John Titus on the world reserve currency transferring away from the US.

The US debt to GDP ratio in the US is too high and unsustainable. This is what J. Powell, J. Yellen and Blackrock are saying, which is a big shift in dialogue from what these people were saying before.

The biggest thing to come out of the Sanctions on Russia is that the Federal Reserve basically cancelled Russia's money. J. Powell said that the world reserve currency hinges on the rule of law, but just proved that, that does not exist in the US by cancelling Russia's money. The US probably knows it can not fight a hot war with Russia and will loose and to add to that Putin announced a couple of years ago that Russia has hypersonic-weapons which is a game changer.

Sanctions may be all the US has, for the moment and it is clear that these sanctions will hasten the demise of the USD because it will create more inflation. If you are restricting goods from travelling in and out of the US, like not buying Russian oil, you are going to have less oil and higher gas prices. It seems to be an intentional act.

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A new world financial order will be negotiated, West will no longer have a veto: Moscow

According to ex-Russian President Dmitry Medvedev, a new global financial order will be negotiated, and the West will no longer have a veto.

The “hellish” sanctions imposed on Russia by the US, EU, and their allies over the Ukraine conflict have failed to cripple the country, instead “returning to the West like a boomerang,” according to Medvedev, the former Russian president who is now the deputy chairman of the Russian Security Council.

According to Medvedev, the US and EU have “tarnished their reputation” by blocking the Russian central bank’s reserves.

“It is impossible to trust those who freeze the accounts of other states; steal other people’s business, assets and personal possessions, compromising the principles of sanctity of private property,” he added.

Following the outbreak of the conflict in Ukraine in late February, the United States and the European Union froze nearly half of Russia’s $300 billion in foreign currency reserves.

Confidence in reserve currencies is “fading like the morning mist,” and the prospect of abandoning the dollar and euro in this role does not seem like such an unrealistic prospect anymore, he said. “The era of regional currencies is coming.”

“No matter if they want it or not, they’ll have to negotiate a new financial order,” Medvedev said. “And the decisive voice will then be with those countries that have a strong and advanced economy, healthy public finances and a reliable monetary system. And not with those who endlessly inflate their public debt, issuing more and more pieces of paper into circulation which aren’t backed by national wealth.”

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http://groupelavigne.free.fr/blackrock819.pdf

@Cloudcity

Thank-you.

Yes. Evil. Thank-You Father. :pray:

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You're welcome.

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By Ronan Manly of Bullionstar.com

With Russia’s central bank having just profoundly altered the international trade and monetary system by linking the Russian ruble to both gold and commodities, journalists in Moscow asked me to write a Q and A article on what these developments mean, and the ramifications of these changes on the Russian ruble, the US dollar, the gold price and the global system of currencies. This article has been published on the RT.com website here.

Since RT.com is now blocked and censored in many Western locations such as the EU, UK, US and Canada, and since many readers may not be able to access the RT.com website (unless using a VPN), my Questions and Answers that are in the new RT.com article are now published here in their entirety.

Who would have thought that citizens of ‘free speech’ Western countries would need a VPN to read a Russian news site?

Why is setting a Fixed Price for Gold in Rubles significant?

By offering to buy gold from Russian banks at a fixed price of 5000 rubles per gram, the Bank of Russia has both linked the ruble to gold and, since gold trades in US dollars, set a floor price for the ruble in terms of the US dollar.

We can see this linkage in action since Friday 25 March when the Bank of Russia made the fixed price announcement. The ruble was trading at around 100 to the US dollar at that time, but has since strengthened and is nearing 80 to the US dollar. Why? Because gold has been trading on international markets at about US$ 62 per gram which is equivalent to (5000 / 62) = about 80.5, and markets and arbitrage traders have now taken note, driving the RUB / USD exchange rate higher.

So the ruble now has a floor to the US dollars, in terms of gold. But gold also has a floor, so to speak, because 5000 rubles per gram is 155,500 rubles per troy ounce of gold, and with a RUB / USD floor of about 80, that’s a gold price of around $1940. And if the Western paper gold markets of LBMA / COMEX try to drive the US dollar gold price lower, they will have to try to weaken the ruble as well or else the paper manipulations will be out in the open.

Additionally, with the new gold to ruble linkage, if the ruble continues to strengthen (for example due to demand created by obligatory energy payments in rubles), this will also be reflected in a stronger gold price.

What does this mean for Oil?

Continued at link.

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No country has successfully challenged the U.S. dollar’s global hegemony—until now. How did this happen and what will it mean?

By Ellen Brown / Original to ScheerPost

Foreign critics have long chafed at the “exorbitant privilege” of the U.S. dollar as global reserve currency. The U.S. can issue this currency backed by nothing but the “full faith and credit of the United States.” Foreign governments, needing dollars, not only accept them in trade but buy U.S. securities with them, effectively funding the U.S. government and its foreign wars. But no government has been powerful enough to break that arrangement – until now. How did that happen and what will it mean for the U.S. and global economies?

The Rise and Fall of the PetroDollar

First, some history: The U.S. dollar was adopted as the global reserve currency at the Bretton Woods Conference in 1944, when the dollar was still backed by gold on global markets. The agreement was that gold and the dollar would be accepted interchangeably as global reserves, the dollars to be redeemable in gold on demand at $35 an ounce. Exchange rates of other currencies were fixed against the dollar.

But that deal was broken after President Lyndon Johnson’s “guns and butter” policy exhausted the U.S. kitty by funding war in Vietnam along with his “Great Society” social programs at home. French President Charles de Gaulle, suspecting the U.S. was running out of money, cashed in a major portion of France’s dollars for gold and threatened to cash in the rest; and other countries followed suit or threatened to.

