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Secret Agenda: Are They Planning To Use ‘Russian Interference’ As An Excuse To Invalidate Trump’s Election Victory?

barack-obama-michelle-obama-hillary-clinton-conversation-on-air-force-one-public-domainIt has been said that nothing happens by accident in politics, and it is certainly no accident that Barack Obama, Hillary Clinton, members of the U.S. Senate and the mainstream media are all suddenly buzzing about “Russian hacking” and “Russian interference” in our elections.  Over the past 48 hours, the Washington Post, the New York Times, and just about every other major news source in America has been breathlessly telling us that the CIA has concluded that the Russians “intervened” in the presidential election with the specific goal of helping Donald Trump win.  The implication is that if the Russian interference was significant enough, it could have “unfairly” altered the outcome of the election and thus Donald Trump’s victory was not legitimate.  And if his victory was not legitimate, that opens up all sorts of possibilities for the Democrats.

For those that have been wondering if the establishment was going to attempt to steal the presidency away from Donald Trump before he can be inaugurated, we now appear to have our answer.

There are several ways that this could work, and we’ll take it one step at a time.

On Friday, we were suddenly assaulted with all sorts of headlines about how the U.S. intelligence community has concluded that the Russians interfered in the election and that they did so with the intention of helping Trump win.  The following example comes from CNBC

The New York Times reported American intelligence agencies have “high confidence” that Russia intervened in the later stages of the 2016 election to help Trump win the presidency. Senior administration officials said the Russian government gave WikiLeaks emails from the Democratic National Committee, among others including Hillary Clinton’s campaign chairman John Podesta. The organizations also found evidence that Russia hacked the Republican National Committee’s computer systems, but did not release the information.

More specifically, we are being told that it is the CIA that is the primary source of this “intelligence”.  Of course the public is not being shown a shred of evidence that the Russians were behind any of this.  Instead, we are just being told to trust the “experts” at the CIA

The CIA has concluded that Russia intervened in the 2016 election specifically to help Donald Trump win the presidency, a U.S. official has confirmed to NPR.

“Before, there was confidence about the fact that Russia interfered,” the official says. “But there was low confidence on what the direction and intentionality of the interference was. Now they [the CIA] have come to the conclusion that Russia was trying to tip the election to Trump.”

On Sunday, four members of the U.S. Senate came forward to express their concerns about Russian interference.  Two of the four were Democrats, and the other two were Republicans that have been some of the most vocal critics of Donald Trump throughout the election season.  I don’t think that it is any accident that John McCain and Lindsey Graham have chosen to be part of this effort

“Congress’s national security committees have worked diligently to address the complex challenge of cybersecurity, but recent events show that more must be done,” said Sens. Chuck Schumer, the incoming Senate Democratic leader, Sen. John McCain, the Armed Services Committee chairman, fellow Republican Sen. Lindsey Graham, and Sen. Jack Reed, the top Armed Services Committee Democrat, in a Sunday morning statement.

“While protecting classified material, we have an obligation to inform the public about recent cyberattacks that have cut to the heart of our free society. Democrats and Republicans must work together, and across the jurisdictional lines of the Congress, to examine these recent incidents thoroughly and devise comprehensive solutions to deter and defend against further cyber-attacks.”

And of course this comes on the heels of Barack Obama ordering all of the intelligence agencies under his command to show him any evidence of Russian interference in the election before he leaves office.  According to NBC News, he is insisting that this evidence be delivered to him before January 20th…

President Barack Obama has ordered U.S. intelligence agencies to deliver to him a dossier of the evidence that the Russian government used cyber attacks and other means to intervene in the 2016 election, possibly with the idea of making more information public, a senior intelligence official told NBC News.

White House counterterrorism advisor Lisa Monaco told reporters that the results of the report would be shared with lawmakers and others. Obama leaves office on Jan. 20. Monaco used careful language, calling it a “full review of what happened during the 2016 election process.”

Incredibly, this review is actually going to be headed up by the infamous James Clapper

Taking the absurdity to a whole new level, Obama wants the report completed before his term ends on January 20, by none other than a proven and confirmed liar: “The review will be led by James Clapper, the outgoing director of national intelligence, officials said.” In other words, the report that the Kremlin stole the election should be prepared by the time Trump is expected to be sworn in.

“We are going to make public as much as we can,” the spokesman added. “This is a major priority for the president.”

So what is there such an urgency to this?

Couldn’t they just begin this review now and have it completed at some point under the Trump administration?

Or could it be possible that they need this information so urgently because they want to use it for political purposes?

Some are already suggesting that if there is “clear evidence” of unfair Russian intervention that the only reasonable outcome would be to hold another election.  In fact, former CIA agent Bob Baer just appeared on CNN and stated that if “the evidence is there, I don’t see any other way than to vote again.

Could you imagine the uproar if that happened?

Personally, I think that is not likely to happen.

But this issue could be used to try to sway some Electoral College votes on December 19th.  We already know that one of Trump’s electoral voters has publicly pledged not to vote for him, and he claims that he has other Republican electoral voters that plan on joining him.

But even if Trump successfully gets through the Electoral College vote, he still has one more hurdle to get over.

On January 6th, a joint session of Congress will meet to count the electoral votes.  Most of the time this is a formality, but this time around that may not be the case.

If at least one member of the House and at least one member of the Senate submits an objection in writing, electoral votes can potentially be invalidated.  The following comes from the official House.gov website

Since 1887, 3 U.S.C. 15 sets the method for objections to electoral votes. During the Joint Session, Members of Congress may object to individual electoral votes or to state returns as a whole. An objection must be declared in writing and signed by at least one Representative and one Senator. In the case of an objection, the Joint Session recesses and each chamber considers the objection separately in a session which cannot last more than two hours with each Member speaking for no more than five minutes. After each house votes on whether or not to accept the objection, the Joint Session reconvenes and both chambers disclose their decisions. If they agree to the objection, the votes in question are not counted. If either chamber does not agree with the objection, the votes are counted.

So even if Donald Trump receives at least 270 Electoral College votes, he could still be denied the presidency by Congress.

And that may be what the establishment is shooting for.  If they can present “compelling evidence” that Russian interference “unfairly” altered the outcome of the election in November, perhaps enough members of Congress can be convinced to vote to invalidate Trump’s election victory.

I don’t think that is going to happen, but when it comes to Trump the normal rules don’t seem to apply.

However, what should be apparent to everyone is that Barack Obama, Hillary Clinton and the members of Congress that are suddenly making this such a huge issue all have a reason for doing so.  They claim that they are doing it for the good of the country, but in politics there is almost always an ulterior motive for everything.

Do they actually intend to try to steal the presidency from Donald Trump?

If they do, we won’t have too long to wait before we find out.

