The invasion of Ukraine, the spike in inflation and the risks of supply shortages have made some politicians dust off some of the worst economic ideas in history: Autarky and protectionism.

Some believe that if our nation produced everything we needed we would all be better off because we would not depend on others. The idea comes from a deep lack of understanding of economics. There is no such thing as autarky. There is no such thing as covering all the needs of a population based on the limit of a politically defined border. It makes no sense. If I told you that I want to make my city self-sufficient you would laugh about it understanding that it is impossible and that the reason why my city thrives is because of the interaction and commerce with other cities. However, when a group of politicians define a nation’s border, we are immediately led to believe that those limits contain every resource that citizens may need and that everything else is irrelevant.

There are numerous articles mentioning that Saudi Arabia may use the Yuan, China’s domestic currency, for its oil exports.

How much does Saudi Arabia export to China? According to the OEC, the kingdom’s main exports are to China ($45.8B), India ($25.1B), Japan ($24.5B), South Korea ($19.5B), and the United States ($12.2B). Exports of crude oil reached $145 billion in total.

Saudi Arabia is the world’s largest oil exporter at $145 billion, and China the largest buyer at $204 billion, with 2019 figures.

Europe is not going to achieve a competitive energy transition with the current interventionist policies. Europe does not depend on Russian gas due to a coincidence, but because of a chain of mistaken policies. Banning nuclear in Germany, prohibiting the development of domestic natural gas resources throughout the European Union, added to a massive and expensive renewable roll-out without building a reliable back-up.

Solar and wind do not reduce dependency on Russian natural gas. They are necessary but volatile and intermittent. They need back-up for security of supply from nuclear, hydro, and natural gas. Dependency rises in periods of low wind and little sun, just when prices are highest.

In this world of monetary insanity, defenders of central bank constant easing try every day to convince you that inflation is caused by numerous factors, not by currency printing.

Many blame inflation on cost-push factors or even speculation, but ultimately all those are consequences, not causes. Rising prices are always caused by more units of currency being directed to scarce or tangible assets.

Commodities ETFs are a clear example. In 2022 investors have been purchasing these products to protect themselves from inflation and generate real returns. They are not a cause, they are a consequence. With increased inflationary concerns, the likelihood of rising interest rates, and elevated geopolitical concerns, commodities-focused funds have seen record inflows in 2022. Year to date through February 25, commodities ETFs gathered $8.5 billion of net ETF inflows according to Wealthmanagement.com. This is not the full picture, though.  According to the CFTC the total value of various commodity index-related instruments purchased by institutional investors has increased from an estimated $15 billion in 2003 to an estimated $200 billion. The global Commodity Services market size is estimated at $4 trillion in 2020, according to Market Research.