In 1971, President Richard Nixon ended the convertibility of the dollar to gold internationally (known as “closing the gold window”), in order to avoid draining U.S. gold reserves. The value of the dollar then plummeted relative to other currencies on global exchanges. To prop it up, Nixon and Secretary of State Henry Kissinger made a deal with Saudi Arabia and the OPEC countries that OPEC would sell oil only in dollars, and that the dollars would be deposited in Wall Street and City of London banks. In return, the U.S. would defend the OPEC countries militarily. Economic researcher William Engdahl also presents evidence of a promise that the price of oil would be quadrupled. An oil crisis triggered by a brief Middle Eastern war did cause the price of oil to quadruple, and the OPEC agreement was finalized in 1974.

The deal held firm until 2000, when Saddam Hussein broke it by selling Iraqi oil in euros. Libyan president Omar Qaddafi followed suit. Both presidents wound up assassinated, and their countries were decimated in war with the United States. Canadian researcher Matthew Ehret observes:

We should not forget that the Sudan-Libya-Egypt alliance under the combined leadership of Mubarak, Qadhafi and Bashir, had moved to establish a new gold-backed financial system outside of the IMF/World Bank to fund large scale development in Africa. Had this program not been undermined by a NATO-led destruction of Libya, the carving up of Sudan and regime change in Egypt, then the world would have seen the emergence of a major regional block of African states shaping their own destinies outside of the rigged game of Anglo-American controlled finance for the first time in history.

The Rise of the PetroRuble

The first challenge by a major power to what became known as the petrodollar has come in 2022. In the month after the Ukraine conflict began, the U.S. and its European allies imposed heavy financial sanctions on Russia in response to the illegal military invasion. The Western measures included freezing nearly half of the Russian central bank’s 640 billion U.S. dollars in financial reserves, expelling several of Russia’s largest banks from the SWIFT global payment system, imposing export controls aimed at limiting Russia’s access to advanced technologies, closing down their airspace and ports to Russian planes and ships, and instituting personal sanctions against senior Russian officials and high-profile tycoons. Worried Russians rushed to withdraw rubles from their banks, and the value of the ruble plunged on global markets just as the U.S. dollar had in the early 1970s.

The trust placed in the U.S. dollar as global reserve currency, backed by “the full faith and credit of the United States,” had finally been fully broken. Russian President Vladimir Putin said in a speech on March 16 that the U.S. and EU had defaulted on their obligations, and that freezing Russia’s reserves marks the end of the reliability of so-called first class assets. On March 23, Putin announced that Russia’s natural gas would be sold to “unfriendly countries” only in Russian rubles, rather than the euros or dollars currently used. Forty-eight nations are counted by Russia as “unfriendly,” including the United States, Britain, Ukraine, Switzerland, South Korea, Singapore, Norway, Canada and Japan.

Putin noted that more than half the global population remains “friendly” to Russia. Countries not voting to support the sanctions include two major powers – China and India – along with major oil producer Venezuela, Turkey, and other countries in the “Global South.” “Friendly” countries, said Putin, could now buy from Russia in various currencies.

On March 24, Russian lawmaker Pavel Zavalny said at a news conference that gas could be sold to the West for rubles or gold, and to “friendly” countries for either national currency or bitcoin.

Energy ministers from the G7 nations rejected Putin’s demand, claiming it violated gas contract terms requiring sale in euros or dollars. But on March 28, Kremlin spokesman Dmitry Peskov said Russia was “not engaged in charity” and won’t supply gas to Europe for free (which it would be doing if sales were in euros or dollars it cannot currently use in trade). Sanctions themselves are a breach of the agreement to honor the currencies on global markets.

Bloomberg reports that on March 30, Vyacheslav Volodin, speaker of the lower Russian house of parliament, suggested in a Telegram post that Russia may expand the list of commodities for which it demands payment from the West in rubles (or gold) to include grain, oil, metals and more. Russia’s economy is much smaller than that of the U.S. and the European Union, but Russia is a major global supplier of key commodities – including not just oil, natural gas and grains, but timber, fertilizers, nickel, titanium, palladium, coal, nitrogen, and rare earth metals used in the production of computer chips, electric vehicles and airplanes.

On April 2, Russian gas giant Gazprom officially halted all deliveries to Europe via the Yamal-Europe pipeline, a critical artery for European energy supplies.

U.K. professor of economics Richard Werner calls the Russian move a clever one – a replay of what the U.S. did in the 1970s. To get Russian commodities, “unfriendly” countries will have to buy rubles, driving up the value of the ruble on global exchanges just as the need for petrodollars propped up the U.S. dollar after 1973. Indeed, by March 30, the ruble had already risen to where it was a month earlier.

A Page Out of the “American System” Playbook

Russia is following the U.S. not just in hitching its national currency to sales of a critical commodity but in an earlier protocol – what 19th century American leaders called the “American System” of sovereign money and credit. Its three pillars were (a) federal subsidies for internal improvements and to nurture the nation’s fledgling industries, (b) tariffs to protect those industries, and (c) easy credit issued by a national bank.

Michael Hudson, a research professor of economics and author of “Super-Imperialism: The Economic Strategy of American Empire” among many other books, notes that the sanctions are forcing Russia to do what it has been reluctant to do itself – cut reliance on imports and develop its own industries and infrastructure. The effect, he says, is equivalent to that of protective tariffs. In an article titled “The American Empire Self-destructs,” Hudson writes of the Russian sanctions (which actually date back to 2014):

Russia had remained too enthralled by free-market ideology to take steps to protect its own agriculture or industry. The United States provided the help that was needed by imposing domestic self-reliance on Russia (via sanctions). When the Baltic states lost the Russian market for cheese and other farm products, Russia quickly created its own cheese and dairy sector – while becoming the world’s leading grain exporter.

Russia is discovering (or is on the verge of discovering) that it does not need U.S. dollars as backing for the ruble’s exchange rate. Its central bank can create the rubles needed to pay domestic wages and finance capital formation. The U.S. confiscations thus may finally lead Russia to end neoliberal monetary philosophy, as Sergei Glaziev has long been advocating in favor of MMT [Modern Monetary Theory]. …

What foreign countries have not done for themselves – replacing the IMF, World Bank and other arms of U.S. diplomacy – American politicians are forcing them to do. Instead of European, Near Eastern and Global South countries breaking away out of their own calculation of their long-term economic interests, America is driving them away, as it has done with Russia and China.