Turkey Has Declared War On Syria – Does This Mean That World War 3 Is About To Erupt In The Middle East?

fighter-jet-silhouette-public-domainTurkish President Recep Tayyip Erdogan has just announced that the only reason Turkish military forces have entered northern Syria is to “end the rule of the tyrant al-Assad”.  By publicly proclaiming that Turkey intends to use military force to overthrow the regime of Syrian President Bashar al-Assad, Erdogan has essentially declared war on the Syrian government.  Of course this puts a member of NATO in direct military conflict with Russia, since Russia is working very hard to prop up the Assad regime.  If all-out war breaks out between Turkey and Russia, could that be the spark that causes World War 3 to erupt in the Middle East?  And once Turkey and Russia start fighting, would the United States and the rest of NATO be dragged into the conflict?

The big mainstream news networks in the western world are almost completely ignoring what Erdogan said on Tuesday, but without a doubt this is major news.  The following comes from a Turkish news source

The Turkish military launched its operations in Syria to end the rule of Syrian President Bashar al-Assad, President Recep Tayyip Erdoğan said Nov. 29.

“In my estimation, nearly 1 million people have died in Syria. These deaths are still continuing without exception for children, women and men. Where is the United Nations? What is it doing? Is it in Iraq? No. We preached patience but could not endure in the end and had to enter Syria together with the Free Syrian Army [FSA],” Erdoğan said at the first Inter-Parliamentary Jerusalem Platform Symposium in Istanbul.

Turkish military forces initially invaded northern Syria on August 24th, and at the time we were all told that the purpose of the invasion was to “fight ISIS”, but now Erdogan is telling us something completely different.

Breitbart is one of the few U.S. news outlets that is reporting on this story, and I want you to read the following quotes from Erdogan that come from a Breitbart article that was posted on Tuesday very, very carefully…

“Why did we enter? We do not have an eye on Syrian soil. The issue is to provide lands to their real owners. That is to say we are there for the establishment of justice. We entered there to end the rule of the tyrant al-Assad who terrorizes with state terror,” Erdogan continued, insisting his forces were not in Syria for “any other reason.”

The Daily Sabah notes that Erdogan spoke with Russian President Vladimir Putin about Syria during two telephone calls last week. Since Russia launched a massive military operation to secure Bashar Assad in power, Putin would presumably have been interested in anything Erdogan had to say about toppling the regime in Damascus, and probably would not have kept quiet about it.

If the Turkish military is only in Syria to end the Assad regime, then presumably they will stay there until the job is done.

And this puts Turkey into a direct military conflict with Russia, Iran and Hezbollah since all three of them are already fighting very hard to help the Assad regime.

Of course there is another reason why Turkey is in northern Syria, and that is to fight the Kurds.  In fact, the Kurds and Turkey are both rushing to capture a little city northeast of Aleppo called al-Bab which is currently controlled by the Islamic State

Their immediate challenge is securing al-Bab, an Islamic State-held city northeast of Aleppo which Kurdish-led fighters are racing to take, and which lies close to the front lines of Assad’s allies.

Turkish-backed forces have made rapid gains since August, but largely through less heavily populated areas. Urban warfare around al-Bab is already taking a heavier toll. Five Turkish soldiers have been killed in the past week alone, three of them in a suspected Syrian government air strike.

“Right now the question is whether Russia will allow Turkey to seize al-Bab,” said the Muntasir Billah Brigade official.

But most people in the western world don’t know that Turkish soldiers are already dying in Syria.

Here in the United States, tens of millions of Americans are hailing a new era of “peace and prosperity” now that Donald Trump has won the election, but the truth is that one false move in Syria could easily raise tensions between the United States and Russia to the highest level that we have seen since the Cuban missile crisis back in the 1960s.

If Erdogan would have just stayed out of Syria we wouldn’t be in such a precarious situation.  Unfortunately, the president of Turkey is a narcissistic lunatic, and he dreams of a day when the old Ottoman Empire will once again be restored.

But his delusions of greatness threaten to make the Middle East even more unstable than it already has been.  In addition to his remarks above, on Tuesday Erdogan also called on all Muslims globally “to embrace the Palestinian cause and protect Jerusalem”

Turkish President Recep Tayyip Erdogan has urged Muslims to defend the Palestinian cause, striking a tough stance on Israel despite improved ties between the two nations.

The president of majority Muslim Turkey said Tuesday that “it is the common duty of all Muslims to embrace the Palestinian cause and protect Jerusalem” and that safeguarding the Al-Aqsa Mosque should not be left to children armed with nothing but stones. Located in the Old City of Jerusalem, the hilltop compound is sacred to Muslims and Jews.

Most people in the western world pay very little attention to Erdogan, but the truth is that he is a madman that is often referred to as “Turkey’s version of Adolf Hitler”.  He is extremely ambitious, extremely nationalistic, and he is a warmonger.  That is a very dangerous combination, and I believe that it is only a matter of time before he starts a major war in the Middle East.

Somebody needs to get this guy under control, but unfortunately the Obama administration has been very hesitant to confront Erdogan about his outrageous behavior.

When Erdogan openly stated that the Turkish military is in Syria to overthrow the Assad regime on Tuesday, that was like lighting a match in a room that has already been doused with propane.

He needs to immediately retract those comments, because his unique brand of lunacy has now brought us dangerously close to the start of World War 3.

Winds Of War: Is Russia Conducting A Massive Mobilization Of Troops For An Invasion Of Ukraine?

Russian Troops - Public DomainThe drumbeats of war are growing louder.  Fighting in eastern Ukraine between separatists and pro-government forces has risen to an intensity not seen in well over a year, and the Russians claim that they recently foiled a “Ukrainian plot” to conduct terror attacks in Crimea.  As tensions in the region have increased, the Russians have used the cover of “military drills” to move massive amounts of troops and military equipment up to the border with Ukraine.  This is something that I wrote about a couple of weeks ago, but things have intensified since then, and a huge military exercise is planned for September.  Needless to say, the Ukrainians are quite alarmed by this, and Ukrainian President Petro Poroshenko is warning that a full scale mobilization of the Ukrainian military may be needed.  If something is going to happen, it is likely to happen soon.  As you will see below, once we get into October it will become much less likely that we would see a Russian invasion of Ukraine.

We aren’t hearing much about this conflict in the U.S. media, but over in Europe this is a very big deal.  Just consider the following excerpt from an article in the Independent entitled “Russia is teetering on the brink of ‘all out war’ with Ukraine“…

Ukraine is holding a major military parade in Kiev today to mark its 25th anniversary as an independent state. But, at a time that should otherwise be a moment of national celebration, a serious crisis with Moscow is flaring up. So serious, in fact, that on Tuesday the Russian President Vladimir Putin, German Chancellor Angela Merkel and French President Francois Hollande were forced to hold a three-way phone call to try to de-escalate the situation.

Ukrainian President Petro Poroshenko has even warned that there is growing risk of a “full scale Russian invasion along all fronts,” ratcheting up what is already the bloodiest European conflict since the wars over the former Yugoslavia in the 1990s.

