Russia-China Gas Deal is Latest Bullet US Fires Into Its Foot

This idiotic stance against Moscow must stop, or the Western world faces an insurmountable crisis. Were you forwarded this email? [Sign-up to Rude Awakening here.]( [Unsubscribe]( [The Rude Awakening] It’s come to our attention that you might be missing out on extra benefits exclusively for Rude Awakening subscribers. Check out our website where you can find archives, updates, and everything else included in your subscription. You can access it by [clicking here now](. Russia-China Gas Deal is Latest Bullet US Fires Into Its Foot - Russia will supply China with natural gas from its Far East region. - Payment for the gas will be settled in euros, not dollars. - In effect, China aids Russia to get around US sanctions, which have proven useless anyway. Recommended Link [Former CIA Advisor: “They are LYING about inflation!”]( Despite the circus of distractions you’re hearing on the news... The lies and the misdirections... There’s one former CIA and Pentagon insider is revealing the TRUTH behind the inflation numbers in America. A story so shocking and so powerful that it could bring the Biden Administration to its knees. You might have known something strange was going on in America, but I can guarantee you weren't expecting this. [See The Story Mainstream News Is Trying To Bury]( Sean Ring Editor, Rude Awakening Good morning to you on this fine Tuesday! What Now? I’ve written to you before about how I think [our Russia policy is crazy](. I’ve also shown you what happens when [the West sanctions Moscow](. The consequences are plain to see from a sanctions point-of-view. The geopolitical and macro factors take longer to develop. Until they do. Suddenly, the fruition of idiocy fully manifests itself. Joke Biden and his junior varsity foreign policy team continue to plunge the country into macroeconomic chaos. The evidence is on display - and incontrovertible. There is no Office of Unintended Consequences in the United States. But I guarantee you any policy that puts the “exorbitant privilege” of the US dollar as the world’s reserve currency at risk is unintended. So Russia and China’s latest move is the economic equivalent of a kick in the goolies. On Friday, the [Reuters headline read]( Russia, China agree 30-year gas deal via new pipeline, to settle in euros From the US’s perspective, the headline before the comma is bad enough. But after the comma, it’s a disaster. To be sure, this deal makes all the sense in the world for both China and Russia. China needs energy resources. Russia needs to diversify its client base away from sanctioning countries. And both of them want to deal in a currency other than USD. But for the United States and pretty much the entirety of Europe, it’s a disaster. Let me explain. How does this affect the Ukraine situation? The tangled mess in Ukraine originated lifetimes ago. Ukrainians are a people separate and independent of Russia. Russians believe that they and Ukrainians are one people. No “deal” hastily put together in the West will ever change these points of view. We have to deal with the reality on the ground. When the Cold War ended, America bragged about winning it and that the Soviet Union lost it. Russians - especially Vladimir Putin - have never forgiven this offense. Nor have they forgiven the [Harvard Boys]( plundering their country. What’s worse for Russia is how the US rescinded its promises not to move NATO’s borders up against Russia’s. Credit: [Al-Jazeera]( To Russia, the Baltics were bad enough. But Ukraine… that’s just not happening. Parking missiles in Ukraine represent a considerable risk to the Russian state. [Caspian Report]( on YouTube covers this well. But in a nutshell, Russia doesn’t want weapons on its doorstep. Cuban Missile Crisis, anyone? Does this have anything to do with Nordstream 2? Yes. Quickly, Nordstream 2 is another pipeline recently built but not yet operational thanks to German foot-dragging and American pressure, bringing Russian natural gas to Europe. Credit: [Al-Jazeera]( Let me quote former President Trump again from an earlier edition of the Rude: I think it’s very sad when Germany makes a massive oil and gas deal with Russia, where you’re supposed to be guarding against Russia, and Germany goes out and pays billions and billions of dollars a year to Russia,” Trump told Stoltenberg. “So we’re protecting Germany, we’re protecting France, we’re protecting all of these countries. And then numerous of the countries go out and make a pipeline deal with Russia where they’re paying billions of dollars into the coffers of Russia. And I think that’s very inappropriate. So the problems are these, from America’s perspective: - Russia makes money supplying natural gas directly to Germany. - Germany doesn’t buy natural gas from America, depriving it of funds. - America pays for NATO to defend Europe, while Europe funds its supposed enemies. - Ukraine loses out on transit fees, strengthening Russia’s economic hold over it. - America has more difficulty inviting Ukraine into NATO and planting missiles there. Let’s go from first principles: change NATO’s mission from bugging Russia to irritating China instead. Most of these problems go away, at least for America. What America’s policy has done is drive Russia further into China’s orbit, and that’s just plain dumb. And [Joke Biden has consigned the Germans to a frigid winter]( indeed if they can’t get their energy supplies to warm the place up. The Germans, as usual, kowtowed to the American president and his directives. I think Chancellor Scholz’s reign will be short if he doesn’t depart from his ludicrous stance. Recommended Link [Trump’s Secret Legacy]( [Click here for more...]