Glazyev and the Eurasian Reset

Sergei Glazyev, mentioned by Hudson above, is a former adviser to President Vladimir Putin and the Minister for Integration and Macroeconomics of the Eurasia Economic Commission, the regulatory body of the Eurasian Economic Union (EAEU). He has proposed using tools similar to those of the “American System,” including converting the Central Bank of Russia to a “national bank” issuing Russia’s own currency and credit for internal development. On February 25, Glazyev published an analysis of U.S. sanctions titled “Sanctions and Sovereignty,” in which he stated:

[T]he damage caused by US financial sanctions is inextricably linked to the monetary policy of the Bank of Russia …. Its essence boils down to a tight binding of the ruble issue to export earnings, and the ruble exchange rate to the dollar. In fact, an artificial shortage of money is being created in the economy, and the strict policy of the Central Bank leads to an increase in the cost of lending, which kills business activity and hinders the development of infrastructure in the country.

Glazyev said that if the central bank replaced the loans withdrawn by its Western partners with its own loans, Russian credit capacity would greatly increase, preventing a decline in economic activity without creating inflation.

Russia has agreed to sell oil to India in India’s own sovereign currency, the rupee; to China in yuan; and to Turkey in lira. These national currencies can then be spent on the goods and services sold by those countries. Arguably, every country should be able to trade in global markets in its own sovereign currency; that is what a fiat currency is – a medium of exchange backed by the agreement of the people to accept it at value for their goods and services, backed by the “full faith and credit” of the nation.

But that sort of global barter system would break down just as local barter systems do, if one party to the trade did not want the goods or services of the other party. In that case, some intermediate reserve currency would be necessary to serve as a medium of exchange.

Glazyev and his counterparts are working on that. In a translated interview posted on The Saker, Glazyev stated:

We are currently working on a draft international agreement on the introduction of a new world settlement currency, pegged to the national currencies of the participating countries and to exchange-traded goods that determine real values. We won’t need American and European banks. A new payment system based on modern digital technologies with a blockchain is developing in the world, where banks are losing their importance.

Russia and China have both developed alternatives to the SWIFT messaging system from which certain Russian banks have been blocked. London-based commentator Alexander Mercouris makes the interesting observation that going outside SWIFT means Western banks cannot track Russian and Chinese trades.

Geopolitical analyst Pepe Escobar sums up the plans for a Eurasian/China financial reset in an article titled “Say Hello to Russian Gold and Chinese Petroyuan.” He writes:

It was a long time coming, but finally some key lineaments of the multipolar world’s new foundations are being revealed.

On Friday [March 11], after a videoconference meeting, the Eurasian Economic Union (EAEU) and China agreed to design the mechanism for an independent international monetary and financial system. The EAEU consists of Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia, is establishing free trade deals with other Eurasian nations, and is progressively interconnecting with the Chinese Belt and Road Initiative (BRI).

For all practical purposes, the idea comes from Sergei Glazyev, Russia’s foremost independent economist ….

Quite diplomatically, Glazyev attributed the fruition of the idea to “the common challenges and risks associated with the global economic slowdown and restrictive measures against the EAEU states and China.”

Translation: as China is as much a Eurasian power as Russia, they need to coordinate their strategies to bypass the US unipolar system.

The Eurasian system will be based on “a new international currency,” most probably with the yuan as reference, calculated as an index of the national currencies of the participating countries, as well as commodity prices. …

The Eurasian system is bound to become a serious alternative to the US dollar, as the EAEU may attract not only nations that have joined BRI … but also the leading players in the Shanghai Cooperation Organization (SCO) as well as ASEAN. West Asian actors – Iran, Iraq, Syria, Lebanon – will be inevitably interested.

Exorbitant Privilege or Exorbitant Burden?

If that system succeeds, what will the effect be on the U.S. economy? Investment strategist Lynn Alden writes in a detailed analysis titled “The Fraying of the US Global Currency Reserve System” that there will be short-term pain, but, in the long run, it will benefit the U.S. economy. The subject is complicated, but the bottom line is that reserve currency dominance has resulted in the destruction of our manufacturing base and the buildup of a massive federal debt. Sharing the reserve currency load would have the effect that sanctions are having on the Russian economy – nurturing domestic industries as a tariff would, allowing the American manufacturing base to be rebuilt.

Other commentators also say that being the sole global reserve currency is less an exorbitant privilege than an exorbitant burden. Losing that status would not end the importance of the U.S. dollar, which is too heavily embedded in global finance to be dislodged. But it could well mean the end of the petrodollar as sole global reserve currency, and the end of the devastating petroleum wars it has funded to maintain its dominance.

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"Just a fly in the ointment. The monkey in the wrench. The pain in the ass."

The New World Order steals Russia’s wealth while inventing new sanctions. Sanctions that Joe Biden said don’t work.One news event you won’t often hear the war drum-banging mainstream media mention is Putin tying the Russian Ruble to gold.

Libya’s Muammar Gaddafi wanted a gold-based currency. Soon after, the US bombed his country and Gaddafi was murdered. Now we’re seeing how the US would love a ‘regime change’ in Russia as Biden put it, but unlike bullying smaller countries, the US knows any direct attempt to take Putin out could lead to nuclear war.

Putin plays 3-D chess. Biden can’t even play checkers because he’s too busy tracking down his jello cup.

The Great Reset is a launch of globalist neo-serfdom where citizens have no freedom.

We are to shut up and do as we’re told while pedophiles at the top insist we celebrate the never-ending ‘trans’ mockery. We will own nothing and eat bugs while the oligarchs own and control everything.

Biden has already mumbled about how he leads the New World Order. Putin is one of the few who is standing up against those insane plans. It’s not that I admire Putin the dictator.

I simply despise our own dictators much more.

— Ben Garrison

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Leading Russian economist Sergey Glazyev says a complete overhaul of the western-dominated global monetary and financial system is under works. And the world's rising powers are buying into it.