And the truth is that Ukrainian President Petro Poroshenko has some very good reasons to be concerned.  As the Washington Post has pointed out, the Russians have used military exercises as an excuse to stage forces for military action in the past…

As violence in the east heats up, Ukrainian officials have suggested that Russia may use the upcoming military drills, called Kavkaz (Caucasus) 2016, as cover for military action against Ukraine. The drills are the first to integrate the Crimean Peninsula, which was annexed by Russia in 2014, into the country’s military planning, and thousands of Russian troops will be brought in for air, land and sea exercises.

Ukrainian government analysts have recalled that exercises served as staging grounds for troop incursions in 2014, as did Russian military exercises held shortly before the Georgian war of 2008. Ukraine’s ambassador to the United Nations suggested that Russia may have “bad intentions,” while the West has also said it would like observers to be present.

If there is going to be a Russian invasion of Ukraine in September, Kavkaz 2016 will likely be used as cover for invasion preparations.  It is a yearly exercise, but in 2016 it looks like it will be much bigger than ever before, and some analysts have pointed out that the Russians have not conducted a mobilization on this scale since the invasion of Czechoslovakia in 1968.  Here is more on Kavkaz 2016 from the Daily Signal

In September, Russia has plans for a large-scale strategic military exercise called Kavkaz-2016. The exercise, which is an annual event, will include units deployed near the borders of Ukraine, Georgia, and Azerbaijan—including two Russian military districts in the Southern and Northern Caucasus, the Russian Black Sea Fleet (headquartered in occupied Crimea), and the Caspian Flotilla.

It is not immediately clear the exact size of this year’s exercise, but last year it comprised 95,000 troops, 7,000 vehicles, and 150 aircraft, according to a report by IHS Markit, a U.K.-based intelligence and analysis firm.

If the Russians are going to do something, they need to do it soon, because the weather turns very bad during the month of October.  Here is one how one analyst assessed the situation

“But will there be a war – we’ll see, no much time for guessing left… In this situation, the main thing for Russia is to achieve strategic and tactical surprise. And if she does not start now – then it will be too late. One would need to turn off full-scale operations in October because of the rains and the next draft to Russian army (it would mean the demobilization of current wave of conscripts and training the new ones – UT).”

A Russian invasion of Ukraine would mean that Russian relations with the U.S. and with Europe would immediately plunge to Cold War levels.  Of course some would argue that we are already there.  In any event, a Russian invasion would force the U.S. and NATO to make some very uncomfortable decisions.

Would the U.S. and NATO just stand by and do nothing while Ukraine is overrun by the Russians?

Maybe.

But if the U.S. and NATO responded with military force, that would risk a full scale nuclear confrontation with Russia.

Right now, a war with Russia is about the last thing that most Americans are thinking about, but the truth is that we are not that far away from such a scenario.

Over in Russia, the mindset is totally different.  The following is from a Newsweek article entitled “In Europe and Russia, There’s Talk of War“…

Recently, I grabbed a taxi in Moscow. When the driver asked me where I was from, I told him the United States. “I went there once,” he said, “to Chicago. I really liked it.”

“But tell me something,” he added. “When are we going to war?”

The question, put so starkly, so honestly, shocked me. “Well, I hope never,” I replied. “No one wants war.”

At the office, I ask a Russian employee about the mood in his working class Moscow neighborhood. The old people are buying salt, matches and gretchka [buckwheat], he tells me—the time-worn refuge for Russians stocking up on essentials in case of war.

In the past two months, I’ve traveled to the Baltic region, to Georgia, and to Russia. Talk of war is everywhere.

Most Americans don’t realize that Russians already view the United States more negatively than they did even during the height of the Cold War.  On Russian television they openly talk about the inevitability of a war between the United States and Russia, and the Russian military has feverishly been preparing for such a future conflict.

If we can get to October, we can probably breathe a bit of a sigh of relief because the Russians are not likely to conduct an invasion once the weather turns bad.

But for now there are very good reasons to be concerned, and we shall see what happens over the coming weeks…

Russia’s New ‘Nuclear Torpedo’ Can Create Giant Tsunamis And Wipe Out Entire Coastal Cities

Nuclear Explosion - Public DomainWhile the eyes of the world are on ISIS, Russia is creating weapons unlike anything the world has ever seen before.  Plans for a giant self-propelled nuclear torpedo that can create a giant tsunami more than 1,000 feet tall were recently “leaked by mistake” by the Russian media.  Apparently the warheads on these torpedos are designed to create so much radiation “that everything living will be killed” – including those that try to survive the attack by hiding in underground shelters.  These “robotic mini-submarines” would have a range of up to 10,000 kilometers and would be able to evade all existing U.S. detection systems.  To say that such a weapon would be a “game changer” would be a massive understatement.

I know that you are not just going to take my word for any of this.  So like I do in all of my articles, I am going to carefully document what I am saying.

The reason why we know about the plans for this new nuclear torpedo is because they were displayed on Russian state television for a few moments during a recent broadcast.  According to Russian officials, this was an “accident”.  The following comes from a report in the Independent

Secret plans for a new Russian nuclear torpedo system have been shown on state-controlled television in what the Kremlin said was an accident.

A close-up of a confidential document detailing “Ocean Multipurpose System: Status-6” was broadcast for several seconds by Channel One Russia and NTV during coverage of a meeting between Vladimir Putin and military officials.

Could it be possible that this “accident” happened on purpose?

Could it be possible that it was intended as a warning for the Obama administration?

You never know.

But without a doubt, this is the kind of weapon that would keep military planners up at night.  According to RT, this new nuclear torpedo is designed to create “extensive zones of radioactive contamination” that would ensure that no “military, economic, business or other activity” would occur in that area for a very long time…

The presentation slide titled “Ocean Multipurpose System: Status-6” showed some drawings of a new nuclear submarine weapons system. It is apparently designed to bypass NATO radars and any existing missile defense systems, while also causing heavy damage to “important economic facilities” along the enemy’s coastal regions.

The footnote to the slide stated that Status-6 is intended to cause “assured unacceptable damage” to an adversary force. Its detonation “in the area of the enemy coast” would result in “extensive zones of radioactive contamination” that would ensure that the region would not be used for “military, economic, business or other activity” for a “long time.”

In addition, Konstantin Sivkov of the Russian Geopolitical Academy told the BBC that this kind of weapon could be used to create a tsunami more than 1,000 feet high…

A warhead of up to 100 megatons could produce a tsunami up to 500m (1,650ft) high, wiping out all living things 1,500km (930 miles) deep inside US territory

As I have written about previously, a whopping 39 percent of all Americans live in counties that directly border a shoreline.  The detonation of just a handful of these weapons could wipe out the entire east coast and kill off a very substantial percentage of the U.S. population.

On top of all that, the BBC is reporting that a state-run Russian publication is suggesting that these new torpedos are being fitted with extremely radioactive cobalt warheads…

According to state-run Rossiiskaya Gazeta, the destructive power attributed to the new torpedo’s warhead would fit the description of a cobalt bomb.

