By Tarik in the Vineyard for the Saker Blog
If Russia shot down a NATO bomber or ship flying or sailing where it shouldn’t be (or even a US one), who would dare respond in kind?
It begs the next question: Why Russia didn’t shoot anything down yet?
Things need to be put in perspective. So here is a third question: Why is the West and the US in particular, so dead set on confronting Russia and China at every corner, short of direct military attack?
It is not because they want to cut Russian gas to Europe (it would terminally break the EU economy and destroy its ability to store increasing dollar reserves), or repatriate jobs from China (systemically incompatible with dollar hegemony) , or even prevent the implementation of the BRI per se (because the matter of fact is that potentially it could become a huge new, and very much needed pit for excess dollars to find their home; if only it were done the “right” way).
When Kissinger invited China into the western world economy, it was understood that it would eternally accumulate dollar trade surpluses, and over time, become another EU or Japan. In the case of the EU, the US had NATO, and for Japan they had their military bases to make sure these two would dutifully stockpile every dollar that comes their way. But nothing of the sort existed for China. To make a story short; in the early nineties they took over the largest stash of natural resources that is Russia. With that in hand they thought they now held China on a tight leash. Late nineties the Asian economic crisis hit; Beijing was livid. 2000 Putin takes over Russia’s natural resources, unleashing China. The later enters a global buying spree of natural resources through its huge accumulated dollar reserves. Commodities’ prices shoot up, interest rates follow suit and triggers the subprime implosion and all its aftermath.
For all practical purpose, intentional or not, this was an unofficial war declaration. No doubt every central banker on the planet worth his salt understood a new player entered town. It meant business, and was to be reckoned with. US responds with an “epidemic” of color revolution everywhere China was laying the ground work for what was to become the BRI, and dramatically increases the pressure on Russia to force it back into the US$ fold. Neither China nor Russia blinked. Instead the former announced to the world the official launch of BRI, and the latter openly challenged US military supremacy in Syria, and soon after started in earnest the distribution of S400s (almost as good as the atomic bomb, in diplomatic terms) to the world.
For those holding reservations about the above interpretation of events, please consider: the price of gold went from under 300 US$/ounce in the late 90’s to 1900 US$ by the end of the first decade, bear in mind that this in a market hated by all. To this day less than 1% of global private wealth is held in gold. In 5000 years of history never did this ratio fall below 5%, even under the most exuberant times. Who was buying? While the western bullion banks acted as “sellers of last resort” with unlimited fictitious supplies on the Futures market to keep the price under cap, so did Beijing act as “buyer of last resort” on the spot market with unlimited dollar supplies from their trade surpluses, thus uncapping the price. The relevance of this is apparent when juxtaposed to the BRI project.
It is estimated tens of thousands tons of gold were disappeared in China; that enters the border but never show up; neither in retails nor official reserves records, but instead just somehow vanish in thin air. At the minimum it shows they’re preparing for a post dollar economy. Then again the BRI makes no secret that it intends to make use of local currencies worldwide. There are two ways only to have any currency accepted. Either it is backed by the most powerful military, or alternatively it is referenced to gold. Anything else (eg. Petrodollar, Eurodollar…) is military backing under the guise of… and the BRI has also admitted its preferred option for trade account settlements.
Such monetary arrangement (no matter the exact actual architecture) would in short order annihilate any form of western prevalence and privilege on the global scene. In itself it would just be an ego bruise, but when added to the staggering debt levels, it translates to guaranteed decades of servitude. That my friends is the crux of the matter, the unfathomable horror the west is facing. It is what keeps their elite awake at night, while the population imperfectly senses a looming day of reckoning whether under the traits of a yellow slit eyed giant dragon, a monstrous growling bear, a flood of melted ice, or an amorphous unforgiving pestilence, when instead they should really fear Shylock’s lurking specter and past due pounds of flesh.
Now that the real motive for the Big Boys’ quarrels has been defined, how would a war with Russia or China, even if only through a proxy (Ukraine or whatever) fit in this equation. First of all the West or the US today is not comparable to say Napoleon’s France or Hitler’s Germany which “benefited” from industrial and military supremacy. It is those specific advantages that allowed them the privilege to make fools of themselves. Without them, neither Napoleon nor Hitler would have ever thought of heading East. And I might add, nor would have the US embarked on the last 50 years of hegemonic delusions. Today the latter has lost both trump cards, and with them, one might presume, the luxury to fantasize a swift military solution.
