by Ian (editor) and Phil (finance expert)
Ahead of Russia's invasion of Ukraine, and let's be honest here, both of us predicted it would not happen because we thought US and NATO leaders would persuade the nutters in Kiev to stop provoking Russia and respect the Minsk agreements brokered by Angela Merkel in 2014, we forecast a rough year economically and materially for the developed world coping with the aftermath of the hoax pandemic and in the grip of an energy crisis caused by the failure of loonytoons 'green energy' policies, which together would inflict unsurvivable cost of living increases on poor and middle income families and spirallig inflation on businesses and the affluent. We also predicted the collapse of the US$ as global reserve currency, soaring prices in gold, oil and commodity markets, monetary, a rush to cryptos, ongoing supply chain crunch, and a pandemic of that uneasy, queasy feeling one gets on hearing the sound of large amounts of shit hitting enornous fans.
The Ukraine situation has changed all that, not because it caused the stuff we forecast not to happen but because it has caused it all to happen much more quickly and to a greater extent than we thought possible. That's what you get for being naive enough to believe that for once common sense might prevail.
What just happened in the last two weeks is enormously important and misunderstood by many financial pundits and almost every mainstream media finncial journalist we have read. Only yesterday The Daily Telegraph published and article by a respected finance writer which claimed sanctions had, in one short week, brought Russia's economy to its knees.
In the comment thread under that article comment after comment praised Joe Biden and Boris Johnson because their sanctions had really put that nasty bully Putin in his place, the Russian people and his own inner circle were turning on him. On the contrary, as we wrote on the day the first sanctions were announced, the sanctions are hitting NATO and its allies harder than Russia. Energy prices in the west will soar even higher, inflation will accelerate and now there will be food shortages to because as Russian and Ukrainian wheat, maize and oil seed exports dry up, crop yields around the world will drop dramatically because Russia, which supplies two thirds of the world's ammonium nitrate (the mmain ingredient in commercial fetilizers,) has banned exports of that mineral.
The West's action of shutting Russia out of SWIFT, , the international payments system, is also ineffectual, Russia buys little from the west and if it cannot sell its oil and other products to the west it will sell them to China and probably find plenty of agencies based in tax havens prepared to act as middlemen and channel Russian goods into western markets. Sanctions have never worked before there is no reason to think they will now. And about seven years ago Russia and China set up a financial transfer system of their own so they would not be dependent on the American - controlled SWIFT.
In short Russia, with the backing and support of China, just told the world that it is no longer going to sell its oil, gas, minerals and wheat on which many Western economies are dependent. The West in its response just said to all countries around the world: “If you have foreign exchange reserves, held in our system, they are no longer safe if we don't like your leaders.”
The US Dollar has been the reserve currency of the world since WW II. This has given the US an enormous advantage and subsidy from the rest of the world because everyone else needs to produce goods and services to obtain dollars and the US can simply produce dollars at no cost by printing them.
Putin is now cast in the role of Charles de Gaulle who complained about the "exorbitant privilege" of the US with its dollar hegemony. The arrogant, aristocratic de Gaulle demanded gold in exchange for France's US dollar FX surpluses and this outflow forced the US to abandon the gold standard in 1971.
Recall that post this event, gold went from $35 per ounce to $800 per ounce (23x). Russia's move will lead to a similar move in favor of gold. Putin could see that the US fiscal and monetary situation was becoming untenable and he decided to use this to create an existential threat to the US and the world financial system. Gold may become the de facto world reserve currency but as members of the public lose confidence in government backed paper money because of the obvious incompetence of governments in managing their national economies, many people will put money into cryptocurrencies, which are based on trust it is true.