That would be a type of thermonuclear warhead with a layer of cobalt-59, which on detonation would be transmuted into highly radioactive cobalt-60 with a half-life longer than five years.

Such a weapon would guarantee “that everything living will be killed”, the paper said – there would not even be any survivors in bunkers.

A cobalt bomb has never been tested because of the devastating radiation it would unleash.

Worst of all, we would have no advance warning that these torpedos were coming.  They can be launched from anywhere, they reportedly have a range of up to 10,000 kilometers, and they are designed to “avoid all acoustic tracking devices and other traps”

On the diagram the giant torpedo’s range is given as “up to 10,000km” (6,200 miles) and depth of trajectory is “up to 1,000m” (3,300ft).

It was developed by Rubin, a submarine design bureau in St Petersburg.

It would, apparently, be launched by nuclear-powered submarines of the 09852 “Belgorod” and 09851 “Khabarovsk” series.

Rossiiskaya Gazeta called the torpedo a “robotic mini-submarine”, travelling at 100 knots (185km/h; 115mph), which would “avoid all acoustic tracking devices and other traps”.

We already know that Russia has been building “black hole submarines” that NATO officials admit are undetectable.

So Russia already has the capability to approach our coastlines without us even knowing about it.

But these new nuclear torpedos take the game to an entirely new level.

And of course this is not the only new weapons system that Russia has been developing in anticipation of World War III.  Earlier this year, I discussed several more in an article entitled “The Next-Generation Weapons That Russia Will Use Against The United States In World War III“.

Sadly, the Obama administration seems almost totally oblivious to this threat.  Our strategic nuclear forces are so outdated that floppy disks and rotary phones are still being used, and Barack Obama is fond of saying that “the Cold War’s been over for 20 years“.

Unfortunately for us, the Russians do not see things the same way.  Anti-American sentiment inside Russia is at an all-time high, and every time the U.S. interferes in Syria or Ukraine the Russians get even angrier.

Just like we do, there are “talking heads” on Russian television that tell people what to think.  And many of these “talking heads” on Russian television are openly talking about how war with the United States is inevitable.  These days, the Russians consider themselves to be the great force for good in the world, and they consider America to be the great force for evil in the world.  In fact, one of their most popular talking heads named Alexander Dugin has publicly called the U.S. the “kingdom of the Antichrist”.

And even though the Russian economy has dipped into recession, the Russians continue to feverishly prepare for war.  This year alone, Russian military spending is up 33 percent.

Yes, ISIS is a far greater threat than most Americans would even dare to imagine as I discussed yesterday.  In the times to come, I fully expect to see terror attacks inside this country unlike anything we have ever seen before.

But I am completely convinced that the greater long-term strategic threat is Russia.

The Russians are feverishly preparing for World War III while Barack Obama acts like it could never possibly happen.

Hopefully Obama is right, because if he is wrong the consequences for this nation will be absolutely unthinkable.

Russia Is Going To Pass A Law Formally Dumping The U.S. Dollar

Vladimir Putin 2015 - Public DomainRussian President Vladimir Putin has introduced legislation that would deal a tremendous blow to the U.S. dollar.  If Putin gets his way, and he almost certainly will, the U.S. dollar will be eliminated from trade between nations that belong to the Commonwealth of Independent States.  In addition to Russia, that list of countries includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan.  Obviously this would not mean “the death of the dollar”, but it would be a very significant step toward the end of the era of the absolute dominance of the U.S. dollar.  Most people don’t realize this, but more U.S. dollars are actually used outside of the United States than are used inside this country.  If the rest of the planet decides to stop accumulating dollars, using them to trade with one another, and loaning them back to us at ultra-low interest rates, we are going to be in for a world of hurt.  Unfortunately for us, it is only a matter of time until that happens.

When I first read the following excerpt from a recent RT article, I was absolutely stunned…

Russian President Vladimir Putin has drafted a bill that aims to eliminate the US dollar and the euro from trade between CIS countries.

This means the creation of a single financial market between Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and other countries of the former Soviet Union.

“This would help expand the use of national currencies in foreign trade payments and financial services and thus create preconditions for greater liquidity of domestic currency markets”, said a statement from Kremlin.

For a long time, tensions have been building between the United States and Russia over Syria, Ukraine, the price of oil and a whole host of other issues.  But I didn’t anticipate that things would get to this level quite yet.  It is expected that Putin’s new bill will become law, and this is only one element of a much larger trend that is now developing.

You see, the truth is that Russia and China have both been dumping dollar-denominated assets for months.  The following comes from a recent piece by Mac Slavo

Last year Russia began unloading massive amounts of their US dollar reserves. In the month of December 2014 alone Putin sold some 20% of the country’s U.S. Treasurys, a move that further increased tensions surrounding what can only be described as economic warfare between East and West.

Then, as if part of a coordinated effort, this summer it was revealed that China had implemented a similar strategy, dumping half a trillion in dollar denominated assets.

But that’s just the beginning of the end for the US dollar. Amid a major meltdown in Chinese stock markets the People’s Republic sold off billions in dollar assets last week in what was reported to be an effort to stabilize their collapsing financial markets.

And now, as Russia’s economy collapses under the weight of American and European sanctions, including what many believe to be widespread downward manipulation of oil prices, Vladimir Putin is sending a clear signal to the central bank of the world’s reserve currency.

China has the second largest economy on the entire planet, and Russia has the tenth largest.  In recent years, these two superpowers have become much tighter.  For example, just consider this headline from Sputnik News that I came across just today: “Crippling US Foreign Policy Draws Russia, China Closer Together“.

And I don’t know if you have noticed, but U.S. relations with China have turned rather sour lately.  Lots of accusations about spying and trade violations have been flying around, and just this week five Chinese warships were spotted off the coast of Alaska.  In the months ahead, expect our relationship with China to continue to unravel.

If China and Russia were to both fundamentally reject the U.S. dollar at some point, much of the rest of the world may choose to follow suit.

So why is that important?

The fact that most of the nations of the world use our dollars to trade with one another creates a tremendous amount of artificial demand for our currency.  In other words, the U.S. dollar is valued much higher than it otherwise would be just because it is the de facto reserve currency of the planet.

As a result, we can import massive amounts of products at super cheap prices.  When we go to Wal-Mart or the dollar store, we can fill up our carts with lots and lots of ridiculously inexpensive stuff.  Our standard of living is way higher than it actually should be.

And because the U.S. dollar is used so widely in global trade, major exporting nations end up with giant piles of our currency which they have been willing to lend back to us at ultra-low interest rates.  This has made it possible to fund our massively bloated federal government and to go 18 trillion dollars in debt.

If the rest of the world stops using our dollars and stops playing our game, we will be in a tremendous amount of trouble.  The cost of imported products would absolutely skyrocket and our standard of living would go way down.

