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THIS WEEK’S EDITORIAL
SANCTIONS LIMITED IN EFFECT: Russian imports from the United States amount to around US$13 Billion per year. Russia has a $1.5 Trillion economy so this is 0.85% of their GDP. Exports from Russia to the US are around $11 Billion — about 0.75% of Russia’s GDP.
So any US trade sanctions on Russia will have very little effect. They sound good when trumpeted on the evening news but, at the end of the day, they are effectively meaningless.
China is by far and away Russia’s largest trading partner. Russian exports to China amount to $50 Billion and imports are around $55 Billion. But even those numbers are relatively small when compared to the size of the Russian economy.
Total annual Russian exports are around $500 Billion per year and imports are about $288 Billion. Thus, they have a strongly positive Balance of Trade. It is spread across many trading partners. External trade with the United States does not contribute much to their $1.5 Trillion economy, representing just 1.6 % of total GDP.
The key lesson to learn here is that Russia’s economy is not dominated by trade with the US and thus it has no need to pay many trade settlements in US Dollars. It has said recently that it prefers to pay in Euros.
This is a position of great strength in a Geopolitical sense, especially as they have abundant food, energy and minerals. Combined with significant military capabilities and state-of-the-art weapons, this means that Russia is a key player on the global Geopolitical stage as demonstrated recently in the Syria-Iraq war which Russia effectively won in Syria’s favor (although the Western mainstream media will never admit to it).
The value of Russia’s exports is rising steeply as the global oil and gas prices rise. This means that the war helps their trade balance because the conflict drives up the price of petrochemicals.
Conclusion: The trade sanctions from the US and the confiscation of foreign Russian owned assets trumpeted every night on the Western television news programs are for propaganda purposes. Propaganda is a weapon aimed at domestic audiences.
Meanwhile, nobody from the West, especially NATO, dares to take on Russia on in any actual battlefield, especially in a battlefield geographically close to what the Russians call “Mother Russia”.
UNITED NATIONS VOTE 50:50: On 28th February, the United Nations voted on the Resolution that condemned Russia’s invasion of Ukraine. Of course, Russia does not call it an invasion. They use the terms “demilitarization and denazification”. However, 141 of the 193 member states voted for the resolution, 35 abstained, and five voted against. The Western nations have claimed this as a great victory.
However, those who abstained in the vote are clearly de facto supporters of Russia, including China. India and Pakistan are also both on that list. Other nations on the list with high populations include Bangladesh, Iran, Iraq, Vietnam and South Africa. The combined population of Russia plus Supporters is a total of 3.6 Billion people — half the population of the planet. Food for thought. Russia is not “isolated”.
ARE WE RUSHING TOWARDS A NUCLEAR WAR? IF SO, WHY? Russia is heavily armed with nuclear weapons and the means to deliver them to distant locations. They have intercontinental ballistic missiles that can travel at many times the speed of sound. Those hypersonic missiles can zig zag — a terrifying prospect for the US defenses. They have large nuclear attack submarines. Their nuclear warheads are potentially the most devastating of all in existence. Those are the sobering facts we must consider.
The big question is this. Are we being rushed into a nuclear war and, if so, why? Why has NATO stirred the hornet’s nest and then rapidly disappeared from the scene?
The economic and human consequences of such a nuclear war would be devastating to many nations. The rest of the planet may not be habitable in the long run after such an event. 7.5 Billion innocent people could die. The Covid fear and scare campaign pales into insignificance very quickly in this scenario.
Let’s review the current situation which has developed over 10 – 20 years. With the fore knowledge that Russia is heavily armed with nuclear and military capability, NATO — the North Atlantic Treaty Organization — has executed a plan which may seem clever to someone in NATO headquarters but to nobody else.
It has threatened Russia with closer and closer military installations and then it used the so-called “Maidan Revolution” in 2014 to make Ukraine a forward base of operations, just over 800 kilometers from Moscow (10 hours driving time) and 300 kilometers from the Russian border.
Then (somehow) the nation of Ukraine became fractured into the “rebel” Eastern regions of the Donbass and the Western regions in 2014. The Minsk Agreements rapidly followed in 2015 which held until the ink dried on the paper they were written on. The Minsk 2 Agreement was signed by representatives of Donetsk and Luhansk (the Donbass), Russia, Ukraine and the OSCE (Organization for Security and Co-operation in Europe). Ominously, NATO was not a signatory.
Fast forward through 6 more years of diplomacy, negotiations and further execution of the NATO plan to pressure Russia. Then Russia “suddenly” makes an “unexpected”, “unprovoked” attack on Ukraine — at least, that is how it is strongly portrayed by the Western mainstream media. Not too many well informed people swallow this but the masses are well trained to believe exactly what they are told.