But while governments believe that their ability to raise money through taxation cushions them against the economic realities, crypto - operators know they must be whiter than white because once they lose the trust of people who hold their crypto - currencies, they have nothing.
by Ian (editor) and Phil (finance expert)
Ahead of Russia's invasion of Ukraine, and let's be honest here, both of us predicted it would not happen because we thought US and NATO leaders would persuade the nutters in Kiev to stop provoking Russia and respect the Minsk agreements brokered by Angela Merkel in 2014, we forecast a rough year economically and materially for the developed world coping with the aftermath of the hoax pandemic and in the grip of an energy crisis caused by the failure of loonytoons 'green energy' policies, which together would inflict unsurvivable cost of living increases on poor and middle income families and spirallig inflation on businesses and the affluent. We also predicted the collapse of the US$ as global reserve currency, soaring prices in gold, oil and commodity markets, monetary, a rush to cryptos, ongoing supply chain crunch, and a pandemic of that uneasy, queasy feeling one gets on hearing the sound of large amounts of shit hitting enornous fans.
The Ukraine situation has changed all that, not because it caused the stuff we forecast not to happen but because it has caused it all to happen much more quickly and to a greater extent than we thought possible. That's what you get for being naive enough to believe that for once common sense might prevail.
What just happened in the last two weeks is enormously important and misunderstood by many financial pundits and almost every mainstream media finncial journalist we have read. Only yesterday The Daily Telegraph published and article by a respected finance writer which claimed sanctions had, in one short week, brought Russia's economy to its knees.
In the comment thread under that article comment after comment praised Joe Biden and Boris Johnson because their sanctions had really put that nasty bully Putin in his place, the Russian people and his own inner circle were turning on him. On the contrary, as we wrote on the day the first sanctions were announced, the sanctions are hitting NATO and its allies harder than Russia. Energy prices in the west will soar even higher, inflation will accelerate and now there will be food shortages to because as Russian and Ukrainian wheat, maize and oil seed exports dry up, crop yields around the world will drop dramatically because Russia, which supplies two thirds of the world's ammonium nitrate (the mmain ingredient in commercial fetilizers,) has banned exports of that mineral.
The West's action of shutting Russia out of SWIFT, , the international payments system, is also ineffectual, Russia buys little from the west and if it cannot sell its oil and other products to the west it will sell them to China and probably find plenty of agencies based in tax havens prepared to act as middlemen and channel Russian goods into western markets. Sanctions have never worked before there is no reason to think they will now. And about seven years ago Russia and China set up a financial transfer system of their own so they would not be dependent on the American - controlled SWIFT.
In short Russia, with the backing and support of China, just told the world that it is no longer going to sell its oil, gas, minerals and wheat on which many Western economies are dependent. The West in its response just said to all countries around the world: “If you have foreign exchange reserves, held in our system, they are no longer safe if we don't like your leaders.”
The US Dollar has been the reserve currency of the world since WW II. This has given the US an enormous advantage and subsidy from the rest of the world because everyone else needs to produce goods and services to obtain dollars and the US can simply produce dollars at no cost by printing them.
Putin is now cast in the role of Charles de Gaulle who complained about the "exorbitant privilege" of the US with its dollar hegemony. The arrogant, aristocratic de Gaulle demanded gold in exchange for France's US dollar FX surpluses and this outflow forced the US to abandon the gold standard in 1971.
Recall that post this event, gold went from $35 per ounce to $800 per ounce (23x). Russia's move will lead to a similar move in favor of gold. Putin could see that the US fiscal and monetary situation was becoming untenable and he decided to use this to create an existential threat to the US and the world financial system. Gold may become the de facto world reserve currency but as members of the public lose confidence in government backed paper money because of the obvious incompetence of governments in managing their national economies, many people will put money into cryptocurrencies, which are based on trust it is true.
But while governments believe that their ability to raise money through taxation cushions them against the economic realities, crypto - operators know they must be whiter than white because once they lose the trust of people who hold their crypto - currencies, they have nothing.
US commodity crisis to give rise to new world order, says Credit Suisse’s Zoltan Pozsar:EXPLORE:
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