Sergey Glazyev is a man living right in the eye of our current geopolitical and geo-economic hurricane. One of the most influential economists in the world, a member of the Russian Academy of Sciences, and a former adviser to the Kremlin from 2012 to 2019, for the past three years he has helmed Moscow’s uber strategic portfolio as Minister in Charge of Integration and Macroeconomics of the Eurasia Economic Union (EAEU).

Glazyev’s recent intellectual production has been nothing short of transformative, epitomized by his essay Sanctions and Sovereignty and an extensive discussion of the new, emerging geo-economic paradigm in an interview to a Russian business magazine.

In another of his recent essays, Glazyev comments on how “I grew up in Zaporozhye, near which heavy fighting is now taking place in order to destroy the Ukrainian Nazis, who never existed in my small Motherland. I studied at a Ukrainian school and I know Ukrainian literature and language well, which from a scientific point of view is a dialect of Russian. I did not notice anything Russophobic in Ukrainian culture. In the 17 years of my life in Zaporozhye, I have never met a single Banderist.”

Glazyev was gracious to take some time from his packed schedule to provide detailed answers to a first series of questions in what we expect to become a running conversation, especially focused to the Global South. This is his first interview with a foreign publication since the start of Operation Z. Many thanks to Alexey Subottin for the Russian-English translation.

The Cradle: You are at the forefront of a game-changing geo-economic development: the design of a new monetary/financial system via an association between the EAEU and China, bypassing the US dollar, with a draft soon to be concluded. Could you possibly advance some of the features of this system – which is certainly not a Bretton Woods III – but seems to be a clear alternative to the Washington consensus and very close to the necessities of the Global South?

Glazyev: In a bout of Russophobic hysteria, the ruling elite of the United States played its last “trump ace” in the hybrid war against Russia. Having “frozen” Russian foreign exchange reserves in custody accounts of western central banks, financial regulators of the US, EU, and the UK undermined the status of the dollar, euro, and pound as global reserve currencies. This step sharply accelerated the ongoing dismantling of the dollar-based economic world order.

Over a decade ago, my colleagues at the Astana Economic Forum and I proposed to transition to a new global economic system based on a new synthetic trading currency based on an index of currencies of participating countries. Later, we proposed to expand the underlying currency basket by adding around twenty exchange-traded commodities. A monetary unit based on such an expanded basket was mathematically modeled and demonstrated a high degree of resilience and stability.

At around the same time, we proposed to create a wide international coalition of resistance in the hybrid war for global dominance that the financial and power elite of the US unleashed on the countries that remained outside of its control. My book The Last World War: the USA to Move and Lose, published in 2016, scientifically explained the nature of this coming war and argued for its inevitability – a conclusion based on objective laws of long-term economic development. Based on the same objective laws, the book argued the inevitability of the defeat of the old dominant power.

Currently, the US is fighting to maintain its dominance, but just as Britain previously, which provoked two world wars but was unable to keep its empire and its central position in the world due to the obsolescence of its colonial economic system, it is destined to fail. The British colonial economic system based on slave labor was overtaken by structurally more efficient economic systems of the US and the USSR. Both the US and the USSR were more efficient at managing human capital in vertically integrated systems, which split the world into their zones of influence. A transition to a new world economic order started after the disintegration of the USSR. This transition is now reaching its conclusion with the imminent disintegration of the dollar-based global economic system, which provided the foundation of the United States global dominance.

The new convergent economic system that emerged in the PRC (People’s Republic of China) and India is the next inevitable stage of development, combining the benefits of both centralized strategic planning and market economy, and of both state control of the monetary and physical infrastructure and entrepreneurship. The new economic system united various strata of their societies around the goal of increasing common wellbeing in a way that is substantially stronger than the Anglo-Saxon and European alternatives. This is the main reason why Washington will not be able to win the global hybrid war that it started. This is also the main reason why the current dollar-centric global financial system will be superseded by a new one, based on a consensus of the countries who join the new world economic order.

In the first phase of the transition, these countries fall back on using their national currencies and clearing mechanisms, backed by bilateral currency swaps. At this point, price formation is still mostly driven by prices at various exchanges, denominated in dollars. This phase is almost over: after Russia’s reserves in dollars, euro, pound, and yen were “frozen,” it is unlikely that any sovereign country will continue accumulating reserves in these currencies. Their immediate replacement is national currencies and gold.

The second stage of the transition will involve new pricing mechanisms that do not reference the dollar. Price formation in national currencies involves substantial overheads, however, it will still be more attractive than pricing in ‘un-anchored’ and treacherous currencies like dollars, pounds, euro, and yen. The only remaining global currency candidate – the yuan – won’t be taking their place due to its inconvertibility and the restricted external access to the Chinese capital markets. The use of gold as the price reference is constrained by the inconvenience of its use for payments.

The third and the final stage on the new economic order transition will involve a creation of a new digital payment currency founded through an international agreement based on principles of transparency, fairness, goodwill, and efficiency. I expect that the model of such a monetary unit that we developed will play its role at this stage. A currency like this can be issued by a pool of currency reserves of BRICS countries, which all interested countries will be able to join. The weight of each currency in the basket could be proportional to the GDP of each country (based on purchasing power parity, for example), its share in international trade, as well as the population and territory size of participating countries.

In addition, the basket could contain an index of prices of main exchange-traded commodities: gold and other precious metals, key industrial metals, hydrocarbons, grains, sugar, as well as water and other natural resources. To provide backing and to make the currency more resilient, relevant international resource reserves can be created in due course. This new currency would be used exclusively for cross-border payments and issued to the participating countries based on a pre-defined formula. Participating countries would instead use their national currencies for credit creation, in order to finance national investments and industry, as well as for sovereign wealth reserves. Capital account cross-border flows would remain governed by national currency regulations.

The Cradle: Michael Hudson specifically asks that if this new system enables nations in the Global South to suspend dollarized debt and is based on the ability to pay (in foreign exchange), can these loans be tied to either raw materials or, for China, tangible equity ownership in the capital infrastructure financed by foreign non-dollar credit?

