two wars against the yuan, which is trying to steal the absolute ring, and Bitcoin, which aims to destroy the absolute ring itself. Key figures threatening the petrodollar include former U.S. President Donald Trump, current President Joe Biden, Chinese President Xi Jinping, Saudi Arabian Crown Prince Mohammed bin Salman, Indian Prime Minister Narendra Modi, and Russian President Vladimir Putin.
On another battlefield, Tesla CEO Elon Musk is waging a completely different kind of currency war. This is unprecedented in history.
Elon Musk [Photo=TED, YOUTUBE)
The reason to pay attention to Tesla CEO Elon Musk from the perspective of the currency war is that the world is not well aware of the fact that he is attacking the petrodollar. Even the petrodollar camp under attack has not yet recognized him as a threat. Considering the Sun Tzu’s Art of War, which says that if you know your enemies and know yourself, you will not be imperiled in a hundred battles, it’s not hard to guess what results a war in a state of not knowing the enemy will bring.
When mentioning what comes after the petrodollar, petro-yuan is usually mentioned, and before the Iraq War in 2003, it was petro-euro. Petro, a pillar of the reserve currency system, has not been threatened for the past 50 years.
The reason to pay attention to Elon Musk is that he is waging war against both pillars of the petrodollar system, oil and the dollar.
Photo=Image Today
The petrodollar system was created in 1973 when the first oil shock occurred due to the war between the Arabs and Israel. As oil prices soared, the U.S. planned to stabilize the oil supply line and replace gold, the original asset, which had broken its chains, with oil. The petrodollar, the absolute ring, was born when a contract was made to sell Saudi Arabia’s oil only for dollars. At that time, oil accounted for 43% of the energy needed for global production, and 57% in developed countries. To buy oil to run a factory, one had to first buy dollars.
Elon Musk is attacking petro, or oil, while the yuan is fighting the dollar. His weapon is electro, or in other words, electricity.
Elon Musk dreams of a state where coal and oil use is zero and the world is operated only by electricity. He believes this is the only way to create a sustainable earth. It is naive to believe that he became a super hard worker (workaholic) to create an earth where he can breathe.
He has set the deadline for such an earth to be created by 2045. If coal and oil are completely replaced by electricity, the world will become a terabyte world, which is 2.28 times the current electricity usage, according to Elon Musk’s forecast.
This is a calculation that at least the same amount of electricity used now needs to be produced in about the next 20 years. What Elon Musk is focusing on is this point. Even if the electricity produced by each country is produced in the traditional way, the additional electricity produced will be produced, distributed, and paid for in a new way. This is Elon Musk’s big picture to seize control of the electricity supply network.
The new production method means replacing traditional power generation such as thermal and nuclear power with solar power. He has mentioned producing electricity in large quantities using large concentrator panels installed in the Sahara Desert, the moon, and Mars. It could be dismissed as the delusion of a mental patient, but because it’s Elon Musk, the world is curious about how he will generate solar power on Mars. For now, he is focused on reducing the production cost and maintenance cost of solar concentrator panels used in homes and factories. He has even improved the fierce-looking design to the point where it looks cool to the average person.
The new distribution method is the Energy Storage System (ESS), or in simple terms, a battery subscription service. Solar power generation requires batteries. This is because the electricity produced during the day needs to be used in the evening. The electricity generated on a sunny day needs to be used on a rainy day. One might even think that Elon Musk made electric cars not to sell cars, but to sell batteries. If all 2 billion cars in the world are replaced with electric cars, that means distributing 2 billion batteries. In effect, a large-capacity battery is distributed to every household in the world. It becomes possible to buy electricity at charging stations like buying oil at gas stations. A system that produces electricity from solar power on the moon, sends it to the distribution hub on Earth, and distributes it to each household with a battery becomes possible. Elon Musk is testing mass production centered in Texas, U.S., by developing the household battery Powerwall and the industrial battery Megapack. If a household that pays $200 a month for electricity subscribes to Powerwall for $30 a month and the electricity bill is reduced to $100, there will be no household that doesn’t use it.
If the energy revolution Elon Musk is creating drastically reduces oil consumption, the petrodollar will inevitably collapse. Just as the dollar changed its partner from gold to oil, if it finds a new partner, it may not lose the absolute ring. The dollar now has to fight not the yuan, but Elon Musk.
The revolutionary cost-cutting target is not only production and distribution. An attempt to virtually reduce the payment cost to zero is being driven by Elon Musk. If you want to become a global power supplier, you need to solve the problem of foreign exchange and remittance fees. In this regard, it is necessary to pay attention to Twitter, which Elon Musk acquired. Its current mission is X. X revives the name of the company Elon Musk first established. This means that he is attached to X and gives it meaning. X will not remain a text-based SNS. Elon Musk’s plan is to make X a financial super app, a financial platform where all the money in the world gathers. It is a platform where payment, storage, and transactions are all possible. The reason Elon Musk was able to acquire Tesla was because he made money with the payment app PayPal. What kind of security can drastically reduce payment and remittance and exchange fees through X? If you look for the answer to this, the dollar camp can’t help but break out in a cold sweat.
Columnist: Kim Chang-ik, Seoul Economic Newspaper Reporter/ Vice President of the Consumer Made Newspaper/ Representative of Donsei Don, Author: Wall Street Journal Dummies
Columnist Kim Chang-ik
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