by Tom Luongo
This report from RT from last week is the kind of thing that feels like a press release from Russia. It’s to let everyone know that whatever happens next the Russians are prepared for it.
The key to understanding what’s happening here is the following:
Within the Eurasian Union, consisting of former Soviet republics Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan, trade using foreign currencies such as the US dollar and Euro has dropped to around a quarter of transactions.
With Russia coming forward internally, capable now of building and supporting a commercial airplane industry, their relationships across central Asia and transacting in local currencies becomes a ‘rising tide lifts all boats’ situation with Russia as the central node.
This is the multi-polar world in microcosm, a central Asia trading independently of the West’s banking system. This is the essence of evading the dollar trap, building a stronger regional economy.
To that end Russia’s commitment to building a much bigger IT economy also bears noting. Today’s Press Review from Tass is quite a wealth of information.
According to Vedomosti, in the near future, the document will be submitted to the Prime Minister to be signed. According to IDC, in 2020 the volume of Russia’s IT market reached $24.18 bln. So, in 2024, if the plans of the Ministry of Digital Technologies are implemented, its volume will approach the $50 bln mark.
Couple this with the revolution happening in crypto, to bring banking and savings services to the unbanked, and I see a massive groundswell happening over the next ten years if this is allowed to continue.
Which is why, of course, it won’t be.
It’s why FOMC Chair Jerome Powell is out there trashing Bitcoin while capital flees the pronouncements of half-clueless/half-rapacious (a dangerous combination to say the least) central bankers.
What I’m worried about now is an all-out attempt to start a war in Ukraine which forces Russia’s hand there. It’s an election year in Russia. Putin’s handling of a crisis in the Donbass will be critical to what happens next. This is why the Navalny cult of personality they are desperate to create is so important.
Watch the headlines out of Ukraine carefully. They are becoming more and more disturbing with Turkish drones and artillery flooding the contact line between Ukraine and the Donbass. EU/Russian relations are now ‘officially’ at an ‘all-time low’ as they are with the U.S. after Biden’s ridiculous statement on ABC last week.
Herr Schwab of the World Economic Forum will not be denied until someone finally puts him in his place. His Great Reset must be obeyed. And the Russians are making very clear that they will keep preparing for the worst while hoping for the best. NATO will have to make the first move because Putin’s strategy is asymmetric.
I expect Erdogan in Turkey will act as the West’s proxy.
And, unfortunately, that ultimately means a sincere loss of potency in the U.S. military. In other words provocations won’t cut it, actions will and when, not if, Ukraine attacks later this year we’ll find out who’s bluffing whom. I don’t doubt our ability on the battlefield, I doubt our will to risk it against a major military power like Russia and Europe’s will to host the conflict.
In the meantime, foreign investment into Russia improves despite sanctions and threats (thanks, I think to capital flight from an intentionally dysfunctional Europe) which is building a much different financial foundation than the one built exclusively on oil and gas exports during the early years of Putin’s rule out of sheer necessity.
That is the path to evading the next phase of attack, diversifying trade and investment out of dollars and euros. As I talked about over the weekend, it looks to me the Fed is intentionally strengthening the dollar to foment global chaos.