Glazyev: Transition to the new world economic order will likely be accompanied by systematic refusal to honor obligations in dollars, euro, pound, and yen. In this respect, it will be no different from the example set by the countries issuing these currencies who thought it appropriate to steal foreign exchange reserves of Iraq, Iran, Venezuela, Afghanistan, and Russia to the tune of trillions of dollars. Since the US, Britain, EU, and Japan refused to honor their obligations and confiscated the wealth of other nations which was held in their currencies, why should other countries be obliged to pay them back and to service their loans?

In any case, participation in the new economic system will not be constrained by the obligations in the old one. Countries of the Global South can be full participants of the new system regardless of their accumulated debts in dollars, euro, pound, and yen. Even if they were to default on their obligations in those currencies, this would have no bearing on their credit rating in the new financial system. Nationalization of extraction industry, likewise, would not cause a disruption. Further, should these countries reserve a portion of their natural resources for the backing of the new economic system, their respective weight in the currency basket of the new monetary unit would increase accordingly, providing that nation with larger currency reserves and credit capacity. In addition, bilateral swap lines with trading partner countries would provide them with adequate financing for co-investments and trade financing.

The Cradle: In one of your latest essays, The Economics of the Russian Victory, you call for “an accelerated formation of a new technological paradigm and the formation of institutions of a new world economic order.” Among the recommendations, you specifically propose the creation of “a payment and settlement system in the national currencies of the EAEU member states” and the development and implementation of “an independent system of international settlements in the EAEU, SCO and BRICS, which could eliminate critical dependence of the US-controlled SWIFT system.” Is it possible to foresee a concerted joint drive by the EAEU and China to “sell” the new system to SCO members, other BRICS members, ASEAN members and nations in West Asia, Africa and Latin America? And will that result in a bipolar geo-economy – the West versus The Rest?

Glazyev: Indeed, this is the direction where we are headed. Disappointingly, monetary authorities of Russia are still a part of the Washington paradigm and play by the rules of the dollar-based system, even after Russian foreign exchange reserves were captured by the west. On the other hand, the recent sanctions prompted extensive soul searching among the rest of the non-dollar-block countries. western ‘agents of influence’ still control central banks of most countries, forcing them to apply suicidal policies prescribed by the IMF. However, such policies at this point are so obviously contrary to the national interests of these non-western countries that their authorities are growing justifiably concerned about financial security.

You correctly highlight potentially central roles of China and Russia in the genesis of the new world economic order. Unfortunately, current leadership of the CBR (Central Bank of Russia) remains trapped inside the intellectual cul-de-sac of the Washington paradigm and is unable to become a founding partner in the creation of a new global economic and financial framework. At the same time, the CBR already had to face the reality and create a national system for interbank messaging which is not dependent on SWIFT, and opened it up for foreign banks as well. Cross-currency swap lines have been already set up with key participating nations. Most transactions between member states of the EAEU are already denominated in national currencies and the share of their currencies in internal trade is growing at a rapid pace.

A similar transition is taking place in trade with China, Iran, and Turkey. India indicated that it is ready to switch to payments in national currencies as well. A lot of effort is put in developing clearing mechanisms for national currency payments. In parallel, there is an ongoing effort to develop a digital non-banking payment system, which would be linked to gold and other exchange-traded commodities – the ‘stablecoins.’

Recent US and European sanctions imposed on the banking channels have caused a rapid increase in these efforts. The group of countries working on the new financial system only needs to announce the completion of the framework and readiness of the new trade currency and the process of formation of the new world financial order will accelerate further from there. The best way to bring it about would be to announce it at the SCO or BRICS regular meetings. We are working on that.

The Cradle: This has been an absolutely key issue in discussions by independent analysts across the west. Was the Russian Central Bank advising Russian gold producers to sell their gold in the London market to get a higher price than the Russian government or Central Bank would pay? Was there no anticipation whatsoever that the coming alternative to the US dollar will have to be based largely on gold? How would you characterize what happened? How much practical damage has this inflicted on the Russian economy short-term and mid-term?

Glazyev: The monetary policy of the CBR, implemented in line with the IMF recommendations, has been devastating for the Russian economy. Combined disasters of the “freezing” of circa $400 billion of foreign exchange reserves and over a trillion dollars siphoned from the economy by oligarchs into western offshore destinations, came with the backdrop of equally disastrous policies of the CBR, which included excessively high real rates combined with a managed float of the exchange rate. We estimate this caused under-investment of circa 20 trillion rubles and under-production of circa 50 trillion rubles in goods.

Following Washington’s recommendations, the CBR stopped buying gold over the last two years, effectively forcing domestic gold miners to export full volumes of production, which added up to 500 tons of gold. These days the mistake and the harm it caused are very much obvious. Presently, the CBR resumed gold purchases, and, hopefully, will continue with sound policies in the interest of the national economy instead of ‘targeting inflation’ for the benefit of international speculators, as had been the case during the last decade.

The Cradle: The Fed as well as the ECB were not consulted on the freeze of Russian foreign reserves. Word in New York and Frankfurt is that they would have opposed it were they to have been asked. Did you personally expect the freeze? And did the Russian leadership expect it?

Glazyev: My book, The Last World War, that I already mentioned, which was published as far back as 2015, argued that the likelihood of this happening eventually is very high. In this hybrid war, economic warfare and informational/cognitive warfare are key theaters of conflict. On both of these fronts, the US and NATO countries have overwhelming superiority and I did not have any doubt that they would take full advantage of this in due course.

I have been arguing for a long time for the replacement of dollars, euro, pounds, and yen in our foreign exchange reserves with gold, which is produced in abundance in Russia. Unfortunately, western agents of influence which occupy key roles at central banks of most countries, as well as rating agencies and key publications, were successful in silencing my ideas. To give you an example, I have no doubt that high-ranking officials at the Fed and the ECB were involved in developing anti-Russian financial sanctions. These sanctions have been consistently escalating and are being implemented almost instantly, despite the well-known difficulties with bureaucratic decision making in the EU.

