Ron Paul – US sanctions on Russia may sink the dollar
…by the Ron Paul Institute
[ Editor’s note: I continue to be amazed at how few insiders who leave government do not begin a whole new career serving their country by explaining to the public that it is not really their country anymore.
We have a “mirage” democracy, with gerrymandering being only the first step to undermining our ability to challenge the elites from the commanding position our numbers should give us in a real democracy.
The current US economic war strategy is doomed to failure. No effort was ever made to sell the public on a strategy that would have more impact on the future of all Americans than any other decision. So they just cut us out of the process. Imagine that… both the Bush gangsters, and to a different degree, the Obama bunch, where no one ever gets fired no matter what they screw up.
If you think you are living in a democracy, and yet something this important can be carjacked and made into a bureaucratic prerogative that Congress or Presidential authority can handle “without hurting our little heads with all the pros and cons details ” – then you have erased yourself from the equation.
Stimulating what, I suspect, they feel will be small scale wars is also part of this strategy. They have taken our measure and concluded that if no US military body bags are coming home, and no huge funding appropriations adding to our deficit are going before Congress, then Johnny Public can be distracted by any of the myriad of diversion issues that magically seem to dominate front page news to help Johnny keep his eye off the ball.
We will have to up our game to survive this. And that starts first with some good leadership. We don’t have much, but will have to build on what we have, not competing with, but cross supporting, each other as much as we can to gain more leverage. That is why VT made the strategic decision to expand our growth internationally.
Why? Well, that’s because we can’t count on Americans to do it, that’s why. We feel it will take a more coordinated worldwide effort. This is why we are backing off the endless debates with the one man army blogger folks living in their “head of state” fantasy world and wanting tons of attention.
They don’t deserve it. They are hurting more than helping. And more than a few work for the bad guys for just that reason.
We teamed up early with Press TV to help build their commentary section that had been buried on the back page. Two years later, VT articles can often be found, not only on the top daily reads but, on the weekly and even the monthly ones, something unprecedented in the history of journalism.
That was followed last year with our strategic partnership with New Eastern Outlook, to give us a deeper bench of writing talent from the other side of the planet.
We thank our readers for the role they played, as we did not get the attention of these major players on our own. The other partners have been following VT and the unique platform and style that we have, and wanted to cross pollinate their own people by working with us.
My trip to Syria as an election monitor was a result of that synergy, as has the doubling of our radio and TV interview exposure now.
Next year will bring more changes as we take VT up another notch by expanding our support staff. The first outreach got a better than expected response. We found we have a deep talent bench among our readers, especially from those who have been avid VT readers but have not been in the comment boards for us to see them.
This will help us become much stronger and be able to focus more time on major investigative journalism stories…the big ones. We have to up our game, too… and we are taking you with us. Enjoy the ride, as it is going to be one hell of a journey… Jim W. Dean ]
– First published August 10, 2014 -
The US government’s decision to apply more sanctions on Russia is a grave mistake and will only escalate an already tense situation, ultimately harming the US economy itself.
While the effect of sanctions on the dollar may not be appreciated in the short term, in the long run these sanctions are just another step toward the dollar’s eventual demise as the world’s reserve currency.
Not only is the US sanctioning Russian banks and companies, but it also is trying to strong-arm European banks into enacting harsh sanctions against Russia as well. Given the amount of business that European banks do with Russia, European sanctions could hurt Europe at least as much as Russia.
At the same time the US expects cooperation from European banks, it is also prosecuting those same banks and fining them billions of dollars for violating existing US sanctions. It is not difficult to imagine that European banks will increasingly become fed up with having to act as the US government’s unpaid policemen, while having to pay billions of dollars in fines every time they engage in business that Washington doesn’t like.
European banks are already cutting ties with American citizens and businesses due to the stringent compliance required by recently-passed laws such as FATCA (Foreign Account Tax Compliance Act). In the IRS’s quest to suck in as much tax dollars as possible from around the world, the agency has made Americans into the pariahs of the international financial system.
As the burdens the US government places on European banks grow heavier, it should be expected that more and more European banks will reduce their exposure to the United States and to the dollar, eventually leaving the US isolated. Attempting to isolate Russia, the US actually isolates itself.
Another effect of sanctions is that Russia will grow closer to its BRICS (Brazil/Russia/India/China/South Africa) allies. These countries count over 40 percent of the world’s population, have a combined economic output almost equal to the US and EU, and have significant natural resources at their disposal.
Russia is one of the world’s largest oil producers and supplies Europe with a large percent of its natural gas. Brazil has the second-largest industrial sector in the Americas and is the world’s largest exporter of ethanol. China is rich in mineral resources and is the world’s largest food producer.
Already Russia and China are signing agreements to conduct their bilateral trade with their own national currencies rather than with the dollar, a trend which, if it spreads, will continue to erode the dollar’s position in international trade. Perhaps more importantly, China, Russia, and South Africa together produce nearly 40 percent of the world’s gold, which could play a role if the BRICS countries decide to establish a gold-backed currency to challenge the dollar.
US policymakers fail to realize that the United States is not the global hegemon it was after World War II. They fail to understand that their overbearing actions toward other countries, even those considered friends, have severely eroded any good will that might previously have existed. And they fail to appreciate that more than 70 years of devaluing the dollar has put the rest of the world on edge.
There is a reason the euro was created, a reason that China is moving to internationalize its currency, and a reason that other countries around the world seek to negotiate monetary and trade compacts. The rest of the world is tired of subsidizing the United States government’s enormous debts, and tired of producing and exporting trillions of dollars of goods to the US, only to receive increasingly worthless dollars in return.
The US government has always relied on the cooperation of other countries to maintain the dollar’s preeminent position. But international patience is wearing thin, especially as the carrot-and-stick approach of recent decades has become all stick and no carrot.
If President Obama and his successors continue with their heavy-handed approach of levying sanctions against every country that does something US policymakers don’t like, it will only lead to more countries shunning the dollar and accelerating the dollar’s slide into irrelevance.
Editing: Jim W. Dean
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