This leaves us with only a proxy war scenario. If realized, that option can only yield very short lived dividends that could never alter the natural course of the empire’s demise. After all once the Ukrainian army is spent, that card is gone. In fact the Ukraine holds value as long as the status quo last, once the situation is resolved (which ever way that may be) it looses any bargaining stock. The same holds true for the JCPOA, Syria, North Korea, Taiwan, Myanmar, Ethiopia, and so many others. And what bargaining may I be referring to? Well hold on tight: the West pushes for terms of a new partitioning of the world, while Russia and China expect its terms of surrender.
Sure, until say around 2018, all these pressure points were meant to force China and Russia reconsider the dollar’s role in the BRI and related projects. But then in March of that faithful year (if I remember well) Putin casually announced a panoply of hyper-sonic toys. If the subprime event was a “Wazari”, March 2018 was the “Ipon Seonage”, or basically a “checkmate”.
No doubt every general worth his salt must have raised an eyebrow or two, and every central banker realized the dollar was now naked, with neither gold nor the most powerful military on the planet to enforce it.
All the while Putin was giving his speech, the list of nations that were rejoining the BRI since its official launch and their commitment, were about to dramatically increase. The practical effect was a gradual and ongoing abandonment of dollars in cross border regional settlement of trades, particularly in South-East Asia were the doomed currency is now considered almost a dirty word among regional players. Consequently local currencies reserves are displacing US$, which are increasingly being spent on the acquisition of raw materials on the international market for infrastructure projects. If it sounds like “déjà vu” it’s because it is. The resulting inflationary pressure on the commodities’ market would again spill over to the interest rate market, triggering the September 2919 REPO event. Because of its brevity, I suppose, few realize how defining that moment was to what came next.
First the Fed met the burst from 0% to 10% on the overnight REPO rate with a 700+ billion US$ barrage within a matter of days to literally drown those darn, messy, uncooperative interest rates. Ever since that market requires a monthly 120 billion allowance just so banks may trust each other and perpetuate the myth of solvency. As the global economy stopped accumulating, or even off-loaded dollar reserves, the greenback’s velocity increased and soon will feel like hot potatoes. A rarely mentioned consequence of this phenomenon (at least I never came across it anywhere), is the severe restriction it imposes on newly printed dollar deployment outside US financial markets, lest it turns the already established price inflation into hyperinflation. Thus it renders the dollar useless as a tool for influencing foreign actors. Those loose dollars must be neutralized. A few months later COVID strikes in China.
Was it just one more sorry attempt to oblige China to reverse its “dollar policy” or whatever favorite narrative one may subscribe, isn’t as relevant as Beijing’s response was remarkable. There were several instances in the last 20 years when China had to suffer some suspicious biological outbreaks, yet none of the measures taken ever even registered in import/export figures, GDP, or in any other major economic indicator. Now suddenly under the pretext of one insipid flu-like germ, precisely when the West is shown at its most fragile financially, they decide to entirely shut down one major world industrial production hub. Again, regardless of one’s view on that epidemic, there’s not a point in the entire space/time continuum where Xi and his team didn’t foresee the consequences of such measures, both on their economy and those of the West respectively.
The West was totally taken off-guard; no point in calling China, the damage was already done, trillions would be needed to absorb the shock, and thus they took the path of least resistance. They doubled down on the COVID song, proactively shut down their economies to force unanimous political support for direct monetary support of the economy and markets. That the pandemic narrative also served as convenient cover for population movement control, was an extra bonus in an environment ripe for social unrest.
A few months later China unlocks and its economic indicators quickly resume to pre-pandemic levels, all while the US and Europe were still mired in frozen economies. This showed the world economy did not depend any longer on Western lead. In fact the world can now perfectly do without the West all together.
Now it may still be early to assess with any certainty how the game is being played at this very moment, but based on the evidence over the last 2 to 3 years, here is a proposition which hopefully might offer an answer to our starting questions.
The earlier Putin “checkmate” referred specifically to global dollar dominance. Preserving regional dominion for a little while longer however seems still possible, at least in the minds of the western elites. However such a region must be isolated from areas that do not submit to the dollar “order” (or whatever new cryptocurrency denomination they may come up with to implement their reset), since direct competition would instantly reveal the currency fraud that it is. Hence the necessary world partition. In this new context, those pressure points whose main purpose was originally directed against China and Russia, can easily be repurposed to mainly close the ranks in the “salvageable” portion of the world. That explains nicely the increased hysteria surrounding those sour points; not as means to strike fear in the hearts of Russians and Chinese (which is a ridiculous proposition when considering the ground facts), but to dig it as deeply as possible into their vassals’ hearts instead, with what military and economic might they still muster.