( In late July, the Trump administration oversaw a RADICAL change to the tech world… one that could unleash a huge wave of disruption… prosperity… and wealth creation in the near future. Chances are, you haven’t heard about it until today. But according to one of America’s most respected tech forecasters, it’s set to create small fortunes right here in this country. He recently went on camera to explain why... [Click Here To Watch Now]( Why does euro settlement matter? Anytime a country decides against using the US dollar in favor of another currency, US dollar hegemony erodes. That China and Russia will be using euros to settle this deal isn’t a trivial footnote. Two economic and military powers are deliberately moving away from the dollar. Really not good, from America’s perspective. And if the American government sanctions Russia for an actual invasion of Ukraine, Russia will have to accept payments in euros anyway. My colleague Jim Rickards had this to say in the [5 Min. Forecast]( Russia would have to price its oil and natural gas in euros so that it could receive payment. Sanctions will include bans of Russian banks from U.S. dollar payment systems and a prohibition on Russian companies seeking finance in Western capital markets. Additional sanctions will include freezes on financial transactions by Russian leaders and firms, prohibitions of certain high-tech exports to Russia, a ban on Russian investment in U.S. businesses, and perhaps tariffs on U.S. imports of Russian goods. The U.S. will not prevent Russian bank transactions on SWIFT, the international financial communications network based in Belgium. That would be regarded as an act of war by Russia and would not be supported by European members of SWIFT. But Jim also agrees with what I wrote about the [uselessness of sanctions]( against Russia anyway: These sanctions would have some impact on Russia but would not change Russian behavior. Sanctions have been imposed on Russia since the 2014 annexation of Crimea and have had no material impact on Russian policy. Russia has moved over 20% of its reserves into physical gold bullion stored in Moscow in anticipation of freezes on digital payments. Because the gold is physical, not digital, it cannot be hacked, frozen, or seized. This gold bullion is worth about $140 billion at current market prices. Importantly, U.S. sanctions would not affect exports of Russian oil or natural gas. Russia provides about 10% of all the oil produced in the world. Russia, Saudi Arabia, and the United States combined produce over 33% of all the oil in the world. It’s simply impossible to sanction Russian oil sales. Any interference in Russian oil sales would cause global hyperinflation and global economic collapse at the same time. The impact on Russia would be marginal; it has a waiting list of customers for the natural gas in China. The impact on Western Europe, especially Germany, would be devastating. In a best case, higher energy prices from Russian dominance of the Western European market would feed inflation and damage the profitability of manufacturers around the world. Financial sanctions would reduce global liquidity, increase market uncertainty and possibly trigger a global financial panic of the kinds seen in 2020 and 2008. If this policy is stupid for America, it’s positively self-harmful for Germany. Wrap Up America’s policy towards Russia is idiotic. Of course, when politicians make mistakes, even if they realize their mistakes, they can’t back down for fear of losing face. (See: policy, COVID) America is sowing the seeds of its own economic destruction, and Germany wouldn’t escape this situation unscathed. It’s essential to be aware of these manifestations of our central thesis of dollar destruction. It’s a policy so suicidal only academics, politicians, and news anchors can support it. Until tomorrow. All the best, Sean Ring Editor, Rude Awakening P.S. If you want to get some great insights into what I’ve been writing about with the dollar, you should listen to my friend and colleague Addison Wiggin’s interview with entrepreneur and investor Mark Moss. I’m reading the transcript now, and it’s chockfull of golden nuggets. Check this out from Mark: “And so what we're doing is most people are just looking at financial cycles, and they're going, ‘Well, we're at the end of a long term credit cycle. Interest rates are at zero. What's going to happen next? Is the dollar going to remain the reserve currency?’ but they're only looking at this one piece right here. And I think you need to understand the other two pieces to understand, like I said, how we got here, what the heck is going on, and most importantly, where we go from here.” [Whitelist Us]( | [Archive]( | [Privacy Policy]( | [Unsubscribe]( Rude Awakening 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 Paradigm Press delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [unsubscribe](. Please read our [Privacy Statement.]( If you are you having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by [whitelisting us.]( © 2022 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. 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