I expected things to get crazy this year, but di not predict that the health of Western economies would hinge on decisions made by one man. In order to see the emerging world order it was worth listening to one of its architects—in his own words.
In 2019 Putin spoke his vision for a post-dollar global economy. I covered that here:
War in Ukraine, and sanctions in response, have accelerated events towards his preferred outcomes. More evidence was provided during Putin’s Speech at SPIEF earlier this month. Here are some highlights:
Putin In his own words
The era of a unipolar world order has come to an end. I want to start with this, as there is no way around it. This era has ended despite all the attempts to maintain and preserve it at all costs . . .
They expected to suddenly and violently crush the Russian economy, to hit Russia’s industry, finance, and people’s living standards by destroying business chains, forcibly recalling Western companies from the Russian market, and freezing Russian assets.This did not work … Sanctions as a weapon have proved to be a double-edged sword damaging their advocates and architects just as much, if not more.
European politicians have already dealt their economies a serious blow. We see social and economic problems worsening in Europe, and in the US as well, food, electricity and fuel prices rising, with quality of life in Europe falling and companies losing their market edge.
Such a disconnect from reality and the demands of society will inevitably lead to a surge in populism and extremist and radical movements, major socioeconomic changes, degradation and a change of elites in the short term.
On Western money-printing:
Surging inflation in product and commodity markets had become a fact of life long before the events of this year. The world has been driven into this situation, little by little, by many years of irresponsible macroeconomic policies pursued by the G7 countries, including uncontrolled emission and accumulation of unsecured debt.
Because they could not or would not devise any other recipes, the governments of the leading Western economies simply accelerated their money-printing machines … I have already cited this figure: over the past two years, the money supply in the United States has grown by more than 38 percent. Previously, a similar rise took decades, but now it grew by 38 percent or 5.9 trillion dollars in two years. By comparison, only a few countries have a bigger gross domestic product.
The rising prices, accelerating inflation, shortages of food and fuel, petrol, and problems in the energy sector are the result of system-wide errors the current US administration and European bureaucracy have made in their economic policies.
I will mention our operation, too: yes, it could have contributed to the trend, but the root cause is precisely this – their erroneous economic policies. In fact, the operation we launched in Donbass is a lifeline they are grabbing at to be able to blame their own miscalculations on others,
So, they printed more money, and then what? Where did all that money go? It was obviously used to pay for goods and services outside Western countries – this is where the newly-printed money flowed. They literally began to clean out, to wipe out global markets. Naturally, no one thought about the interests of other states, including the poorest ones. They were left with scraps, as they say, and even that at exorbitant prices.
While at the end of 2019, imports of goods to the United States amounted to about 250 billion dollars a month, by now, it has grown to 350 billion. It is noteworthy that the growth was 40 percent – exactly in proportion to the unsecured money supply printed in recent years. They printed and distributed money, and used it to wipe out goods from third countries’ markets.
"Under the cloud of inflation, many developing nations ask a good question: why exchange goods for dollars and euros that are losing value before our eyes?
The conclusion suggests itself: the economy of mythical entities is inevitably being replaced by the economy of real values and assets"
On devalued reserves:
According to the IMF, global currency reserves are at $7.1 trillion and 2.5 trillion euros now. These reserves are devalued at an annual rate of about 8 percent. Moreover, they can be confiscated or stolen any time if the United States dislikes something in the policy of the states involved. I think this has become a very real threat for many countries that keep their gold and foreign exchange reserves in there.
According to analyst estimates, and this is an objective analysis, a conversion of global reserves will begin just because there is no room for them with such shortages. They will be converted from weakening currencies into real resources like food, energy commodities and other raw materials. Other countries will be doing this, of course. Obviously, this process will further fuel global dollar inflation.
On disorder in the West:
As for Europe, their failed energy policy, blindly staking everything on renewables and spot supplies of natural gas, which have caused energy price increases since the third quarter of last year – again, long before the operation in Donbass – have also exacerbated price hikes. We have absolutely nothing to do with this. It was due to their own actions that prices have gone through the roof, and now they are once again looking for somebody to blame.
Maybe it would even be nice to hear that we are so powerful and omnipotent that we can blow up inflation in the West, in the United States and Europe, or that we can do things to throw everything into disorder. Maybe it would be nice to feel this power, if only there were truth in it.
This situation has been brewing for years, spurred by the short-sighted actions of those who are used to solving their problems at somebody else’s expense and who have relied and still rely on the mechanism of financial emission to outbid and draw trade flows, thus escalating deficits and provoking humanitarian disasters in certain regions of the world. I will add that this is essentially the same predatory colonial policy as in the past, but of course in a new iteration, a more subtle and sophisticated edition. You might not even recognise it at first.
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