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THIS WEEK’S EDITORIAL
GEOPOLITICS — A PIVOTAL MEETING
On June 16th, Joe Biden will meet Vladimir Putin in Geneva, Switzerland. This is a meeting of great significance. Many people have speculated about what will be discussed. But nobody really knows. There will be much fanfare beforehand and much analysis by the mainstream media afterwards. But most of that will be obfuscation, smoke and mirrors.
Russia is in a strong position. It is becoming more entwined with China via the Belt and Road project. China needs labor and consumer markets and Eurasia will provide those along the route to Western Europe. Russia shares borders and historical ties with many of those countries and is also a major supplier of energy to China, to Eurasia and to Western Europe.
The population of China, India, Eurasia and Europe combined is around 4 Billion people. The US has only 330 Million people. Do the math as they say in Hollywood movies. Recent US unwanted interference in European affairs especially in regard to the Nord Stream Gas project and recent revelations about spying on their European allies has left a bad taste. Joe is struggling to remain relevant.
Paradoxically and perhaps surprisingly, Russia is increasing its trade with the United States rapidly (and vice versa). Over the last 12 months, total trade between Russia and the US has increased by almost 118 %. Russia’s exports to the US have increased by 75 % and imports have increased by over 130 %. Russia has moved to Number 23 from Number 27 in the list of US trading partners. You may be surprised to learn that bilateral trade between Russia and the United States is growing robustly.
The Russian economy has rebounded sharply from the global Covid induced recession. Since March last year, the Russian stock market index has doubled in value.
It is noteworthy that Russia is the second largest exporter of oil and gas in the world after Saudi Arabia and it is expected that Russia will soon exceed Saudi Arabia in this regard and become the world’s largest exporter of crude oil. Saudi Arabia’s oil exports are in decline. That is why Joe Biden must come to Europe to meet with Vladimir Putin.
The Petro-US Dollar empire is clearly at risk. He must ask Russia to settle its oil & gas trades principally in US Dollars. But the answer is obvious. Putin will refuse. He will say that they prefer to use any currency. And he has recently indicated strongly that Russia will prefer to accept Euros over US Dollars as the main settlement currency. He has no reason to change his mind as far as BOOM can see.
None of this discussion will be released to the media. Media coverage will carefully tip toe around it or censor it completely.
CONGRESSMAN COMMENTS
This short article by Ron Paul, the famous American Doctor and Congressman is certainly worth reading in regard to the upcoming Biden Putin meeting: LINK: http://www.ronpaulinstitute.org/archives/featured-articles/2021/june/07/the-coming-bidenputin-train-wreck-summit/
IT’S ALL ABOUT THE DOLLAR
Steadily, over the last two years, the mainstream media in the West has persistently promoted the view that China represents some sort of “major threat”. Cynics would say that if Russia is no longer a threat, then it is important to find another. After all, the flow of weapons and energy must continue along with the flow of US Dollars as principal settlement currency of trade. And for that to happen, there must always be a perceived threat.
Eurodollars in particular are used to settle global trade. Eurodollars are US Dollars outside the United States. Most of these are not created by the US banking system or the US government. They are created principally as US Dollar denominated loans to global borrowers. These loans are made by offshore tax haven banks in UK territories and in The City of London (which is not strictly part of the UK). This flow of offshore global dollars is necessary to keep the so called “reserve” status of the dominant US Dollar intact.
BOOM wrote about this subject in July 2019 — 2 years ago. Let’s go back 2 years to see if anything has changed.
BACK TO THE FUTURE — PUBLISHED JULY 2019 — GEO-POLITICS GONE MAD
Geo-politics has dominated during the last week. The United States said they had shot down an Iranian drone that was flying too close to a US warship in the Persian Gulf. Iran denied that they had lost a drone and subsequently accused the US of inventing the story or having mistakenly shot down one of their own drones.
Iran seized a UK oil tanker in retaliation for the UK seizure of an Iranian oil tanker near Gibraltar some weeks ago. So the UK announced that this was “unacceptable”.
Meanwhile, to the North of those incidents, Turkey took delivery of a sophisticated Russian S400 anti-aircraft missile defence system. One must wonder who is the enemy that Turkey wishes to defend itself against?
In retaliation, the US halted delivery of their new F 35 fighter jets to Turkey. That move is complicated by the fact that Turkey manufactures key components of the new US jet and had planned to purchase 100 of them. To make things even more interesting, Turkey has been reported as saying that they will now build weapons with Russia in future.
These developments are worth noting because Turkey is a NATO ally of the US and, in fact, have the second largest military force in NATO (after the US). NATO stands for North Atlantic Treaty Organization. There are 29 members including the US, Canada, Turkey, Albania, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, United Kingdom.
NATO was formed in 1949 to protect Western Europe from the USSR which had been an ally of the US and UK just 4 years previously and during the Second World War. In fact, the USSR was arguably the critical force that allowed the Allied Nations to defeat Germany and win peace in Western Europe. And in that quest, Russia claims that 20 million Russian lives were lost.
After the war and the defeat of Germany, however, the US decided that a new “adversary” was necessary and that became the communist threat from the East, the Union of Soviet Socialist Republics (the USSR), led by Russia.
In 1946, the USSR had not agreed to ratify the Bretton Woods Agreement whereby the US Dollar would become the dominant global currency with which to settle international trade. As a result, the USSR never joined the IMF or the World Bank and never accepted the US Dollar as the dominant currency for international trade settlements. That was deemed sufficient cause to label it an “adversary” of the US and NATO.