Why was any of this necessary? The communist empire of the USSR is long gone, collapsed over 30 years ago. So the cold war existential stand-off based upon Capitalism (often described as democracy) versus Communism is no longer a rationale. It is time to ask — what is the rationale for NATO’s belligerence? Or is Russia inappropriately belligerent on behalf of the people of the Donbass?
Either way, one clear outcome will be that all Western European nations will be forced to buy more weapons from the US military industrial complex and those purchases will be expected to be settled with — you guessed it — US Dollars and not Euros. When all of this is considered, it looks like NATO is not actually a defense organization, it is a lobby organization aimed at maintaining US Dollar dominance in world trade.
IS EUROPE COMMITTING ECONOMIC SUICIDE?: Western political leadership appears to be at an all-time low. A perfect example is NATO — the ‘North Atlantic Treaty Organization’. This is a US – Pan European Defence Organization, founded in 1949 in the mess after World War 2. Its purpose at the time was to defend the West against the USSR (a former ally).
The USSR was a centrally planned, communist experiment known as the Soviet Union which failed ignominiously in 1989. It no longer exists but that fact seems lost on most Western politicians and commentators, especially in the United States where an “enemy” is seen as absolutely essential. In fact, the USSR collapsed 30 years ago. Reality can take a long time to dawn, especially in the US.
NATO has 30 member nations and is a vast organization with an annual budget of over US$1 Trillion. If you are spending that amount of money every year, you have to (presumably) do something with it or appear to be doing something. That is an existential problem because there is actually no real enemy anymore to defend against.
In fact, modern day Russia is absolutely essential to the European economy as the largest provider of imported energy and a major supplier of food and fertilizer. Russia is the main supplier of petroleum oils and natural gas to the EU. Thus, Europe is dependent upon Russia economically unless it can find an alternative energy, food and fertilizer supplier.
The United States loves to call itself a “Net Energy Exporter” but that statement is not strictly true. The US barely exports more energy than it imports. Thus, it simply cannot provide Europe with sufficient energy to be a suitable alternative long term supplier. And China’s energy requirements are always increasing as a competitive customer for Russian energy.
So, what does NATO do? It picks a fight with Russia. BOOM cannot see the rational basis for this strategy unless it is to boost US Dollar purchases of US weapons by Europe.
WHO HAS BEEN LEADING NATO DOWN THIS PATHWAY? NATO, a military alliance, has, until recently, been led by an economist, a career politician who now sees himself as a banker, the Norwegian, Jens Stoltenberg. In BOOM’s opinion he has made a great mess in the Ukraine situation but he is now being promoted to become head of the Norwegian central bank where he will (probably) create yet more carnage.
Born in 1959, aged 62. He is typical of many Western “leaders” who share well known characteristics. They generally get involved in politics at an early age; they learn quickly that they must always appear self-assured, confident and ready to provide “solutions”. They don’t focus much on the causes or complexity of problems at hand as they are too busy promulgating solutions. Solutions that are offered by self-assured, confident people appear plausible.
The solutions are often quick fixes. And so the caste is set. They rush to overwhelm their domestic political opponents by being ultra confident and move steadily towards positions of greater and greater power. That is their real goal. They also take instructions from anyone who can feed their thirst for power.
That thirst for power and that process together generate an almost certain result with the more psychopathic personalities emerging victorious. Boris Johnson, the current Prime Minister of the UK and Jacinda Ardern, PM of New Zealand are absolutely typical. So is Emmanuel Macron, current President of France. They always appear totally certain that they are doing the right thing for the nation. If only.
STOLTENBERG TO THE RESCUE: Stoltenberg’s first steps into politics came in his early teens, when he was influenced by his sister Camilla, who at the time was a member of the then Marxist–Leninist group Red Youth.
He served his mandatory military service with the Norwegian Army. From 1979 to 1981, Stoltenberg was a journalist for the Labour owned newspaper, Arbeiderbladet. From 1985 to 1989, he was the leader of the Workers’ Youth League. He then enrolled at the University of Oslo, graduating in 1987 with a degree in economics. Between 1990 and 1992, he was leader of the Oslo chapter of the Labour Party. He was first elected to Parliament in 1993 at age 34 years, and is a member of the Norwegian Labour Party.
Interestingly, up to 1990, he had regular contacts with a Soviet diplomat. He ended this relationship after being informed by the Norwegian Police Security Service his contact was a KGB agent, warning him of further contact. Stoltenberg’s code name within the KGB was “Steklov”. Nonetheless, he became Prime Minister of Norway in 2005.
The political classes of the West are littered with such people. They think they know what they are doing but they don’t. They provide “solutions” readily but do not consider the long term consequences, the complexity or the inherent causes. They react. They use “full speed ahead” strategies in all situations. They are empty vessels who readily take instructions. The disastrous Covid response was a good example.