The Cradle: Elvira Nabiullina has been reconfirmed as the head of the Russian Central Bank. What would you do differently, compared to her previous actions? What is the main guiding principle involved in your different approaches?

Glazyev: The difference between our approaches is very simple. Her policies are an orthodox implementation of IMF recommendations and dogmas of the Washington paradigm, while my recommendations are based on the scientific method and empirical evidence accumulated over the last hundred years in leading countries.

The Cradle: The Russia-China strategic partnership seems to be increasingly ironclad – as Presidents Putin and Xi themselves constantly reaffirm. But there are rumbles against it not only in the west but also in some Russian policy circles. In this extremely delicate historical juncture, how reliable is China as an all-season ally to Russia?

Glazyev: The foundation of Russian-Chinese strategic partnership is common sense, common interests, and the experience of cooperation over hundreds of years. The US ruling elite started a global hybrid war aimed at defending its hegemonic position in the world, targeting China as the key economic competitor and Russia as the key counter-balancing force. Initially, the US geopolitical efforts were aiming to create a conflict between Russia and China. Agents of western influence were amplifying xenophobic ideas in our media and blocking any attempts to transition to payments in national currencies. On the Chinese side, agents of western influence were pushing the government to fall in line with the demands of the US interests.

However, sovereign interests of Russia and China logically led to their growing strategic partnership and cooperation, in order to address common threats emanating from Washington. The US tariff war with China and financial sanctions war with Russia validated these concerns and demonstrated the clear and present danger our two countries are facing. Common interests of survival and resistance are uniting China and Russia, and our two countries are largely symbiotic economically. They complement and increase competitive advantages of each other. These common interests will persist over the long run.

The Chinese government and the Chinese people remember very well the role of the Soviet Union in the liberation of their country from the Japanese occupation and in the post-war industrialization of China. Our two countries have a strong historical foundation for strategic partnership and we are destined to cooperate closely in our common interests. I hope that the strategic partnership of Russia and the PRC, which is enhanced by the coupling of the One Belt One Road with the Eurasian Economic Union, will become the foundation of President Vladimir Putin’s project of the Greater Eurasian Partnership and the nucleus of the new world economic order.

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Ruble runs victory laps. If Russia’s “plan” was so perfect, by Jacob Dreizin

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Do you know why Henry Kissinger’s speech at the World Economic Forum touched-off such a furor?

Kissinger didn’t criticize the way the war in Ukraine is being conducted or the lack of progress on the ground. No. What Kissinger criticized was the policy itself, that’s what triggered the firestorm. He was throwing a bucket of cold water on the people who concocted this loony policy by telling them to their faces that they “got it wrong.”

And, they did get it wrong, because the policy they are currently pursuing is hurting US allies and US interests. That is the metric we use to determine whether a particular policy is stupid or not and, unfortunately, this passes the “stupid test” with flying colors.

Let me explain: Our basic strategy is to “weaken” and “isolate” Russia by severing Russia’s economic ties with Europe and goading them into a long and costly quagmire in Ukraine. That’s the plan.

Now you might think that it sounds pretty reasonable but– according to Kissinger– it’s the wrong plan.

Why?

Because US National Security Strategy identifies China as America’s number one rival (which it certainly is) so, naturally, any policy that makes China stronger, runs counter to US strategic interests.

Got it? So, the question is: Does our proxy-war in Ukraine make China stronger?

And the answer is: Of course, it does. It makes China alot stronger because it forces Russia to strengthen relations with China.

What does that mean in practical terms?

It means that relations between the world’s manufacturing powerhouse (China) and the world’s second biggest producer of hydrocarbons (Russia) just got a helluva alot better because of Washington’s counterproductive war in Ukraine. That’s what it means. It also means that– as relations between the two countries improve– the pace of US imperial decline is going to accelerate as the non-dollar zone expands and bilateral trade gradually replaces the current US-dominated global trade system.

You can see this happening already. The war in Ukraine has triggered a shocking collapse in global trade, major disruptions in critical supplylines, unprecedented food and energy shortages, and the greatest redivision of the world since the breakup of the Soviet Union. Washington has decided to stake its future and the future of the American people on a senseless geopolitical gambit could turn out to be the greatest strategic catastrophe in US history.

Kissinger grasps the gravity of the situation which is why he decided to put in his two-cents. But he wasn’t just critical of the policy, he also offered an ominous warning that has been almost-entirely ignored by the media. Here’s what he said:

“Negotiations need to begin in the next two months before it creates upheavals and tensions that will not be easily overcome. Ideally, the dividing line should be a return to the status quo ante (…) Pursuing the war beyond that point would not be about the freedom of Ukraine, but a new war against Russia itself”.

There it is in black and white, but let’s break it into two parts to get a better sense of what he’s saying:

  1. The policy is wrong
  2. The policy must be changed immediately or the damage to the US and its allies will be severe and permanent. (“Negotiations need to begin in the next two months”)

That might sound too apocalyptic for some, but I think Kissinger is on to something here. After all, look at the massive changes the world has already experienced since the conflict began; the disruptions in supplylines, the food and energy shortages, and the rolling-back of the globalization project. Pretty big changes, I’d say, but they’re probably just be the tip of the iceberg. The real pain is still ahead of us.

What is this winter going to look like when home heating bills go through the roof, industries across Europe succumb to the higher energy costs, unemployment soars to Great Depression levels, and rolling blackouts become a regular feature of life in the west? That’s what the future holds for Europe and America if the policy isn’t reversed and a negotiated settlement quickly reached.

Putin has already stated that Russia will not put itself in a position where it is economically dependent on Europe again. Those days are over. Instead, he is redirecting critical energy flows to China, India and beyond. Europe is no longer a priority customer, in fact, they have emerged as a threat to Russia’s survival, which means, Russia will continue to reorient its production eastward.

How will this impact Europe?