PUTIN IS NOT A COMMUNIST
Last week, BOOM saw an article that described President Vladimir Putin of Russia as a “communist leader”. It seems that some people, including the author of that article, still think that the USSR exists and that Russia is still the leader of a communist group of nations. That is odd because the USSR has not existed for almost 30 years, since it collapsed on Christmas Day in 1991.
So, let’s think this through, the Russian Federation is no longer a communist nation, no longer leads a group of communist nations and it joined the global Bretton Woods Institutions of the IMF and the World Bank in 1992 plus the World Trade Organization in 2012. It may (or may not) be a democracy — depending upon your definition of democracy — but Russia is also now clearly a capitalist economy driven by a large private banking system.
So why is Russia still seen as an “adversary” of NATO by some NATO states? Perhaps it has nothing to do with communism versus capitalism or communism versus democracy?
Perhaps all of this is linked with the manufacture and sale of military equipment and the sale of oil? And, if so, could it have something to do with the fact that Russia does not buy any military equipment or any oil from outside sources? Or could it be because Russia is not so keen on the use of the US Dollar as the dominant global trade settlement currency?
BOOM suspects all of the above. If a nation refuses to buy military equipment and oil from external sources with US Dollars used as settlement, then it appears that such a nation must be deemed an “adversary” of the US and NATO.
This is the circuitous logic against Russia that is promoted by many political leaders, placing millions of lives at risk as NATO stands against Russia in Western Europe.
BUT CHINA BUYS OIL WITH US DOLLARS
Then there is China — now that is clearly a communist, non-democratic nation but it claims to be “one country, two systems” which implies that communism and capitalism can co-exist. Clearly, they choose not to buy weapons from external sources and they are not in favor of single currency dominance in trade settlement. However, they are the world’s largest importer of oil, by far. They import $ 240 Billion of oil which is 20% of all oil imported on the planet. And, because of convenience and TINA (there is no alternative), they do accept the use of US Dollars for many, if not most, of their trade settlements — both for imports and for exports.
So can they be an “adversary” of the US and NATO? Go figure. It appears that the definition varies depending upon the circumstance.
BACK TO 2021
So, you see. Nothing has really changed in the last 2 years. The US has simply replaced Russia with China as the “great threat”, the great “adversary”. The game continues — to maintain the US Dollar as the dominant global settlement currency. To achieve this, they must pay close attention to the global trade in oil and gas. And they must pay close attention to the global trade in weapons.
After purchase, oil and gas gets burned to release energy. Then they must be replaced. After purchase, weapons explode to release energy or they rot in silos and munitions dumps. Then they must be replaced. The result is the need for yet more energy and yet more weapons as long as an enemy can be found.
For a dominant global settlement currency to continue to dominate, it must be used as principal settlement currency for the purchase of oil and gas and weapons. And an existential “enemy” must be kept in place, clearly delineated because otherwise there would be no need for a global weapons trade. And there would be no need for more and more US Dollars external to the United States. Nations could simply settle their trades using their own currencies.
In economics things work until they don’t. Until next week -Make your own conclusions, do your own research. BOOM does not offer investment advice.
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Thanks, Peter. I really enjoy reading Gerry’s editorials and appreciate you bringing them to us on TBP.
Reading this week’s edition, it almost looks like there is a plan to replace the USD as the reserve currency and the plan is gaining steam. With nobody at the helm in the District of Corruption, Putin seems to be moving Russia to a much more prominent role in world economics, using oil as his vehicle. We should be teaming up with Russia, not demonizing them at every step. The more we demonize them, the more we drive them into partnership with China.
I have long said the Saud family is all that is keeping the USD floating on top of the heap. With their dwindling oil reserves and increased pressure from Iran, one wonders how much longer the life vest will be able to maintain the bloated USD.
We are certainly living in interesting times.
Thanks TNP for your kind words and I am pleased that you enjoy Gerry’s work. I collaborate with him regularly and learn so much from him – I think he is a star for his work.
I agree with your assessment about the dollar and how the West should work with Russia – we are all European tribes in the end. I have always thought that Russia should join the EU bringing all that oil and gas with them but it looks as if they will be the providers of note anyway.
The dollar’s strength is of course the petrodollar so if this weakens, as the Saudi oil depletes, then it has to affect it adversely. However, as Gerry says, we need something to replace it and one where the offshore banks can create loans in another currency. We have discussed a possible euro-yuan but this is far away at present.
NATO ain’t shit. The only military action it ever took was against Serbia. They were the cheerleaders on the sidelines
All about the cash, always is.
Putin will privately threaten Senile Joe with a Karate Chop and Senile Joe will respond he prefers filet mignon to chops .
There’s some sick weird shit going on in Britain …. so much so that one British MP is calling for law changes to clamp down on those who take advantage of vulnerable old people.
It’s called “predatory marriage” …. where the elderly, especially those with dementia, are being coerced into marriage … then robbed of all their assets, often being physically abused in the process.
WHAT THE FUCK IS GOING ON IN BRITAIN????!!!!!
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https://www.rt.com/op-ed/526543-marriage-predators-law-change/
Yes, dreadful isn’t it Stucky but it has always being going on in Britain anyway – hidden under the covers, like child abuse. The class system here causes splits in the moral fibre of the average Joe who justifies his actions by consoling himself with the idea that ‘they can afford it’. Have a look at the system described here:
Quote: “Whether you are a lord, a “toff” or just the king of your own middle class kingdom, everyone in the UK fits into the class system but explaining the British class system is a hard thing to do even for a Brit. ”
https://greatbritishmag.co.uk/uk-culture/what-is-the-british-class-system/