In addition, the federal government (along with state and local governments) would have to pay much more to borrow money which would rapidly create a gigantic debt crisis.

So Russia knows where they could really hurt us.  Most of the “power” that America currently projects around the world is based on having the de facto reserve currency of the planet.  If you take our financial power away, we would be far, far less imposing on the global stage.  Sadly, the truth is that the U.S. military is rapidly shrinking and has largely been defanged by the Obama administration.

A lot of people that will read this article will not understand this, but it is very, very important to keep an eye on this emerging Russian/Chinese alliance.  I believe that it is going to play a critical role in world events during the years ahead.

So do you agree with me or do you disagree?  Please feel free to join the discussion by posting a comment below…

The Road To World War 3: Russia And Ukraine Are Now Engaged In A Shooting War

Russian Tanks - Photo by Yana AmelinaRussian soldiers and Ukrainian soldiers are now shooting at each other in eastern Ukraine.  Could this conflict ultimately lead us down the road to World War 3?  This week, a very robust force of “tanks, artillery and infantry” has opened up a “third front” in the Ukrainian civil war in a part of southeastern Ukraine that had not seen much fighting yet.  Exhausted Ukrainian forces are suddenly being pushed back rapidly and many outsiders are wondering how the nearly defeated rebels were able to muster such impressive military strength all of a sudden.  But it really isn’t much of a mystery.  The tanks, artillery and infantry came from inside Russia.  In recent days, Ukrainian units have captured ten Russian paratroopers and there have even been funerals for Russian paratroopers that have been killed in action back home in Russia.  Even though it has become exceedingly obvious that Russia is now conducting a stealth invasion of Ukraine, Vladimir Putin is still choosing to deny it.  But if he did publicly admit it, that would be even more dangerous.  Barack Obama would be forced into a position of either having to do something about the Russian invasion or look weak in the eyes of the public.  And as the Russians have already shown, they are more than willing to match any move that the Obama administration makes.

There has already been much written about who is to blame for all of this, and I am sure that much more will be written about who is to blame in the future.  The western world is blaming “Russian aggression” for the mess in Ukraine.    In return, the Russians point out that it was westerners that funded and organized the groups that violently overthrew the democratically-elected government of Ukraine.  To the Russians, the current government of Ukraine is made up of neo-Nazi terrorist usurpers that are attempting to brutally oppress millions of ethnic Russians in eastern Ukraine.

So the Russians seem themselves as “the good guys” in this conflict and so does the western world.  But that is how most wars start.  Both sides usually feel morally justified at the start of a conflict.

In the final analysis, however, is it really going to matter very much who was “right” and who was “wrong” if the end result is World War 3?

If the rebels in eastern Ukraine had been able to defeat the Kiev government forces on their own, Putin probably would have been content to let them do that.  But instead, they had been pushed back to two major cities and seemed on the verge of defeat.

But now it is the Ukrainian forces that are experiencing “panic and wholesale retreat”

Tanks, artillery and infantry have crossed from Russia into an unbreached part of eastern Ukraine in recent days, attacking Ukrainian forces and causing panic and wholesale retreat not only in this small border town but a wide swath of territory, in what Ukrainian and Western military officials are calling a stealth invasion.

The attacks outside this city and in an area to the north essentially have opened a new, third front in the war in eastern Ukraine between Ukrainian forces and pro-Russian separatists, along with the fighting outside the cities of Donetsk and Luhansk.

How is this happening?

It is the Russians of course.

In fact, if you talk to Ukrainian soldiers, they are very clear on who they are fighting now…

“I tell you they are Russians, but this is what proof I have,” said Sgt. Aleksei Panko, holding up his thumb and index finger to form a zero. Sergeant Panko estimated about 60 armored vehicles crossed near Novoazovsk. “This is what happened: they crossed the border, took up positions and started shooting.”

The Ukrainian Vinnytsia brigade met the cross-border advance over the six miles of countryside separating Novoazovsk from the Russian border, but later retreated to the western edge of town along the Rostov-Mariupol highway, where soldiers were collapsed in exhaustion on the roadside. “This is now a war with Russia,” Sergeant Panko said.

And as I mentioned above, Ukrainian forces have even captured ten Russian paratroopers.  Rather than denying who they are, the Russian government is claiming that they wandered into Ukraine by mistake

Ten Russian soldiers were detained in the Donetsk region of eastern Ukraine, that country’s Security Service said Tuesday, as tensions simmered over the conflict between Ukrainian forces and pro-Russian rebels.

The Russian soldiers were captured with documents and weapons on them, the Security Service said.

Moscow has repeatedly denied claims by Kiev that it has sent troops and weapons over the border into Ukraine, where the Ukrainian military is fighting pro-Russian rebels.

Russia’s state-run RIA Novosti news agency cited a source in the Russian Defense Ministry as saying the soldiers had been patrolling the border and “most likely crossed by accident” at an unmarked point.

The denials that Russian forces are actively operating inside eastern Ukraine have become so absurd that even some in the Russian press are openly questioning them.  For example, just check out this excerpt from a USA Today article that was posted on Wednesday…

Vedomosti, a liberal business daily, published an editorial Wednesday on events in Ukraine under the headline, “Are We Fighting?”

It noted the recent capture of the Russian soldiers on Ukrainian territory and reports of “mysterious funerals” of Russian soldiers, some of whom are officially counted dying during training exercises.

“The number of questions that hang in the air of the dead and detained Russian troops on the territory of Ukraine has reached a critical number. Does Russia fight in Ukraine and, if so, on what grounds? If not, then who is in those freshly dug graves or giving testimony at SBU (Russian Security service) interrogations?”

A Bloomberg editorial contained some more details about the “mystery funerals” that have been taking place inside Russia…

One such burial, of two soldiers, took place in the village of Vybuty near Pskov in northwestern Russia, where an airborne division is based. Efforts to conceal the deaths produced a fiasco. Though the wife of one paratrooper had reported his death on the Vkontakte social network, when a reporter, Ilya Vasyunin of the Russian Planet website, called the wife’s phone number, a woman who answered stated that the paratrooper was alive and well. Two reporters, from Russian Planet and TV Dozhd, who visited the cemetery where the two fresh graves had been seen were immediately attacked by men in black tracksuits. Local journalists, however, succeeded in photographing the graves. According to the independent TV Dozhd, the soldiers’ names and wreaths have been removed from the graves.

There are other reports of paratrooper funerals, which are hard to conceal. Soldiers have grieving families who do not necessarily share the authorities’ desire for deception. In any case, Ukrainian troops have captured some Russian paratroopers. For the first time since the conflict began in March, they were able to record interviews with them.

Sadly, most Americans are not paying much attention to this conflict.

Most Americans are not really going to care much about a war on the other side of the planet that does not directly involve us.

But they should care.

Because things are about to escalate to a level that we rarely saw even during the darkest moments of the Cold War.  Relations between the United States and Russia are spiraling downhill, and that could end up having a huge impact on all of our lives.