That’s easy. Europe is going to pay more for its energy that any country in the world. That is the choice they made by shrugging off Russia’s legitimate security demands, and that is the outcome they will have to live with.

So, here’s what you need to know:

In 2021, Russia provided 40% of all the natural gas consumed in the EU.

In 2021, Russia provided over 25% of the oil consumed in the EU.

If you think that those quantities of hydrocarbons can be replaced by producers in Nigeria, Iran, Saudi Arabia or some other far-flung location, you are sadly mistaken. Europe is walking headlong into the biggest energy crisis in its history, and it can only blame itself. Here’s more from an article at RT:

“The current energy crisis could be one of the worst and longest in history and European countries could be hit particularly hard, the head of the International Energy Agency, Fatih Birol, said on Tuesday. In an interview with German magazine Der Spiegel, Birol said that the fallout from the events in Ukraine is likely to make the current energy crisis worse than the crises of the 1970s.

Back then it was all about oil. Now we have an oil crisis, a gas crisis and an electricity crisis at the same time,” Birol told the publication, adding that before the ongoing events in Ukraine, Russia was “a cornerstone of the global energy system: the world’s largest oil exporter, the world’s largest gas exporter, a leading supplier of coal.”

As part of its Ukraine-related sanctions, the EU introduced restrictions on Russian fossil fuels and has pledged to gradually phase them out. Birol warned that countries in Europe that are more dependent on Russian gas are facing a “difficult winter,” as “gas may well have to be rationed,” including in Germany. His comments came as Russia’s state gas supplier Gazprom cut off supplies to some energy firms in Germany, Denmark, the Netherlands and other countries, after their failure to pay for the fuel in rubles as per new requirements.” (“Fuel rationing may be coming to Europe – IEA“, RT)

So, I guess, freezing to death in the dark is preferrable to insisting that Ukraine remain neutral and stop killing ethnic Russians in the east? Is that the “principal” that Europe is defending?

If so, it’s a bad choice.

Here’s something to mull over: Did you know that all “oil blends” are not alike?

Why would that matter?

Because Germany currently imports 34% of its oil from Russia. And Russian oil is a fully-proven, high quality Urals blend that is delivered in vast quantities via the Druzhba pipeline to German refineries that have been engineered to meet particular processing requirements. Different oil from different providers would throw a wrench in the whole refinery process. It would require significant “modification of new feedstock lines and infrastructure, an atmospheric distillation facility, a vacuum distillation system, a cat-crack unit, a visbreaking facility, an alkylation unit, a catalytic reformer, an isomerisation unit, and an ethyl tertiary butyl ether (ETBE) facility. Plus brand new storage facilities + handling equipment for Rostock feed to substitute the 24x7x365 smooth Druzhba pipeline.” (“Germany’s Refinery Problem”, The Saker)

So, all oil blends aren’t the same?

Nope, not even close. On top of that, industry experts estimate that the refinery modifications would take roughly 6 years to complete. In the meantime, Germany’s economic growth– which is closely aligned with energy consumption– will dip dramatically, businesses will be shuttered, unemployment will spike, and the EU’s most powerful and productive country will be brought to its knees.

Maybe someone in the German government should have thought about these things before they decided to boycott Russia oil?

The point we’re trying to make is simple: Kissinger is right and the neocon clowns that concocted the failed Ukraine strategy are wrong, dead wrong. And, if we don’t convene “Negotiations… in the next two months”, as Kissinger advices, then the break with Russia will be final and irreversible, at which point, Russia’s voluminous energy resources, mineral wealth and agricultural products will be forever routed eastward to friendlier nations. And that is going to inflict terrible suffering on both the United States and its allies in Europe.

The only reasonable course of action is to call for an immediate ceasefire so that peace talks can begin ASAP.

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“Rejection of Russian energy resources means that Europe will become the region with the highest energy costs in the world. This will seriously undermine the competitiveness of European industry which is already losing the competition to companies in other parts of the world…. Our Western colleagues seem to have forgotten the elementary laws of economics, or simply prefer to ignore them.” Vladimir Putin, President of the Russian Federation

On Tuesday, Russia announced a 40% reduction in the flow of natural gas to Germany through the Nord Stream pipeline. The announcement, that was made by Gazprom officials, sent tremors through the European gas market where prices quickly soared to new highs. In Germany—where prices have tripled in the last three months—the news was met with gasps of horror. With inflation already running at a 40-year high, this latest reduction in supply is certain to tip the German economy into recession or worse. All of Europe is now feeling the impact of Washington’s misguided sanctions on Russia. Here’s more from Oil Price website:

“Russia’s Gazprom said on Tuesday that it would limit natural gas supply via the Nord Stream pipeline to Germany by 40 percent compared to planned flows because of a delay in equipment repairs… The lower supply of gas via Nord Stream to the biggest European economy, Germany, sent Europe’s gas prices surging by double digits...

Russian gas deliveries to Europe… have already been down after Ukraine stopped last month flows from Russia to Europe at … one of the two transit points… thus supply was cut off for a third of the gas transiting Ukraine onto Europe.” (“Europe’s Gas Prices Surge 13% As Russia Reduces Nord Stream Flow“, Oil Price)

The United States and its European allies have imposed more sanctions on Russia than any country in history. But Tuesday’s announcement helps to illustrate who is actually suffering from the sanctions and who is not. Russia is not suffering, in fact, Russia does not seem particularly perturbed at all. It has calmly brushed aside Washington’s attacks as one would whisk-away a fly at a family picnic. Even more surprising is the fact that the sanctions have strengthened the ruble, increased revenues from raw materials, sent Russia’s trade surplus into record territory, and pushed gas and oil profits into the stratosphere. By every objective standard, the sanctions appear to be benefiting Russia which, of course, is the opposite outcome that was expected.

Washington’s Economic Sanctions on Russia: Success or Failure?

  1. The Russian currency (the Ruble) has rallied to a five-year high.
  2. Russia’s commodities are raking in windfall profits
  3. Russia’s trade surplus is projected to hit a record high this year
  4. Russia’s oil and gas sales have risen sharply

Continued at the link.

