The period between the second half of the 15th century and the end of the 17th century was marked, at least to this day, by unprecedented political upheavals on the European continent.
The period that became known as the “Price Revolution” marked the discovery of America and the expansion of the Spanish empire.
With the conquest of territories on the new continent, the Spaniards spent a lot of money on the silver found here and expanded their own currency supply.
The currency of the time, the Real de 8, consisted of a huge silver coin that was considered the most influential coin of the time. The coin’s nickname, the “Spanish Dollar”, would also be chosen by rednecks in North America to inspire their own currency after independence from Britain…
In those 150 or so years, prices have risen by a staggering 600%, which in turn has led to soaring land prices and the poverty of millions of farmers, scorched by high costs. The result, as the name of this period suggests, was a series of revolutions across the continent.
Disaffected and impoverished peasants helped overthrow governments and push for change amid a period of excess “wealth” on the part of the elite.
The oncemighty Spanish empire collapsed, making way for new powers like tiny Netherlands (known for its largest province, the Netherlands), who invented modern capitalism to escape geographic difficulties.
And if the whole story seems confusing enough, remember that 600% inflation equates to about 1.5% per year for a century and a half.
At this moment, in the midst of an energy crisis, European countries are facing inflation rates of around 7.9% (Germany) or even 10.1% (UK).
Prices, especially energy, continue to burden the population and fuel political crises and instability.
In the UK, the Conservative Party is still deciding who will replace him after Boris Johnson was ousted. In Germany, the new prime minister is trying in vain to secure the country’s gas supply.
Surrealist examples also appear across Europe.
In France, Emmanuel Macron, who was reelected this year, nationalized the company EDF, which is responsible for controlling the country’s nuclear power plants. The company, already 86 percent governmentowned, is suffering billions in losses trying to dampen energy prices, like a wellknown South American oil company once did.
In the first half of this year alone, “Electricite de France” (EDF) recorded a loss of 5.3 billion US dollars. For the year, the loss is forecast to reach $29 billion.
Macron will have to pay 10 billion euros to secure 100% control of the company and then bear the full loss.
However, this fact in July was not an isolated case.
A little over a month later, France also put pressure on retail groups such as Carrefour, which agreed to freeze the prices of the 120 bestselling products in their stores until November 2022.
In Austria, too, a few billion euros are expected to be spent to save the electricity sector. The company providing the capital alone is set to receive $6 billion in relief.
The increase in energy costs in Europe has already reached 600%. And so far, most of that loss hasn’t been passed on to consumers because of the contracts in place.
Another energy giant, Uniper, is also making losses in Germany. In the first half of the year they were at least 17 billion US dollars.
In the UK, household electricity bills can cost an average of US$5,000 per year, ie around R$25,000 per year in electricity bills.
Overall, it’s possible that losses for the European power sector could reach around $239 billion. Or 1.6% of the region’s GDP.
Damage of the same magnitude can also be seen in the continent’s growth.
In the second quarter, Germany entered nearzero growth.
However, the crisis is not limited to the energy sector.
At around 95.6% of GDP, Europe is highly indebted. It’s a figure below that of the US (130%) but with no sign of slowing down, particularly due to the weakening of the euro.
The weaker currency is of course a consequence of the continent’s stagnation. At $0.99, the euro traded below $1 for the first time since its inception.
As history never tires of showing, Europe still has the power to broadcast ideas and trends, even if this power has waned in the century of globalization.
A wave of instability on the continent could eventually spread to other regions. And apparently this is not far away.
More than ever, Europe is the old continent. The population has an average age of 43.9 years, compared to 38.8 years for the US, 38.4 years for the Chinese and 33.5 years for the Brazilians.
A higher average age implies lower growth, which is already reflected in the pressure to liberalize labor migration.
In the European case it is even more serious.
Today’s Europe accounts for 9% of the world’s population, 20% of the economy and 50% of the planet’s social spending.
In short, a continent, cradle of the most diverse political philosophies of mankind, today stagnant in growth and amid unprecedented price increases.
The result is a powder keg that must be disarmed by European democracy or end up being disarmed itself.