LET’S DO WHAT CANADA DID: Let’s look at more evidence of short sighted Western politicians in action. Or reaction.
Last week, the Canadian Prime Minister and his Deputy decided to plunge a knife deep into their financial system’s heart by freezing some protesting citizen’s access to their bank accounts. It (presumably) seemed like a good idea at the time although BOOM would have strongly advised them not to do such a thing.
Banking trust can be a fragile thing. They also attempted to grab some digital assets residing in the digital wallets of some citizens (crypto holdings). Luckily for the nation of Canada, they did not pursue these brutal (and stupid) policies to their logical end.
But this week the US and some of its G20 Nation partners decided to pull a similar trick with another protestor, Russia. The thought process was probably along the lines of “what can we do to Russia? I know, let’s freeze some of their access to global bank services (SWIFT) and let’s confiscate or isolate some of their assets. It worked so well in Canada”. Huh?
This is akin to watching a war unfold that you had a hand in triggering and then shooting yourself in the foot because you are forbidden to enter the battlefield. Not too clever.
Winston Churchill is often quoted as saying “the Americans can be expected to do the right thing, but only after they have exhausted all other options first” (or words to that effect).
Will these financial interferences be welcomed by Russia? Of course not. Will China be happy with it? Most definitely not. These plainly stupid and reactionary policies will simply strengthen Russia and China’s resolve to move away from using US Dollars for trade settlements at an even faster pace than they are already doing.
The interference in the SWIFT bank messaging system (based in Belgium) was opposed by Italy and Germany. Russia and China both have already developed their own banking message systems. So they will now move even more rapidly towards using these as an alternative and permanent feature of their financial systems.
As BOOM consistently points out — we need better quality leaders in the West.
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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BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY: LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans). https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. https://www.youtube.com/watch?v=EnC1UlnFLyI
AND Watch for 4 minutes, this Bank of England explanation: Money is essential to the workings of a modern economy, but its nature has varied substantially over time. This video provides an introduction to what money is today.
https://www.youtube.com/watch?v=ziTE32hiWdk
Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.
EMAIL: gerry {at} boomfinanceandeconomics.com
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Western leadership were trained at the Adolf Hitler Camp for the Mentally Challenged. They all graduated Magna Cum Evil as they have achieved the fine art of despotism.
Your approach to storytelling in your news reports is very effective, at least with me. I feel almost as if we are having a discussion about the issues at hand, instead of my just reading your analysis.
This segment in particular seemed to spark the virtual conversation in my head.
They have intercontinental ballistic missiles that can travel at many times the speed of sound. Those hypersonic missiles can zig zag — a terrifying prospect for the US defenses.
Me: Do we have those zigzagging missiles? And if we don’t, why not? Oh, I seem to remember that Obama really didn’t mind if Putin built up his nuclear arsenal since ours was so much bigger. Or something along that line… let me see what I can find, quickly.
Oh, look here…
This is interesting and possibly, worth exploring, perhaps even posting. Did you know?
Obama Has Covertly Signed the US Over to the United Nations
Submitted by Dave Hodges on Monday, June 20, 2016
http://www.thecommonsenseshow.com/siteupload/2015/12/agenda-2030.jpe
and then there’s this…
For the rest of the provocative trip to the past, when Dave Hodges was spouting conspiracy theory which has now come true, visit the link below and realize how far this plan reaches.
https://thecommonsenseshow.com/martial-law/obama-has-covertly-signed-us-over-united-nations
Have returned from visiting Geneva, who actually asked me point-blank if I thought (as she does) that the tumors in her head were caused by getting that vaccination more than a year ago.
I told her it was likely the vaccination’s mRNA sequence interacted with her own genome through the blood-brain barrier and interacted in some way. Maybe they’ve been there a while, dormant, but got activated to grow.
And maybe not.
The “means” is the justification for the “ends.”
Some say that a Tsunami of disease is coming ……….
I need more shots to clear the Earth of stupidity.
Hi Ghost, No America does not have such weapons. Their Hypersonic missile development program began after the Russians demonstrated theirs. China has them.
https://www.bloomberg.com/news/articles/2021-10-27/hypersonic-weapons-who-has-them-and-why-it-matters-quicktake
“The U.S.: Gregory Hayes, chief executive officer of U.S. defense contractor Raytheon Technologies Corp., told Bloomberg TV Oct. 26 that the U.S. is “at least several years behind” China in hypersonic technology despite significant investment.”
And China is behind Russia.
So — get in line. The US is way behind so it appears.
But let’s not forget, the US has what the Russkie and Chinky don’t: the power of DIVESITY and INCLUSION!!! Hyper sonic missiles are nothing compared to the US’s circus freak shows!!!