The Ruble and The Realpolitik

“It's all very well for us to sit here in the west with our high incomes and cushy lives, and say it's immoral to violate the sovereignty of another state. But if the effect of that is to bring people in that country economic and political freedom, to raise their standard of living, to increase their life expectancy, then don't rule it out.” [Wiggin Sessions] April 07, 2022 The Ruble and The Realpolitik “It's all very well for us to sit here in the west with our high incomes and cushy lives, and say it's immoral to violate the sovereignty of another state. But if the effect of that is to bring people in that country economic and political freedom, to raise their standard of living, to increase their life expectancy, then don't rule it out.” — Niall Ferguson [Addison Wiggin]Dear Reader, Let’s see, where were we? Of course, [Yesterday]( we established that the Fed is handcuffed. If they even “normalize” interest rates to 3% they could “nuke the economy.” “I cannot help but notice,” reader John L. from Australia writes in response, “the sanctions against Russia and their response of raising interest rates to 20% can only set the Russians up for a much better long term future than the West with their refusal to set a real money interest rate.” The Central Bank of Russia did, in fact, raise its benchmark rate to 20% – the highest in almost twenty years – up from 9.5% on Monday. They are trying to accomplish the first goal of a central: defend the nation’s currency. Until the invasion, Russian banks and economy were fully integrated into the Western system. Amid a storm of moral opprobrium and a host of international sanctions, the Russian ruble dropped to its lowest point since the financial crisis they endured in 1998. “The ruble has been reduced to ‘rubble’,” Joe Biden lauded. Not so fast, in response the Russians said “okay, if you want our natural gas, Europe, you’re going to have to pay us in rubles.” Before you buy gas in rubles, you have to exchange your euros for them. That and the rate increase have boosted the ruble back to pre-invasion levels. “What’s become clear is that despite an incredibly wide-ranging package of sanctions on the Russian government and its oligarchs, and an exodus of foreign businesses,” Bloomberg reports, “the actions are largely toothless if foreigners keep guzzling Russian oil and natural gas -- supporting the ruble by stocking Putin’s coffers.” Germany for example [sends]( €2.6 billion a month to Russia for oil and gas imports. Much of those energy supplies still flow through the Ukraine. Many of the Ukrainian oligarchs still have a vested interest in letting the supplies flow. Will the ruble rebound set Russia up for success in the “long-term,” as our Australian correspondent asks. To quote our buddy, Sean Ring, from the Rude Awakening, “[that remains to be seen]( New Western Sanctions have been announced. But it’s too early to tell if Russian and Chinese efforts to bifurcate the global economy will be successful. If all you do is gobble up the Western narrative, the Russians are isolated from the global economy and will eventually have to bend to the will of the Western mob. Of course, nothing’s that simple. What is it the mainstream press doesn’t want you to know? That’s a provocative question; one we posed to our latest Wiggin Sessions guest: [Click here to learn more]( “America, the unchallenged global superpower itself, has taken the last 30 years, since the USSR dissolved, to extend its political and military empire to the four corners of the earth.” Here more from Scott Horton, [here](. Scott Horton is the editorial director of Anti-war.com and founder of the Libertarian Institute. In our session Scott riffs through 30 years of foreign policy mistakes that the U.S. and much of the West has conveniently forgotten. How is it the mob has adapted such a high moral stance? What is it that Americans are missing? You may wonder the same after you take a listen by clicking on the image above. If your druthers are to read, you’ll find a link to the transcript there, too. Follow your bliss, [Addison Wiggin] Addison Wiggin Founder, The Wiggin Sessions P.S. Following along, “It seems nearly certain that the trend in resource prices will continue to rise,” Grantham, the co-founder of Boston asset manager GMO, wrote in a paper published Wednesday. Oil spikes, in particular, have a history of triggering recessions. Grantham ticked off a number of potentially troubling trends, [Bloomberg reports]( including that the war in Ukraine will cause food prices to rise and that developing countries eager to grow will contribute to “repeated commodity boom cycles.” “Although we live on a finite planet, we have been attempting for the last 250 years to do the impossible: to generate perpetual compound growth,” said Grantham. We’ll be following up on the CRB index as an inflationary indicator and the boom, bust cycle of commodities early next week. Enjoy a Collection of Wines From the Edge of the World Get access to exclusive small-batch wines from the remote vineyards of Argentina — for half the retail price! Discover unique bottles you can’t find at your local liquor store. [Click here for details](. Ed. note: Got something to say? Send your feedback to The Wiggin Sessions, [here.](mailto:WigginSessions@5minforecast.com) Follow the Wiggin Sessions on Social Media! [Facebook Group]( [Twitter]( [Instagram]( [YouTube]( [LinkedIn]( [The Financial Reserve]The Wiggin Sessions is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Consilience, LLC. delivering daily email issues and advertisements. To end your The Wiggin Sessions e-mail subscription and associated external offers sent from The Wiggin Sessions, feel free to [click here.]( Please read our [Privacy Statement.]( For any further comments or concerns please email us at support@5minforecast.com. If you are having trouble receiving your The Wiggin Sessions subscription, you can ensure its arrival in your mailbox by [whitelisting The Wiggin Sessions.]( © 2022 Consilience, LLC. 808 Saint Paul Street, Baltimore MD 21202. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Email Reference ID: 400WIGED01