For example, in my previous article entitled “Russia Is Doing It – Russia Is Actually Abandoning The Dollar“, I discussed how this tug of war over Ukraine was causing Russia to think about moving away from the petrodollar.  Well, it turns out that now the Russians are actually taking concrete steps toward abandoning the petrodollar for good…

The Russian oil company Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers, the Russian business daily Kommersant reported Wednesday.

The Russian government and several of the country’s largest exporters have widely discussed the possibility of accepting payments in rubles for oil exports.

Last week, Russia began to ship oil from the Novoportovskoye field to Europe by sea. Two oil tankers are expected to arrive in Europe in September. According to Kommersant, the payment for these shipments will be received in rubles.

That is huge news, but you probably haven’t heard a thing about it on the big mainstream news networks.

Meanwhile, one thing that you probably have heard about is how “Russian hackers” attacked JPMorgan Chase earlier this month

Russian hackers attacked the U.S. financial system in mid-August, infiltrating and stealing data from JPMorgan Chase & Co. and at least one other bank, an incident the FBI is investigating as a possible retaliation for government-sponsored sanctions, according to two people familiar with the probe.

The attack resulted in the loss of gigabytes of sensitive data, said the people, who asked not to be identified because the probe is still preliminary. Authorities are investigating whether recent infiltrations of major European banks using a similar vulnerability are also linked to the attack, one of the people said.

As relations between the United States and Russia continue to decline precipitously, both sides will be looking for ways to hurt one another.

And that won’t be good for any of us.

So let us hope that cooler heads prevail.

But ultimately, this current conflict could end up taking us to a destination that the Cold War never did.

World War 3 will probably not happen next week, next month or even next year, but right now we are on a road which could eventually lead to the unthinkable.

Let us pray that our politicians are able to find the exit ramp at some point.

De-Dollarization: Russia Is On The Verge Of Dealing A Massive Blow To The Petrodollar

The U.S. Dollar - Photo by Pen WaggenerIs the petrodollar monopoly about to be shattered?  When U.S. politicians started slapping economic sanctions on Russia, they probably never even imagined that there might be serious consequences for the United States.  But now the Russian media is reporting that the Russian Ministry of Finance is getting ready to pull the trigger on a “de-dollarization” plan.  For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars.  As I will explain below, this has been a massive advantage for the U.S. economy.  In recent years, there have been rumblings by nations such as Russia and China about the need to change to a new system, but nobody has really had a big reason to upset the status quo.  However, that has now changed.  The struggle over Ukraine has caused Russia to completely reevaluate the financial relationship that it has with the United States.  If it starts trading a lot of oil and natural gas for currencies other than the U.S. dollar, that will be a massive blow for the petrodollar, and it could end up dramatically changing the global economic landscape.

The fact that the Russian government has held a meeting to discuss “getting rid of the US dollar in Russian export operations” should be front page news on every mainstream news website in the United States.  That is how big this is.  But instead, we have heard nothing from the big mainstream news networks about this so far.  Instead, we have only heard about this from Russian news sources such as the Voice of Russia

Russian press reports that the country’s Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is “ready to handle the increased number of ruble-denominated transactions”.

According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

The “de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar.

So will Russia go through with this?

After all, this wouldn’t just be a slap in the face.  This would essentially be like slamming an economic fist into our nose.

You see, Russia is not just a small player when it comes to trading oil and natural gas.  The truth is that Russia is the largest exporter of natural gas and the second largest exporter of oil in the world.

If Russia starts asking for payment in currencies other than the U.S. dollar, that will essentially end the monopoly of the petrodollar.

In order to do this, Russia will need trading partners willing to go along.  In the article quoted above, the Voice of Russia listed Iran and China as two nations that would potentially be willing to make the switch…

Of course, the success of Moscow’s campaign to switch its trading to rubles or other regional currencies will depend on the willingness of its trading partners to get rid of the dollar. Sources cited by Politonline.ru mentioned two countries who would be willing to support Russia: Iran and China. Given that Vladimir Putin will visit Beijing on May 20, it can be speculated that the gas and oil contracts that are going to be signed between Russia and China will be denominated in rubles and yuan, not dollars.

And the reality of the matter is that China has seemed ready to move away from the U.S. dollar for quite some time.  In a previous article, I included a quote from a French news source that discussed how China’s official news agency has even called for a “new international reserve currency… to replace the dominant US dollar”…

For decades the US has benefited to the tune of trillions of dollars-worth of free credit from the greenback’s role as the default global reserve unit.

But as the global economy trembled before the prospect of a US default last month, only averted when Washington reached a deal to raise its debt ceiling, China’s official Xinhua news agency called for a “de-Americanised” world.

It also urged the creation of a “new international reserve currency… to replace the dominant US dollar”.

For much more on what China is thinking, please see my previous article entitled “9 Signs That China Is Making A Move Against The U.S. Dollar“.

So why is the petrodollar so important?

Well, it creates a tremendous amount of demand for the U.S. dollar all over the globe.  Since everyone has needed it to trade with one another, that has created an endless global appetite for the currency.  That has kept the value of the dollar artificially high, and it has enabled us to import trillions of dollars of super cheap products from other countries.  If other nations stopped using the dollar to trade with one another, the value of the dollar would plummet dramatically and we would have to pay much, much more for the trinkets that we buy at the dollar store and Wal-Mart.

In addition, since the U.S. dollar is essentially the de facto global currency, this has also increased demand for our debt.  Major exporting nations such as China and Saudi Arabia end up with giant piles of our dollars.  Instead of just letting them sit there and do nothing, those nations often reinvest their dollars into securities that can rapidly be changed back into dollars if needed.  One of the most popular ways to do this has been to invest those dollars in U.S. Treasuries.  This has driven down interest rates on U.S. debt over the years and has enabled the U.S. government to borrow trillions upon trillions of dollars for next to nothing.

But if the rest of the world starts moving away from the U.S. dollar, all of this could change.

In order for our current standard of living to continue, it is absolutely imperative that everyone else around the globe continues to use our currency.

So if Russia really does pull the trigger on a “de-dollarization” strategy, that would be huge – especially if the rest of the planet started following their lead.

The U.S. economy is already teetering on the brink of another major downturn, and there are a whole host of indications that big trouble is on the horizon.  For much more on this, please see the article that I posted on Monday entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“.

Just about the last thing that we need right now is for our petrodollar monopoly to be threatened.

It would be nice if things would calm down in Ukraine and the relationship between the United States and Russia could go back to normal.

Sadly, that does not appear likely any time soon.

In fact, the Ukrainian government has already admitted that “we are essentially at war“, and on Tuesday six Ukrainian soldiers were killed and eight were wounded in a convoy attack in eastern Ukraine.

The regions in eastern Ukraine that have just declared independence have given the government in Kiev until Wednesday to pull their forces out of eastern Ukraine or else face war.

If a full blown civil war does erupt in Ukraine, it is going to take this crisis to a completely new level.