Then in order to preserve their currency’s “credibility”, at least within the remaining sphere of dominion, they need a replacement for the loss of those Central “dollar sinkhole” Banks and respective economies that are escaping to the multi-polar world. So they “repurposed” (or just upgraded, I’m not sure which) a favorite of theirs: Global Warming, from an obstacle to the BRI momentum, to a black hole for infinite currency issuance. The basic idea, apart from its green energy infrastructure component which at least is comprehensible to the mind, is to, through the carbon credit market, “financialize” various ecosystems’ contribution to decarbonization. Shares would be available for “investments”. It’s not clear who or how the book value of these shares would be calculated, but one can be excused for assuming that value will prove as flexible as a COVID infection count. I suppose the underlying logic goes something like this: ecosystems remove CO2 from the atmosphere, which saves our lives. Since we can all agree that our lives are infinitely precious, no amount of investments can possibly realize the full valuation of those shares. Et voilàààà, the inflationary dilemma once and for all, forever and ever, eternally and for perpetuity finally solved!
Is it delusional? Of course it is. But as some real wise man said: People rarely think what they must, instead they tend to think what they need to think, when they need to think it.
Obviously the “Grand absurdity” in which their “Great Reset” is being implemented is the sure sign of their impending capitulation. Hence Russia and China patiently awaiting their acceptable terms, which probably means unconditional rendition. The piper will be paid.
It doesn’t mean they want to destroy, humiliate, or otherwise submit to the West. It’s about facing responsibilities, and within this frame, figure out a convenient, or win-win agreement. In such an environment a war makes little sense because there is no military threat against western leadership, only military containment. In typical “Go” fashion, US and NATO bases that were previously seen as power projections enveloping the world, can increasingly be viewed as the boundaries of a shrinking space.
Funny thing is, Russia and China did try really hard to avoid this sorry state; the downright self-inflicted humiliation the West is facing. Ever since the 1997 Asian crisis, Beijing tried real hard to convince the US to a strategy to solve the Dollar’s paradox in world trades. During the first decade of the century as preparation for the BRI, they started heavily investing in global natural resources extraction. Aside from the obvious practical reasons (BRI would require humongous amounts of resources), there was also a financial/monetary aspect. The commodities sector was suffering from decades of under investments due to price suppression schemes by the usual suspects, in line with the gold price policies. The idea then was to increase production so that the manipulative Future’s shorts could be gradually unloaded without triggering the typical inflationary bomb and the ensuing interest rate response, and thus freeing the Western banks from exposure at no loss. At which point international dollar reserves could gradually be unloaded unto an increasing supply of commodities to the BRI, with also minimal (or at least manageable) inflationary disturbance. Of course it implied a parallel incremental retirement of international dollars to a level commensurate to the US’ economy true size, probably through a series of devaluations against mainly gold. That was China’s plan. Not a bad empire retirement plan when considering where the West stands now.
Just as funny, had the US been agreeable to China’s and Russia’s proposal, better yet had they taken the lead after the USSR collapsed, to “resize” the dollar, neither of the Bear nor the Dragon would have developed their armed forces, instead dedicating their resources strictly to the economy. The US could have retained Military supremacy and acted as a true policing force of the world, with all the benefits and honors attached to this function, and the eternal gratitude and support of all. What a monumental waste those last thirty years indeed. Okay, maybe all wouldn’t have been as rosy, so let’s just say it could have been a great opportunity for a beautiful dream…
“Born in Lucerne 1966, raised in Tangier, Abidjan, Washington DC, Nice and Geneva. When Father said goodby, I decided I needed to save the world, and thought picking up a job in an Islamic financial institution (Private wealth management) was a good place to begin. Started in the back office learning the technicalities of money and its flow, then moved to another institution’s front office as technical analyst for the Commodities, Futures and US Option market. I later added Forex to my coverage. In parallel I self-educated in economics and monetary policies which promptly introduced me to geopolitics
I’m a Muslim at heart. Not necessarily a “good” one, but a Muslim nevertheless. And there’s only that much even an only mildly honest believer can compromise, till some existential limit is reached. And so, I decided to rather save my soul than the world, and left the industry for greener moral pastures, or so I hoped. The passion to decipher the world of Men though, never ceased. ”