I was away much of this past week and it was difficult to keep up with the news. Upon catching up I can only say that the Ukraine situation has entered the “Twilight Zone.” I say this because the back and forth really doesn’t make sense and it’s almost as if the threats and sanctions are aimed at the shooters own feet!
First and foremost, the U.S. is trying as hard as we can to shut Russia OUT of the dollar system …which is exactly what Russia wanted anyway. Let me refine this, Russia does not want to be isolated and shut out of trade, what they do want is for the dollar to either wane, be put in the back row or to outright collapse. Russia as you know has allied itself with China while China has been globetrotting around the world making business deals and friends. “Friends” as in business partners that are treated with respect and equitable deals.
Europe is another “twilight zoner.” I don’t understand what they can be thinking. Late in the week they were considering further sanctions against Russia which included “oil technology” but not gas. No, never gas…because the fall season is but two months away and in a “non- climate controlled” world is normally followed by a winter with cold weather. If Russia were to retaliate by closing their natural gas spigots, yes it would affect and be painful for Russia. But, it would affect Europe much much more as Russia is their largest natural gas supplier with no one standing in the wings to fill the void.
We also found out that the government of Ukraine collapsed on Thursday, what effect will this have? Will past “deals” or pledges be honored by a new government? Will any new government be more anti-Russian or move closer to Russia? Will they give louder or softer pleas for help from the U.S.? Or none at all?
I wrote last week and had a chance to speak to and hear many varying opinions while at the Sprott Money conference in Vancouver this week. There seemed to be many different views from both sides of the spectrum, some believing that Putin is the bad guy and others believing the U.S. was the provocateur.
So which side is correct? I go back to what I said recently, if Russia really wanted military action we would have already seen it long ago… good reason or no. With each conversation that I had, I always reserved one question for the end which I believe opened the eyes of thought for almost 99% of who I spoke to. First, the U.S. has THE best satellite system in the world. Where exactly in the world do you think that we have recently had our most vigilant attention? Do you believe that it is possible that “we missed it?” “It” being the missile launched and the plane coming down. So how is it possible that we have not shown pictures of the launch? With exact coordinates and a nice shiny bright map with pins stuck in it showing that it was “Ivan” who in fact launched the attack…
Instead, we are watching finger pointing with almost no proof at all and we’re steered toward “you tubes” to whip up sentiment. Now, the black boxes which were not “tampered with” will be examined under the “impartial” eyes of Great Britain. Even this has ramifications because it has been reported that Russian oligarchs are pulling up stakes and withdrawing assets from London. Who could have possibly foreseen this action? This really does scare me because it looks as if we (and Europe) are hell bent on pushing Mr. Putin either into a corner or until he decides “no more.” The odds of this morphing into a live and global conflict rise each time someone on either side opens their mouths.
I do want to point out that as was believed all along regarding Syria and now Ukraine, it all has to do with “energy.” This past week it was reported that none other than Joe Biden’s son has involvement in Ukraine’s gas business. He is a director at Burisma which is Ukraine’s largest gas producer. Any potential “conflict of interest” here? Naw, I didn’t think so! In any case, this is very high stakes business where both sides have the capacity to destroy life on our planet. My hope is that a conflict is not manufactured and used as a reason that “our sound policies didn’t work.” Mathematically the dollar and the rest of the Western financial policies are doomed to failure. Nothing can change this, however, “perception” can be altered and this is exactly what both sides are trying to do.
Before finishing I do want to mention that current U.S. policy is 180 degrees backward from what the goal supposedly is. It is imperative that demand for the dollar remain strong, we are pushing other sovereigns around and making the decision to abandon the dollar an easy one to make. We are telling Russia “you cannot use dollars.” We are sanctioning large banks with fines and making it so that their board of directors would be negligent if they continued to use dollars. One can only surmise that the illogical actions are part of a grand plan, the question is “who’s” plan?
Andy Hoffman joins Rory Hall from The Daily Coin to discuss the 10 year Treasury yield, the bond market, negative GDP growth, big attack on gold and silver, the U.S. economy collapsing, home sales are dropping, China and Russia. To listen to this interview, please click below.
