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Weapons Of Financial Destruction And The New World Disorder

 

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As I wrote earlier here, in the fog of war truth is often the first casualty. People come up with the strangest predictions and wild conspiracy theories. We simply don't know, we can't know, what the outcome of Russia's invasion of Ukraine will be. But the article Weapons Of Financial Destruction And The New World Disorder just might give us some insight into what could likely be the outcome of this conflict.

The author, David C. Hendrickson, is professor emeritus of political science at Colorado College. Here's an excerpt: "The comprehensive sanctions the United States and the West have imposed on Russia take us into an entirely new world. The sanctions are multidimensional, but most important is the “freezing” of Russian foreign exchange reserves, what President Biden called Putin’s $630 billion war fund in his State of the Union. This action means that all previous economic contracts between Russia and the West are invalid."

The article goes on to explain that it happened "against the backdrop of a worldwide crisis in supply chains. That is about to get a lot worse. Among the cascading dominos: 30 percent of the world's wheat exports [i.e., from Russia and Ukraine] are now cut off. Russia's exports of fertilizers – 18 percent of the potash market, 20 percent of ammonia exports – are off market. Energy prices have exploded. A suddenly bipartisan United States has imposed a (mostly symbolic) ban on Russian oil imports." Where will the poorer nations of the world turn for oil, wheat and fertilizer? How many millions of their people might die of starvation? And for the more prosperous nations, what will be the inflationary impact on prices? How will the poor among us in the West survive?

Perhaps more importantly, where will Russia turn to sell its gas, oil, and wheat, now that the West won't buy those commodities? China is quietly siding with and building economic relations with Russia. China needs more wheat, fertilizer, gas, and oil to feed its people and power its economy and produce goods for the rest of the world. So the West's embargos and tariffs on Russian goods will likely drive these two nations closer and create out of the two a much greater economic powerhouse than China is by itself. In addition, if poorer nations are forced to choose between Western sanctions and feeding their populations, might they decide to use another currency such as the Chinese yuan instead of the U.S. dollar as a means of exchange?

Ever since I was lecturing during the late-1990s at Mari State University in Russia, I have said that if the U.S. dollar loses its position as the world's reserve currency, all those trillions of dollars floating around in world markets would come home to roost, causing even greater economic woes: massive inflation in the U.S. and elsewhere. So this conflict in Ukraine might not only backfire on V. Putin, but also on the West.