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When Biden announced sanctions against Russia a month ago, he apparently took the Fed by surprise. The Fed chairman claimed that Biden had not consulted them. Apparently, that was a big mistake, as the Fed may have foreseen the consequences of such an action.
Western government also seized the assets of Russia’s central bank, setting a precedent that has caused jitters among every other nation that might consider going against the US government’s sanctions. Everyone now knows that their gold in London vaults and in the Fed’s vaults are subject to confiscation. No one is safe anymore.
The immediate result of the sanctions was that the Russian ruble dropped about 25 percent in value against the US dollar and the euro. Russia soon hit back by linking the ruble to gold at a fixed rate of 5000 rubles to 1 gram of gold. The value of the ruble suddenly turned around and returned almost to its pre-sanction value. It is now the most stable currency in the world.
The west went into a tizzy, complaining that Russia was trying to avoid the sanctions. Well, duh! Biden’s sanctions forbid western companies from using dollars and euros to buy oil and gas from Russia. Yet they continue to buy oil and gas from Russia! But if they are not allowed to pay for these things in dollars or euros, how will they pay?
So Russia demanded that they pay in rubles. There were immediate screams in the west, as if Russia had no right to make such demands. Russia ought to just lie down and die (get rid of Putin) and submit to Biden’s will. Really? That is not a realistic plan when one is at war.
So now Europe and Russia are at an impasse. Europe needs Russian oil and gas, but Russia won’t accept payment in euros or dollars. Who will blink first? Europe will immediately go into recession without sufficient energy to run their businesses. Russia, on the other hand, has doubled its oil revenue, because the price of oil has doubled. Russia was already experiencing a windfall in late January before the sanctions.
After the sanctions, Europe—and even America—has continued buying from Russia, in spite of the sanctions. And the prices have only gone up. When Maria Bartiromo claimed that the US has doubled its imports of Russian oil in the last year, the fact-checkers were quick to correct her. Imports of Russian oil have only gone up 28 percent!
Oh, so imports have gone up 28 percent!! No sign of slowing down. Biden has ordered the US to use a million barrels of oil PER MONTH out of its strategic reserves. That is a drop in the bucket and will have no serious impact on imports or the price of oil. US oil consumption in 2019 was nearly 20 million barrels PER DAY. It dropped down to 17 million in 2020 during the lockdowns but is again rising as people are able to travel again.
One million barrels per month is about 33,000 barrels per day. That will have absolutely no impact on the economy, the imports, or the price of oil. It would have made more sense to build pipelines and increase domestic production. But that would go against the Green New Deal, which seeks to eliminate the use of oil and gas altogether!
Under Donald Trump, the US became oil independent. That is no longer the case. But instead of reducing our consumption of oil, we have simply increased our dependence on foreign imports—including Russian oil imports, which we need because we sanctioned Venezuela a few years ago.
We are now paying the price because the Democratic Party took the advice of a bartender named AOC. Apparently, the Party leadership has a shortage of brain cells.
Unless, of course, they have purposely done this in order to create an emergency and thereby grab dictatorial power over the people. (This is my own view. The size of Biden’s usable brain is no bigger than a puppet’s, but his handlers know full well what they are doing.)
There has been talk for a long time to ditch the US dollar as a world reserve currency, but the sanctions have forced Russia’s hand to make that happen very quickly.
In the process, Russia’s ruble has not been destroyed but has been “internationalized.” Gold, the “barbaric relic,” has been re-legitimized and will soon break free of its manipulated low price. Nickel prices are already through the roof. Zinc has doubled in price. Silver and gold could be next, and when it does, it will probably take place quite suddenly, catching many off-guard. The big banks have shorted the silver market in a big way, and so a big price move in silver would destroy them unless they received a bail-in from depositors or a government bail-out.
If you want to read more about the Sanctions War and the consequences upon the world as a whole, here is an informative article.