Unfortunately, most Americans are incredibly apathetic at this point and know very little about what is going on.

But in the end, this could have dramatic implications for all of us.

Obama And Putin Are Trapped In A Macho Game Of “Chicken” And The Whole World Could Pay The Price

Barack Obama Vladimir PutinThe U.S. government and the Russian government have both been forced into positions where neither one of them can afford to back down.  If Barack Obama backs down, he will be greatly criticized for being “weak” and for having been beaten by Vladimir Putin once again.  If Putin backs down, he will be greatly criticized for being “weak” and for abandoning the Russians that live in Crimea.  In essence, Obama and Putin find themselves trapped in a macho game of “chicken” and critics on both sides stand ready to pounce on the one who backs down.  But this is not just an innocent game of “chicken” from a fifties movie.  This is the real deal, and if nobody backs down the entire world will pay the price.

Leaving aside who is to blame for a moment, it is really frightening to think that we may be approaching the tensest moment in U.S.-Russian relations since the Cuban missile crisis.

There has been much talk about Obama’s “red lines”, but the truth is that Crimea (and in particular the naval base at Sevastopol) is a “red line” for Russia.

There is nothing that Obama could ever do that could force the Russians out of Sevastopol.  They will never, ever willingly give up that naval base.

So what in the world does Obama expect to accomplish by imposing sanctions on Russia?  By treaty, Russia is allowed to have 25,000 troops in Crimea and Russia has not sent troops into the rest of Ukraine.

Economic sanctions are not going to cause Putin to back down.  Instead, they will just cause the Russians to retaliate.

In a letter that he sent to Congress this week, Obama claimed that the Ukrainian crisis is an “unusual and extraordinary threat to the national security and foreign policy of the United States.”

Language like that is going to make it even more difficult for Obama to back down.

On Thursday, Obama announced “visa restrictions” on “those Russians and Ukrainians responsible for the Russian move into Ukraine’s Crimean Peninsula”, and a House panel passed a “symbolic resolution” that condemned Russia for its “occupation” of Crimea.

But those moves are fairly meaningless.  Leaders from both political parties are now pushing for very strong economic sanctions against Russia, and there does not appear to be many members of Congress that intend to stand in the way.

If the U.S. does hit Russia with harsh economic sanctions, what is going to happen?

Is Russia going to back down?

No way.

So let’s just play out the coming moves like a game of chess for a moment…

-The U.S. slaps economic sanctions on Russia.

-Russia seizes the assets of U.S. companies that are doing business in Russia.

-The U.S. seizes Russian assets.

-The Russians refuse to pay their debts to U.S. banks.

-The U.S. government hits Russia with even stronger sanctions.

-Russia starts dumping U.S. debt and encourages other nations to start doing the same.

-The U.S. gets Europe to also hit Russia with economic sanctions.

-Russia cuts off the natural gas to Europe.  As I noted the other day, Russia supplies more than half the natural gas to a bunch of countries in Europe.

-The United States moves troops into western Ukraine.

-Russia starts selling oil for gold or for Russian rubles and encourages other nations to start abandoning the U.S. dollar in international trade.

Of course the order of many of these moves could ultimately turn out to be different, but I think that you can see the nightmare that this game of “chicken” could turn out to be.

And what would be the final result?

Nothing would be resolved, but the global economy would greatly suffer.

What makes all of this even more complicated is that about 60 percent of the people living in Crimea are actually ethnic Russians, and a majority of the population appears to want to leave Ukraine and be reunited with Russia.  The following comes from a Reuters article

Crimea’s parliament voted to join Russia on Thursday and its Moscow-backed government set a referendum on the decision in 10 days’ time in a dramatic escalation of the crisis over the Ukrainian Black Sea peninsula.

The sudden acceleration of moves to bring Crimea, which has an ethnic Russian majority and has effectively been seized by Russian forces, formally under Moscow’s rule came as European Union leaders held an emergency summit groping for ways to pressure Russia to back down and accept mediation.

The Obama administration is calling the upcoming referendum “illegal” and says that it will not respect the will of the Crimean people no matter how the vote turns out.

But the people of Crimea are very serious about this, and of course they never would be pushing for reunification with Russia if they had not gotten approval from Putin…

The decision, which diplomats said could not have been made without Putin’s approval, raised the stakes in the most serious east-west confrontation since the end of the Cold War.

The vice premier of Crimea, home to Russia’s Black Sea Fleet in Sevastopol, said a referendum on the status would take place on March 16. All state property would be “nationalized”, the Russian ruble adopted and Ukrainian troops treated as occupiers and forced to surrender or leave, he said.

There is no way that the U.S. government is going to accept Crimea becoming part of Russia, and there is no way in the world that Russia is going to back down at this point.  Just consider what geopolitical expert Ian Bremmer of the Eurasia Group recently had to say

“Russia is not going to back down from Crimea, irrespective of U.S. pressure. Which means if the U.S. wants to find any resolution here, they’re going to have to find a way to come to terms with that. Now that the Crimean parliament has voted — clearly with Russian assent — we’ll have a referendum … and then further militarization of the peninsula by the Russians.”

What we need is someone with extraordinary diplomatic skills to defuse this situation before it spirals out of control.

Unfortunately, we have Barack Obama, Valerie Jarrett and John Kerry running things.

What a mess.

So why is Ukraine such a big deal anyway?

In a recent article, Peter Farmer explained succinctly why Ukraine is so incredibly important…

The Ukraine is strategically-important for a number of reasons. It sits astride enormous petroleum and natural gas deposits found in the Black Sea region. The nation is also home to an extensive network of liquid natural gas pipelines which crisscross it; control the Ukraine and you control its pipelines – and thus the flow of energy into the hugely-lucrative European market. Western energy firms such as Exxon-Mobil, BP-Amoco and Chevron are locked in competition with the Russian energy giant Gazprom – for control/exploitation of as-yet-undeveloped petroleum deposits not only in the Ukraine, but in neighboring Poland and Romania. Fracking technologies and other new extraction methods have only added urgency to the competition. Income from fossil fuels development is the lifeblood of the new Russian economy. Threats to the regional hegemony of Gazprom are likely to be treated by Putin and Russia with the utmost urgency and seriousness.

The Crimean Peninsula is also home to the Black Sea fleet of the Russian navy, which leases its base at Sevastopol from the Ukrainian government. Since the Black Sea – via the Dardanelles – provides the only warm-water base with access to the Mediterranean Sea – it is of enormous importance to Russia. Its loss would be a crippling blow to the Russian fleet.

Finally, the Ukraine – once known as the “bread basket of Europe” – is home to arguably the finest temperate agricultural region in the world. Its topsoil is widely-acknowledged by agronomists to be among the world’s best. Control the Ukraine and you control the grainery of Europe – and can exert tremendous leverage upon worldwide grain agricultural commodities prices.

If the U.S. insists on playing a game of brinksmanship over Ukraine, the consequences could be disastrous.

