After writing my piece yesterday, “Who Will Suffer The Most?” the following article appeared on Drudge report. This very short article speaks of the Russians “turning the tables” on the U.S. and basically saying that they may discontinue any business with the U.S. if sanctions are imposed. This would also mean that they will stop using dollars which got Saddam Hussein, Qaddafi and seemingly Chavez into some water that was too hot to survive in. This article was followed by another one in the Telegraph where the author mocks Russia’s ability to ever stop using dollars. He says that Russia could not survive without using dollars and that the world uses dollars by “choice.” Before going any further I would like to state the obvious, IT IS NONE OF OUR BUSINESS anyway!
That said, didn’t I just “wonder” yesterday what Russia and China might do if the U.S. pressed sanctions? “Would they…could they” turn the tables on the U.S. and treat us to our own medicine? What it comes down to really is who will suffer the most. The author from the Telegraph suggests that it would be the Russians, I disagree for several reasons. First and foremost, China has sided with Russia and they also happen to be our “banker.” Also as I wrote yesterday, the Russian people already know hard times first hand, could a global meltdown be any harder on them than what they went through back in 1990?
In my opinion, Vladimir Putin is simply “toying” with the West. He knows, the Chinese know, and yes even you should know if you use a little common sense…the West is still standing only out of “confidence” and nothing else. If confidence somehow broke (or was “broken”), then you have the Humpty Dumpty scenario. To this day, 5 years after the GFC we are treated daily to Washington fingers pointing to the stock market…”See, everything is great, just look at the stock market.” As I have said for over a year now, China can on their own “end the game” whenever they choose and almost however they’d like to do it.
China can simply sell Treasury bonds. They can sell dollars. They can put orders in for gold that cannot be filled…or, they don’t even have to do any of this. All they have to do is refuse to transact any business in dollars. Could Russia tank our system by shunning the dollar? Would they really follow through on the threat of defaulting and selling all of their Treasury holdings? Maybe not, but would the chess playing Putin have threatened this if he did not have Chinese assurances that they will also play this game? I sort of view this situation as “muscle” (Russia) and “money” (China), sort of like a Sicilian operation where Mr. Putin is akin to “Luca Brazzi.”
I ask you this, with respect to imposing sanctions, what exactly can Washington do that would injure Russia? Could they freeze deposits? Does Russia have enough capital outside of their control which if lost, would make them think twice and withdraw from Ukraine? Do we transact enough business with them to make a difference? Is Europe going to say, “No, please don’t send us your natural gas. We’d rather freeze?” One must also wonder what would happen if Mr. Putin in turn asked for payment of said natural gas in gold, how the Germans might respond. “We can pay but we’ll have to wait 7 years until the NY Fed sends us OUR gold back?”
I want to point out that this has a very high possibility of being our “Achilles heel” moment. I say this because those running the circus in Washington know that the gold is gone and running low. Mr. Putin knows this as do the Chinese. In fact, I believe that everyone knows and also that everyone knows that everyone else knows and this is exactly why we cannot impose sanctions. Mr. Putin will do whatever it is that he chooses because he knows that we cannot do anything in return. Nothing militarily nor financially. Is he “bluffing?” I don’t think so because he looks to be actually “re assembling” the old Soviet Union. In my opinion, he is doing this out in the open and daring the U.S. to respond or retaliate because he knows that if we act at all, we end our own charade.
Russia also launched a test ICBM missile yesterday. Why? I truly believe that it’s because of the “dirty little secret” that everyone knows but no one (in the West) wants to admit and few are willing to talk about …we are running and for all intents and purposes have run out of gold. There is also speculation that Saudi Arabia which had stored much of their gold in London has had their stash “borrowed” and even that is now gone. Is this true? Could be but we will know the answer to MANY questions the moment that “someone asks anyone for payment for anything in gold.” We will find out who has it and who doesn’t. We will immediately see a new pricing structure and the “issued” fiat of whoever it is that has no gold …will no longer be accepted. The “dirty little secret” may have been kept secret from the unsuspecting public but it is well known amongst nations. Mr. Putin is a Master chess player…with position and backing, we are playing poker with a jack high and our cards showing. I believe that there will be no “sanctions.” If there are they will be meaningless. I also believe that if assets are frozen it will be viewed as outright theft. No matter how it plays out, please understand that you are watching the creation of a “new world order” in real time. Though it’s not the one envisioned by George Bush back in 1990.