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Russian financial messenger ready for BRICS – Putin

Financial institutions in Brazil, India, China and South Africa can be connected to SPFS

Russian President Vladimir Putin said on Wednesday that banks from BRICS nations can freely connect to the System for Transfer of Financial Messages (SPFS), Russia’s alternative to SWIFT.

While addressing a BRICS business forum, Putin said that together with its BRICS partners – Brazil, India, China and South Africa – Russia is developing reliable alternatives for international payments.

“The Russian system for transmitting financial messages is open to connecting banks from the five countries,” he said, adding: “The geography of the use of the Russian payment system Mir is expanding.”

The Russian president also noted that work is underway to create an international reserve currency based on a basket of BRICS currencies.

SPFS has similar functionality to SWIFT and allows the transmission of messages between financial institutions in the same format. It was created by the Bank of Russia as an alternative to the Belgium-based system in 2014, when Moscow was hit with Western sanctions over the conflict in Ukraine.

In April, Russian Central Bank governor Elvira Nabiullina said most Russian lenders and 52 foreign organizations from 12 countries had received access to SPFS, and that the regulator would keep the identity of payment system members secret.

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Ruble hits seven-year high against dollar

The Russian currency continues to strengthen despite the Central Bank’s call to lift capital controls

Ruble hits seven-year high against dollar

© Getty Images / verash095

The ruble soared on the Moscow Exchange on Monday, reaching a new multi-year high against the US dollar. The rally comes despite the Central Bank proposal last week to scrap capital controls that have supported the currency in the face of international sanctions.

The Russian currency briefly dipped to 55.44 rubles to the greenback on Monday, its strongest level against the US currency since June 2015, before later retreating slightly. The ruble was also trading just above 58 against the euro, also close to a seven-year high.

After falling to record lows in early March due to the pressure of Western sanctions, the currency recovered thanks to support from capital controls and Russia’s strong trade account, economists say. Last week, however, the head of Russia’s Central Bank called for a lift on most capital controls in an effort to weaken the ruble.

The government believes that the Russian currency is too strong at the moment, with some officials suggesting weakening it to between 70 and 80 rubles per dollar. The Central Bank and the Audit Chamber, however, have spoken out against the currency interventions and support the current policy of regulating the inflation rate.

Earlier this month, the Central Bank slashed its key rate to the pre-crisis level of 9.5%, noting that inflationary risks for the country continue to subside. The rate had been hiked to 20% after Russia was hit with a barrage of sanctions by the US, the EU, and their allies in late February.

The accelerated recovery of the ruble has also been attributed to rising energy prices in the international markets and Moscow’s gas payment demand, requiring ‘unfriendly’ countries to pay for supplies in the Russian currency.

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President Vladimir Putin said on Wednesday that the BRICS countries – Brazil, Russia, India, China, and South Africa – are currently working on setting up a new global reserve currency.

“The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out,” he said at the BRICS business forum.

According to the Russian president, the member states are also developing reliable alternative mechanisms for international payment

Earlier, the group said it was working on setting up a joint payment network to cut reliance NSE 1.42 % on the Western financial system. The BRICS countries have been also boosting the use of local currencies in mutual trade.

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By Simon Watkins - Sep 13, 2022, 5:00 PM CDT

  • Russia and China are making moves to dethrone the U.S. dollar in global oil markets.
  • Russian and Chinese hydrocarbon giants, Gazprom and China National Petroleum Corporation, have agreed to switched payments for gas supplies to rubles.
  • China has long regarded the position of its renminbi currency in the global league table of currencies as being a reflection of its own geopolitical and economic importance on the world stage.

The long-mooted prospect of the end of the U.S. dollar’s hegemony in the global oil and gas markets took another step towards realisation last week with the announcement that Russian and Chinese hydrocarbons giants, Gazprom and China National Petroleum Corporation (CNPC) have agreed to switch payments for gas supplies to rubles (RUB) and renminbi (RMB) instead of dollars. In the first phase of the new payments system, this will apply to Russian gas supplies to China via the ‘Power of Siberia’ eastern pipeline route that totals at minimum 38 billion cubic metres of gas per year (bcm/y). After that, further expansion of the new payments scheme will be rolled out. It is apposite to note at this point that although ongoing international sanctions against Russia over its invasion of Ukraine in February has provided the final impetus for this crucial change in payment methodology, it has been a core strategy of China’s from at least 2010 to challenge the U.S. dollar’s position as the world’s de facto reserve currency. China has long regarded the position of its renminbi currency in the global league table of currencies as being a reflection of its own geopolitical and economic importance on the world stage. As analysed in depth in my latest book on the global oil markets, an early indication of China’s ambition for the RMB was evident at the G20 summit in London in April 2010, when Zhou Xiaochuan, then-governor of the People’s Bank of China (PBOC), flagged the notion that the Chinese wanted a new global reserve currency to replace the U.S. dollar at some point. He added that the RMB’s inclusion in the IMF’s Special Drawing Right (SDR) reserve asset mix would be a key stepping-stone in this context. At that time, at least 75 percent of the then-US$4 trillion daily turnover in the global foreign exchange (FX) markets, as determined by the Bank for International Settlements (BIS), was accounted for by the ‘Big Four’ international currencies: the U.S. dollar (USD), the Eurozone’s euro (EUR), the British pound (GBP), and the Japanese yen (JPY). Aside from dominating daily FX markets turnover, currencies in the SDR also dominate in the payment, reserves, and investment currency functions in the global economy. Enormous media fanfare in China followed the RMB’s inclusion in the SDR mix in October 2016, when it was assigned a weighting of 10.9 percent (the USD had a 41.9 percent share, the EUR 37.4 percent, GBP 11.3 percent, and JPY 9.4 percent). As of 2022, the RMB’s share in the SDR mix has risen to 12.28 percent, which China still regards as not truly befitting its rising superpower status in the world.

Continues.