Andy Hoffman joins John Stadtmiller of the Republic Broadcasting Network to discuss JPMorgan recent fines, U.S. dollar reserve, London Gold Fix, Germany, Russia, U.S. housing market, gold and silver. To download the audio, please click on the link below:
The biggest news last week was that the BRICS bank has been formed and being funded. Some may argue that the downing of the Malaysian airline flight was bigger but I don’t think so. From a money and banking standpoint, the formation of the BRICS bank is the BIGGEST news since either 1971 or 1973 when the U.S. defaulted off of the gold standard or when the Saudis stepped up to the plate for the petrodollar.
The formation of the BRICS bank is in direct competition with both the IMF and The World Bank. Both of these are “U.S.” controlled banks and the currency that they lend to “help” or “save” countries with are dollars. During our lifetimes these two banks have been the lender of last resort for troubled banks, banking systems and sovereign countries. Often the loans led to alleviating liquidity problems in the short term but then created bigger problems for borrowers in the long term.
Stepping back to look at what has happened and “why” the BRICS decided to form this bank is an important exercise. This will allow and facilitate trade between nations without using dollars. This is important because of the recent “fine” paid by French bank PNB Paribas and the looming fines for both Commerzbank and DeutscheBank of Germany. They transacted business for customers which broke U.S. sanction “rules” regarding Iran and Sudan. These fines as I understand it were levied because the money transfers were in dollars. Anyone even simple minded would understand that to avoid any future “fines,” you just don’t use dollars. It is this simple and foreigners will now use fewer dollars because they don’t have to use them and it is “safer” for them from a “risk” standpoint.
The BRICS bank has been a long time coming and certainly not done in secret. This news has been widely known by foreigners in real time. It has been a different story for Americans. Mainstream U.S. press has barely even whispered the news yet it is the most important event for at least a generation. To put it in perspective, this is the nullification of Bretton Woods outright.
I think that it’s important to understand that the action of forming a non-dollar competitive bank could only have been done if “everyone” went along with it. We have seen in the past what has happened when a country spoke of no longer using the dollar. Their “ruler” was displaced and the country as in the case with Iraq was bombed back into the Stone Age. This is now a simple case of all the schoolyard kids lining up against the bully and “saying” (not asking) “what are you going to do about it?”
I have been very boisterous in my opinion that Saudi Arabia would be the final straw that breaks the back of the dollar. They have had top level talks with both Russia and China with very little comment or “statement” after the meetings. What was said? What was decided? My guess is that Saudi Arabia was “told” what was going to happen. This is no different than a marriage that breaks up or even when “Mafioso” migrate from a weakening family to one that is strong and getting stronger. Saudi Arabia will move to the East.
If you recall the movie “Rollover” from 1981 you will remember the scene where Kris Kristofferson talks about the Arab’s selling Treasuries and dollars. Any announcement by the Saudis that they will accept currencies other than dollars will make “Rollover” come true …exponentially! I say “exponentially” because the system is now 35 years into the futures and at least $1 quadrillion more bloated with debt and derivatives. The system will implode and “wealth,” paper wealth will evaporate overnight. As is said in the movie, “$2,000 gold will be cheap by tomorrow morning,” gold at the time if you remember was $400-$500.
Please understand the “what and why” of the BRICS bank. The Chinese, Russians and the rest of the world know that the petrodollar system is on its last legs. The case can even be made that the rest of the world has “carried” the U.S. for a few rounds so that they could get their ducks in a row ahead of time. The BRICS bank has been put into place because there has to be “something” to “start over with.” Prior to this bank being formed, were the Western banking system to implode the rest of the world had no alternative. When I say “alternative” I am talking about no other clearing system and no place to “hide” so to speak.
It is clear to me that the BRICS bank formation and the massive accumulation of gold over the last several years has gone hand in hand. “The rest of the world” has known for some time that the dollar, the U.S. and the entire Western financial system was on shaky ground and had finite lives. A plan to distance them from the inevitable was formed and has been carried out. All that now remains in my opinion is for Saudi Arabia to defect from the U.S. and knock the last remaining leg out from under the dollar.
My opinion as you already know is that within two weeks of a Saudi announcement, our world will change. The purchasing power of the dollar will crash; this in turn will mean that more dollars will be needed to pay for foreign imported goods. This will affect you directly when you “shop”… for anything. The inflation which we have been exporting for all these years will wash back onto our shores. The “baton” of world reserve currency issuance is being passed right before our eyes. Actually I should reword this; the baton is being TAKEN from us because we have so badly abused the privilege.