Sanctions on Russia Backfire!

When Reality Wins, the West Will Suffer

The Ukrainian money-laundering racket continues.

Last week Joe Biden pledged another $3 billion in aid to Ukraine. The aid includes weapon systems that will allow Ukraine to defend itself over the “long term.”

Just how long is the long term? How long does the administration plan on watching Ukraine be destroyed simply because they want to weaken Russia?

By now, it’s a familiar script. Ukraine says, "Give us more money and we'll counterattack." Then they skim the money, wait a week or two and make the same demand. Biden gives them your tax money. Wash, rinse and repeat.

But support for Ukraine’s money-laundering racket is resulting in the impoverishment of Europe. Germans are buying firewood. Poles are lined up for days to buy coal. They just want to keep warm in winter, but globalist elites don't care. Regular people are just pawns in the service of the globalist agenda.

Last week, French President Emmanuel Macron said, “We are living through the end of abundance.” Well, that’s true if elites manage to shut down the oil and gas industries while forcing everyone to use costly and inefficient “green” energy.

Let’s unpack this…

Wolves in Sheep’s Clothing
The green energy crowd talks about sustainability and saving the planet, which sounds nice. After all, who doesn’t want a clean environment and to save the planet? That sounds like a policy we should all applaud.

Unfortunately, the reality is quite different. The movement is controlled by corporate and government globalist elites aligned with the World Economic Forum.

The environmental target is part of the climate alarmist effort to use phony climate change claims as a Trojan Horse to destroy the oil and natural gas industries, shut down internal-combustion engines and force countries to use wind turbines and solar modules that are intermittent and nonscalable.

They’re also trying to take over global finance and central banks (through the Glasgow Financial Alliance for Net Zero, or GFANZ), to prevent new loans to oil and natural gas firms and to force loans to subsidize electric vehicles (EVs) and battery manufacturers.

Never mind that CO2 is not poisonous (it’s plant food and humans exhale it all day) and that batteries are poisonous. Never mind that there is no climate change emergency. There simply is no existential climate crisis as the alarmists claim.

There may have been very slight warming from 1995⁠–⁠2005 (which is perfectly normal) but there is no evidence either that CO2 is the principal cause or that human activity is a material factor.

Here, I discuss U.S. and Chinese CO2 emissions and the folly of the Paris Climate Accord, which Biden recommitted to after Trump wisely pulled the U.S. out of it.

Real Climate Change
Climate change itself happens all the time and had happened long before the invention of the automobile. The Medieval Warm Period from about AD 950–1250 featured unusually warm temperatures in the North Atlantic region. This was the period when the Vikings roamed as far as Canada and farms were thriving in Greenland in areas now covered in ice.

The Little Ice Age, which reached an intense phase from 1650–1725, featured frozen canals in Holland — one reason the Dutch are such competitive speed skaters today. In London, you could cross the frozen River Thames on ice and winter carnivals were held on the frozen river.

Both of these episodes occurred centuries before the invention of the automobile. You get the point.

But the elites just want you under their thumb using expensive technologies that they themselves control. If that means you must suffer from greatly diminished living standards, so be it. It’s also why Germans are stocking up on firewood and Poles are lining up for days to buy coal in the 21st century. It's more like the 18th century.

We need to consider the role of sanctions in all this.

I Hate to Gloat, But…
As soon as the first economic and financial sanctions were imposed on Russia by the U.S. and EU at the beginning of the war in Ukraine, I wrote and said that the sanctions would fail to deter Russia.

I went further and said that the sanctions would do more harm to the U.S. than Russia and that sanctions would actually help Russia by reducing the power of the oligarchs (Putin’s rivals) and increasing the price of energy (Russia’s main source of hard currency).

All of those forecasts proved to be correct. I’m not trying to toot my own horn. I just want to illustrate how clueless our so-called elites and policymakers are. They’re simply incapable of thinking even one move ahead.

Instead of sanctions hurting Russia, it’s making over $21 billion per month from its energy exports. That’s far more than they made before the war, and the Russian ruble is stronger than it was before the war. In fact, the head of the Central Bank of Russia recently cut interest rates because the ruble was too strong.

Of course, all the “experts” said that sanctions would cripple the ruble.

Meanwhile the U.S. is in a recession, inflation is at 40-year highs, interest rates are rising and gas and food prices have doubled in the past year. In Europe it’s worse with energy and food shortages looming in the months ahead.

Could the situation get any worse? Actually, yes.

A New OPEC Based on Natural Gas?
By weaponizing the U.S. dollar, freezing Russia’s assets and ejecting Russia from the global payments systems, the U.S. has forced Russia to consider alternative payment currencies, alternative payment channels and possibly a new global reserve currency including new digital currencies backed by a basket of commodities including gold.

These projects are already underway in the BRICS+ meetings and the Shanghai Cooperation Organization, both of which are centered around Russia and China. Now a new effort has begun to form a natural gas cartel with participation by Russia and Iran and eventually other countries.

This new organization could function like OPEC except that the strategic asset would be natural gas rather than oil. Other countries that could join this new cartel include Qatar and Azerbaijan. Russia, Iran and Qatar alone control about 60% of the world’s natural gas reserves.

Such a cartel would be in a position to strike exclusive deals with favored buyers like China, which would leave Europe out in the cold literally and figuratively.

We need to confront the reality that the sanctions were a blunder from the start. But the “hate Russia” crowd was so blinded by their contempt for Putin that they plowed ahead regardless.

Now the unforeseen consequences are emerging and they’re even worse than the critics imagined.

The globalist elites and Western politicians pursue their fantasies of windmills and solar modules while serious countries like Russia and Iran gain a lock on the only energy supplies that will really matter for the foreseeable future — oil and gas.

When ideology and reality collide, reality always wins in the end. That doesn’t bode well for the West.

Author: Jim Rickards (for Altucher Confidential)


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