Tag Archives: Financial sanctions

Edging towards a gold standard, by Alasdair Macleod

The Ukraine-Russia war is become as much a financial as a military war, if not more so. From Alasdair Macleod at goldmoney.com:

Commentators are trying to make sense of Russian moves. However, there is a back story which differs from much of the speculation, which this article addresses.

The Russians have not put the rouble on some sort of gold standard. Instead, they have repeated the Nixon/Kissinger strategy which created the petrodollar in 1973 by getting the Saudis to agree to accept only dollars for oil. This time, nations deemed by Russia to be unfriendly will be forced to buy roubles – roughly 2 trillion by the EU alone based on last year’s natural gas and oil imports from Russia — driving up the exchange rate. The rouble has now doubled against the dollar from its low point of RUB 150 to RUB 75 yesterday in just over three weeks. The Russian Central Bank will soon be able to normalise the domestic economy by reducing interest rates and removing exchange controls

The Russians and Chinese will be acutely aware that Western currencies, particularly the yen and euro, are likely to be undermined by recent developments. The financial war, which has always been in the background, is emerging into plain sight and becoming a battlefield between fiat currencies, and it is full on.

The winner by default is almost certainly gold, now the only reliable reserve asset for those not aligned with Russia’s “unfriendlies”. But it is still a long way from backing any currency.

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Here’s Why US Threats Against Russian Gold Reserves Mean a Monetary Reset Is Imminent, by Nick Giambruno

U.S. sanctions against Russia may well be the death rattle of the dollar as the world’s reserve currency. From Nick Giambruno at internationalman.com:

Russian Gold Reserves

“It’s possible to have more than one reserve currency.”

These are the recent words of Jerome Powell, the Chairman of the Federal Reserve.

It’s a stunning admission from the one person who has the most control over the US dollar, the current world reserve currency.

It would be as ridiculous as Mike Tyson saying that it’s possible to have more than one heavyweight champion.

In other words, the jig is up.

Not even the Chairman of the Federal Reserve can go along with the farce of maintaining the dollar’s supremacy anymore… and neither should you. (This has profound consequences for you and your savings, more on that in a moment.)

Powell’s comments occur in the context of what could prove to be one of the most short-sighted and self-destructive acts in history… the US government’s economic war against Russia.

In the wake of Russia’s invasion of Ukraine, the US government has launched its most aggressive sanctions campaign ever.

Exceeding even Iran and North Korea, Russia is now the most sanctioned nation in the world.

“This is financial nuclear war and the largest sanctions event in history,” said Peter Piatetsky, a former Treasury Department official.

He went on to say, “Russia went from being part of the global economy to the single largest target of global sanctions and a financial pariah in less than two weeks.”

Here’s a brief rundown of what has happened.

The US and European governments froze the US dollar and euro reserves of Russia—the accumulated savings of the nation—worth around $300 billion.

Russian banks have been kicked out of SWIFT, the system to send international wire transfers.

A stampede of Western companies have left Russia and are banning average Russian citizens from using their platforms.

Popular cryptocurrency exchange Coinbase blocked over 25,000 accounts linked to Russia.

Visa, MasterCard, and American Express have cut off Russia from their networks.

Even formerly neutral Switzerland joined the orgy of sanctions.

These are just a few examples of how Russia is being cut off from the US-dominated global financial system.

Of course, all this comes as no surprise to the Russians. They have prepared for this exact outcome for many years together with China. The Chinese Communist Party understands that if the US can take down Putin, they will be next. That’s why the Chinese are unlikely to abandon their strategic partnership with Russia.

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Weapons of Financial Destruction and the New World Disorder, by David C. Hendrickson

The U.S.’s weaponization of the financial system will make life difficult for Russia, but may backfire disastrously on the U.S. From David C. Hendrickson at theamericanconservative.com:

Biden didn’t have to take a blowtorch to the financial system in response to the Russian invasion of Ukraine. But he has done so.

The comprehensive sanctions the United States and the West have imposed on Russia take us into an entirely new world. The sanctions are multidimensional, but most important is the “freezing” of Russian foreign exchange reserves, what President Biden called Putin’s $630 billion war fund in his State of the Union. This action means that all previous economic contracts between Russia and the West are invalid. Biden’s figure was probablyoverstated by half, but the precise figure doesn’t matter. It’s the principle that counts.

The effective nullification of contracts is the Big Enchilada, an H-Bomb rather than an A-Bomb, a 50-megaton Weapon of Financial Destruction (WFD). Without bothering to announce it, the United States and its allies have thrown a wrench into the gears of important sectors of the world economy. They are badly underestimating the fallout. Remarkably, they did this against the backdrop of a worldwide crisis in supply chains. That is about to get a lot worse.

Among the cascading dominos: 30 percent of the world’s wheat exports are now cut off.  Russia’s exports of fertilizers—18 percent of the potash market, 20 percent of ammonia exports—are off market. Energy prices have exploded. A suddenly bipartisan United States has imposed a (mostly symbolic) ban on Russian oil imports. The Biden administration has insisted that it doesn’t want to diminish world oil and gas supplies but, grosso modo, the effect of its sanctions point strongly in that direction.

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Burning Globalist Structures to Save the Globalist ‘Liberal Order’, by Alastair Crooke

Will the financial system survive the banking sanctions on Russia? Probably not. From Alastair Crooke at strategic-culture.org:

Biden, finally, has his foreign policy ‘success’: Europe is walling itself off from Russia, China, and the emerging integrated Asian market.

In its triple strike of sanctions on Russia, the EU initially was not looking to collapse the Russian financial system. Far from it: Its first instinct was to find the means to continue purchasing its energy needs (made all there more vital by the state of the European gas reserves hovering close to zero). Purchases of energy, special metals, rare earths (all needed for high tech manufacture) and agricultural products were to be exempted. In short, at first brush, the sinews of the global financial system were intended to remain intact.

The main target rather, was to block the core to the Russian financial system’s ability to raise capital – supplemented by specific sanctions on Alrosa, a major player in the diamond market, and Sovcomflot, a tanker fleet operator.

Then, last Saturday morning (26 February) everything changed. It became a blitzkrieg: “We’re waging an all-out economic and financial war on Russia. We will cause the collapse of the Russian economy”, said the French Finance Minister, Le Maire (words, he later said, he regretted).

That Saturday, the EU, the U.S. and some allies acted to freeze the Russian Central Bank’s foreign exchange reserves held overseas. And certain Russian banks (in the end seven) were to be expelled from SWIFT financial messaging service. The intent was openly admitted in an U.S. unattributable briefing: It was to trigger a ‘bear raid’ (ie. an orchestrated mass selling) of the Rouble on the following Monday that would collapse the value of the currency.

The purpose to freezing the Central Bank’s reserves was two-fold: First, to prevent the Bank from supporting the Rouble. And secondly, to create a commercial bank liquidity scarcity inside Russia to feed into a concerted campaign over that weekend to scare Russians into believing that some domestic banks might fail – thus prompting a rush at the ATMs, and start a bank-run, in other words.

More than two decades ago, in August 1998, Russia defaulted on its debt and devalued the Rouble, sparking a political crisis that culminated with Vladimir Putin replacing Boris Yeltsin. In 2014, there was a similar U.S. attempt to crash the Rouble through sanctions and by engineering (with Saudi Arabian help) a 41% drop in oil prices by January 2015.

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