For one thing, as I mentioned above, the status of the petrodollar could be greatly threatened.  The following is how Jim Willie is analyzing the situation…

If the Kremlin demands Gold bullion (or even Russian Rubles) for oil payments, then the interventions to subvert the Ruble currency by the London and Wall Street houses will backfire and blow up in the bankster faces. Expect any surplus Rubles would be converted quickly to Gold bullion. If the Chinese demand that they are permitted to pay for oil shipments in Yuan currency, then the entire Petro-Dollar platform will be subjected to sledge hammers and wrecking balls. The new Petro-Yuan defacto standard will have been launched from the Shanghai outpost. If the Saudis curry favor to the Russians and Chinese by accepting non-USDollar payments for oil shipments, then the Petro-Dollar is dead and buried.

In addition, if Russia starts dumping U.S. debt and gets other nations (such as China) to start doing the same, that could create a nightmare scenario for the U.S. financial system very rapidly.

So let us hope and pray that cooler heads prevail.

In my recent article entitled “The Top 12 Signs That The U.S. Economy Is Heading Toward Another Recession“, I discussed how the U.S. economy appears to be hurtling toward another major downturn.

And on Thursday, we learned that office supplies giant Staples has just announced that it is going to close 225 stores.

Even without this major international crisis, the U.S. economy would still be deeply troubled.

But if the United States and Russia do declare “economic war” on each other, all hell could start breaking loose.

Unfortunately, there does not appear to be much hope of anyone backing down at this point.  In an editorial for the Washington Post, Henry Kissinger stated that it “is incompatible with the rules of the existing world order for Russia to annex Crimea.”

Very interesting word choice.

So this is the situation we are facing…

-The U.S. government seems absolutely determined to “punish” Russia until it leaves Crimea.

-Russia is never going to leave Crimea, and has promised to “respond” harshly to any sanctions.

Most Americans are not paying much attention to what is going on in Ukraine, but this is a very, very big deal.

In the end, it could potentially affect the lives of virtually every man, woman and child on the planet.

Russia Threatens To Abandon The U.S. Dollar And Start Dumping U.S. Debt

The Kremlin - Photo by Pavel KazachkovThe Obama administration and the hotheads in Congress are threatening to hit Russia with “economic sanctions” for moving troops into Crimea.  Yes, those sanctions would sting a little bit, but what our politicians should be made aware of is the fact that Russian officials are promising “to respond” if economic sanctions are imposed on them.  As you will read about below, one top Kremlin adviser is even suggesting that Russia could abandon the U.S. dollar and start dumping U.S. debt.  In addition, he is also suggesting that if sanctions are imposed that Russian companies would not repay the debts that they owe U.S. banks.  Needless to say, Russia could do far more economic damage to the United States than the United States could do to Russia.  The U.S. financial system relies on the fact that the rest of the planet is going to use our currency to trade with one another and lend gigantic piles of it back to us at super low interest rates.  If the rest of the world starts changing their behavior, we are going to be in a massive amount of trouble.  Those that believe that the United States is “economically independent” are being quite delusional.

In order for U.S. economic sanctions against Russia to be effective, Europe would also have to get on board.

But that simply is not going to happen.

As I noted yesterday, Russia is the largest exporter of natural gas on the planet.  And Russia is also Europe’s largest supplier of energy.

There is no way that Europe could risk having Russia cut off the gas, especially considering the economic condition that Europe is currently in.

To get an idea of just how incredibly dependent the rest of Europe is on Russian natural gas, check out the chart in this article.  A whole bunch of European nations get more than half their natural gas from Russia.

And according to the Telegraph, even the UK has already completely ruled out economic sanctions…

Europe would be pushed back into recession, Russia into financial meltdown. This is not the sort of self harm Europe is prepared to contemplate right now. Indeed, thanks to the indiscretion of a UK official, who was snapped going into Downing Street with his briefing documents on display for all the world to see, we know this to be the case. Trade and financial sanctions have already been ruled out.

So the U.S. can do whatever it wants, but Europe is not going to be any help.  Perhaps Canada will stand with the U.S., but that will be about it.

On the flip side, the Russian Foreign Ministry is promising “to respond” if the United States does impose economic sanctions…

Russia said on Tuesday that it would retaliate if the United States imposed sanctions over Moscow’s actions in Ukraine.

We will have to respond,” Foreign Ministry spokesman Alexander Lukashevich said in a statement. “As always in such situations, provoked by rash and irresponsible actions by Washington, we stress: this is not our choice.”

So what would the response look like?

Lukashevich did not say, but top Kremlin adviser Sergei Glazyev is suggesting that Russia could abandon the U.S. dollar and refuse to pay back loans to U.S. banks…

“In the instance of sanctions being applied to stated institutions, we will have to declare the impossibility of returning those loans which were given to Russian institutions by U.S. banks,” RIA quoted Glazyev as saying.

“We will have to move into other currencies, create our own settlement system.”

He added: “We have excellent trade and economic relations with our partners in the east and south and we will find a way to reduce to nothing our financial dependence on the United States but even get out of the sanctions with a big profit to ourselves.”

Glazyev also stated that Russia could start dumping U.S. debt and encourage other nations to start doing the same.  The following comes from a Russian news source

“We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.

Clearly Russian officials understand the economic leverage that they potentially have.  In fact, Glazyev seems fully convinced that Russia could cause “a crash for the financial system of the United States”

“An attempt to announce sanctions would end in a crash for the financial system of the United States, which would cause the end of the domination of the United States in the global financial system.”

On that last point Glazyev is perhaps overstating things.

On their own, the Russians could do a considerable amount of damage to the U.S. financial system, but I doubt that they could completely crash it.

However, if much of the rest of the world started following Russia’s lead, then things could get very interesting.

Just yesterday, I wrote about how China has chosen to publicly stand in agreement with Russia on the Ukrainian crisis.

If China also decided to abandon the U.S. dollar and start dumping U.S. debt, it would be an absolute nightmare for the U.S. financial system.

And keep in mind that the Chinese were already starting to dump a bit of U.S. debt even before this latest crisis.  In fact, China dumped nearly 50 billion dollars of U.S. debt in December alone.

The only way that the current bubble of debt-fueled false prosperity in the U.S. can continue is if the rest of the world continues to lend us trillions of dollars at ridiculously low interest rates that are way below the real rate of inflation.

If the rest of the world stops behaving in such an irrational manner, interest rates on U.S. government debt would rise dramatically and that would also mean that interest rates on virtually all other loans throughout our financial system would rise dramatically.

And if that happened, it would be a complete and utter nightmare for our economy.

Unfortunately, most Americans have no understanding of these things.  They just assume that we are “the greatest economy in the world” and that nothing is ever going to threaten that.

Well, the truth is that we are rapidly approaching a “turning point”, and after this bubble of false prosperity pops things will never be the same in the United States again.

The Kremlin - Photo by Pavel Kazachkov

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