I hate to sound like a broken record, but engrossing as the military events in Ukraine are—and there is currently speculation about possibly significant developments—the economic/financial war is the big enchilada, so to speak. Just as the military aspects continuously develop, so too does the transformation of the world financial/monetary system. Russia and China, and other countries as well (Saudi Arabia comes to mind, but Iran, India—the list does go on), have King Dollar in their sights. Their aim is to break free from the tyranny of the dollar as the world reserve currency.
Alastair Crooke references the current state of play at the end of a recent article:
The writing isn’t as lucid as Crooke’s usual standard, but I think you’ll get the thrust of what he’s saying:
Having exhausted much of the old Soviet munitions inventory held by NATO states, Kiev’s sponsors doubled-down, sending “volunteers” and ever more advanced Western materiel. Yet there’s no new NATO strategy because there’s now no peer Ukrainian army per se. All the West can do is to continue trying to drag the Russians into the same quagmire they themselves blundered into months ago.
Just as the consequences of massive sanctions on Russian energy and the banning of Russian banks from SWIFT were not thought through in advance by Washington, so too, are the consequences flowing from the next phase of the wider ‘financial war’ – [Russia and China’s] intent to implement a simple, gold-linked digital currency -for real-time ‘clearing’ between Asian Central Banks - superseding earlier notions of a commodity-linked trade currency, which are routinely dismissed in the West.
Iran and Russia however, have just connected their national financial messaging systems: 52 Iranian banks and 106 Russian banks are now linked through the Russian equivalent of SWIFT – the System for Transfer of Financial Messages (SPFS).
The initial western financial thrust to collapse the Russian economy backfired by driving up energy prices for the benefit of western rivals. However, it is Russia’s next step – if implemented – that threatens to drive up commodity prices, undermine western financial markets, and ultimately collapse their currencies. Put simply, NATO, acting impetuously (i.e., escalating further in Ukraine) can become a pretext for securing Russia’s future as an Asian superstate, which ultimately will mark the end of the road for fiat currencies.
The move away from King Dollar as the only reserve currency is proceeding apace. The US, not to mention the rest of the collective West, is in a box of their own contriving. So what’s their reaction? Apparently the idea is we’ll force the rest of the world back into our Rules Based Order, back into the line that we dictate:
You can find related articles here.
The problems with this scheme should be obvious. Replenishing US arsenals isn’t something that will happen overnight. In fact, it could take as long as ten years, and that’s if all goes well. You can read about the problems in that whole process here:
On Shells And Armor: The War Of Sustainment
Brief by-the-numbers exploration of the production war between NATO/Ukraine and Russia.
As Will Schryver never tires of saying, the US—let alone any other member of the collective West--is utterly unprepared for industrial scale warfare. Russia and China are.
There’s another problem. Even if rapid replenishing of the US arsenals were feasible, the US military—unlike the Russian military—is undergoing a recruitment crisis. Not only are normal guys bailing out of our Woke military, but the inadequate numbers of replacements are tending to be fat, dumb, and sexually confused. It’s a crisis of both quantity and quality. Who’s fault is that?
But it gets worse, when you put the two aspects together—the gathering momentum of the war on King Dollar and the lack of US preparedness. After the last years of gross financial excess, and now faced with serious challenges to our ability to force our debt on the rest of the world, those plans to simply ramp up spending for the military may not work out too well. Adam Mill doesn’t get into military spending—focusing instead on “social” spending (that’s a euphemis)—but all you have to do is plug that into the equation to see that things are likely not to compute. Who thinks that our Ruling Class will actually scale back the craziness that Mill refers to?
There’s Going to Be Hell to Pay
America is piling up civilization-ending debts, and the people incurring them for the sake of feel-good social priorities will be justifiably cursed when the consequences finally come.
I like that line about “civilization-ending debts,” although I’m not sure how apt a description that is for the current state of our society. Here are some relevant excerpts, which follow from Mill’s detailing of just how massive and unmanageable our debts have become:
… the federal government will soon be financing most of its $31.5 trillion debt at market rates-which are approaching 4 to 5 percent. We’re looking at a total annual interest bill of over $1 trillion in the very near future. By comparison, the total tax revenue collected by the U.S. government in 2023 is projected to be $4.6 trillion. As soon as next year, interest will consume approximately one-fifth or even a quarter of all government revenue.
That’s not the bad news.
The bad news is that we’re fast approaching the point at which we have to accelerate borrowing just to keep up with the interest payments. The treasury has to find buyers for its whopping $1.4 trillion in deficit spending. And for now, the Federal Reserve is saying it will not buy more treasuries, even to replace the maturing treasuries that roll off its portfolio.
Until recently, the dollar’s resilience made it possible for the government to effectively fund operations with money from the printing press. But inflation, the offspring of deficit spending, has begun to collect its due from the public. As interest payments claim increasingly more and more of the budget, the government must borrow more to make up the difference, thus accelerating the growth of the debt and inflation. This leads to still higher interest rates which lead to higher interest payments requiring even more borrowing
When you have to borrow money to pay interest on existing debt, you’re in big trouble.
…
It’s hard to say exactly when or how the federal budget will hit some sort of wall. But the scenario I consider most likely is that inflation will reignite as the Federal Reserve backs off its interest rate increases. Get ready to go long for single-digit inflation.
Unfortunately, the same geniuses who enabled politicians to run up these irresponsible debts will also be in charge of helping politicians set inflation-fighting policies. For the Left, the go-to tools never work but will always be tried because of political ideology.
Things are bad as it is, but if we allow the Neocons to double down on the old conundrum of Guns and Butter, while the rest of the world ditches King Dollar, we’re in for a rocky ride. The world doesn’t owe us a thing, no matter what Robert Kagan and others may say about American Exceptionalism. The clever boots plan, as I understand it, was that we’d quickly collapse Russia’s economy and then go for China’s jugular—then default on all our debt. That’s not looking too clever right now.
Pumping up the US defence budget won't change a damn thing. How will buying more F35s and Abrams tanks change things? These weapons are no longer what wins wars. It will just tank the economy without changing the battlefield. And the biggest point wasn't mentioned: as the US neocons dig themselves deeper and deeper into a hole, the more likely they are to lash out with extreme prejudice for the whole human race.
Pumping up the US defence budget won't change a damn thing. How will buying more F35s and Abrams tanks change things? These weapons are no longer what wins wars. It will just tank the economy without changing the battlefield. And the biggest point wasn't mentioned: as the US neocons dig themselves deeper and deeper into a hole, the more likely they are to lash out with extreme prejudice for the whole human race.