Who’s the Fool at the Poker Table?

Russia and China are getting along just fine, as the US looks like a ripe target. [The Rude Awakening] March 29, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Who’s the Fool at the Poker Table? - Jim Rickards wrote a gem of a piece in yesterday’s [Daily Reckoning](. - Jim thinks the US is the sucker at the geopolitical poker table. - This mimics an article I wrote the last time Jim wrote about this subject. I reference it heavily. [Secret Gold Back currency RUINING Biden’s plans for a digital dollar?]( What I’m holding in my hand is a completely new form of money… As we speak, it's being used as an alternative currency across the U.S. minting in places like Utah, New Hampshire and Nevada… And since it’s made out of a thinly printed sheet of REAL gold... It may be the single best way to protect your wealth from Biden’s plan for a government controlled digital dollar. That’s why, I want to offer to send one to you today. But since I have a limited number I need you to respond to [this message]( by Wednesday at midnight. [I’ve recorded a short 2 minute message that explains everything here.]( [Click Here To Learn More]( [Sean Ring] SEAN RING Happy Hump Day! It’s glorious here in Northern Italy. While drinking my morning cappuccino, I read Jim Rickards’s piece in yesterday’s [Daily Reckoning](. It echoes a theme he wrote about in February 2022. I remember it vividly because I piggybacked that article for the Rude. Since he’s writing about the same theme in a timely way, I will piggyback him again. The theme is this: how on earth did the United States wind up in this pickle? So Who’s the Fool in This Deadly Game? Jim brought up a great metaphor, encapsulating the situation from first principles. Warren Buffett is famed for saying it succinctly, so here it is: [SJN] From [Jim’s piece]( Here’s the easiest way to understand what’s happening using a poker game as a metaphor: The U.S., China, and Russia are the only superpowers in the world. There are many other important powers, and I’m not suggesting that they don’t count, but only the U.S., China, and Russia qualify as superpowers. Now imagine a three-handed poker game that involves those three. There’s an old saying in poker: If you’re at the table and you don’t know who the sucker is… you’re the sucker. In any three-sided contest, it makes sense for two of the parties to work together to crush the third. Once the third player is wiped out (loses all his chips), the two survivors can turn on each other. That’s just power dynamics. The U.S. understood this dynamic implicitly since the end of World War II. The EU? Nope. The UK? Not even close. Nor is India. Just three players, though they matter in their own ways. Russia-Ukraine War Update From [Jim’s piece]( yesterday: Over 200,000 dead Ukrainian soldiers speak as if from the grave about how badly Ukraine is losing. They’ve lost much of their best personnel and are sending fresh troops to the front lines with only rudimentary training. Many of them don’t last more than a couple of days. On the other hand, Russia is in the process of mobilizing 400,000 new troops. That’s in addition to perhaps 400,000 now in Ukraine, and 300,000 or more in reserve. Ukraine is also low on ammunition, while Russia has dramatically been increasing ammo production. Russia also maintains sizable leads in every major category of equipment from aircraft, to tanks, to artillery. Not what you hear in the US mainstream media, is it? It’s a different story on the ground. [Warning: Will “Bidenflation” Destroy Your Retirement?]( If you’re like most Americans, you’ve worked hard for decades to build your financial legacy. And now, as a result of Biden’s disastrous money printing policies, that’s all at risk. According to one top retirement expert, “Bidenflation” threatens to destroy your retirement and make your hard-earned savings worthless. That’s why you must take action right away to protect yourself… [Click here now to get the simple, step-by-step actions to survive “Bidenflation.”]( [Click Here To Learn More]( Ending One Communist Regime and Empowering Another I’ve written before about how Henry Kissinger gave away the game to the Chinese. In his remarkable book The Hundred Year Marathon, Michael Pillsbury details how Henry Kissinger gave away America’s technological advantage to China in exchange for China not siding with the Soviets. And while I don’t think what Kissinger did was worth it, I’ve got to admit the immediate goal was accomplished. Only 20 years or so after Nixon went to China, the Soviet Union collapsed. That’s because America and China made the Soviet Union the patsy at the table. Of course, the Soviets knew what was happening and tried to get America to stop it, but their efforts were fruitless. And while that outcome looked good on the surface for 30 years, now we’ve got Russia and China turning the tables on America. America’s position isn’t looking so good right now. So Jim’s point is that American policy overall is incorrect and misguided. Back in the 1990s The oligarchs took over the companies when Russia tried to start with capitalism. “It’s a good place to end, but not a good place to start.” The State Department minions who now have senior positions have never forgiven Putin for disrupting their terraforming plans. Let’s get one thing straight: Vladimir Putin is not a nice man. He’s not someone I’d want to go into business with. He’s an ex-spy chief who plays for keeps. But just because we don’t like someone, doesn’t mean we don’t have to deal with them. And since those diplomats failed in the 90s, Putin has accomplished some things for Russia. With the oligarchs, he gave them an ultimatum: keep the money, but stay out of politics. Putin built bridges to the Orthodox church. He’s also made Russia less dependent on, and almost entirely independent of, the USD system, which nullified the sanctions. Russia is by no means perfect. It’s still kleptocratic, and its judiciary isn’t strong enough. But it’s functional, something it wasn’t when the Soviet Union fell. Not History, But Security In America, students stopped learning history and geography in high school. There’s a flat plain between Moscow and the rest of Europe. [pub] From Northern France, you can march straight to Russia without encountering a hill. It’s like Kansas. Ukraine is smack in the east end of it. And it’s not like we don’t have historical examples of Russia’s enemies trying it on. Napoleon got there and froze to death, losing 90% of his troops. Hitler did the same. He couldn’t hold his supply lines. Millions of lives were lost. The only thing that saved Russia was the harsh winter. So, in Russia’s mind, it must create buffer zones. Russia lost the Baltics to NATO. Russia thinks it can’t afford to lose Ukraine. Now, does that mean Ukraine should be under Russian rule? Of course not. Just like I don’t think Canada should be under American rule. Or vice versa. But that doesn’t mean we don’t have to deal with the situation. We’re the Sucker! [Jim concludes]( The rise of Putin after 1999 enraged both neoconservatives and progressives in the U.S. who wanted Russia to be a Western puppet. Putin was a nationalist and pro-religious figure who returned Russia to a more traditional conservative state. Then Russia became a left-wing punching bag because it was a convenient way to rationalize Hillary Clinton’s dismal campaign (2016) and to tar Donald Trump. Finally, the Russo-Ukraine War, provoked by the U.S. after 2014, became an excuse to exclude Russia from the international system entirely. At the same time, the potential for huge profits in China was irresistible for U.S. businesses despite China’s atrocious record on human rights. In time, the U.S. was disabused of the notion that China would be “just like us” given enough time. China turned out to be a vicious Communist dictatorship and an even worse enemy than the former Soviet Union. Where are we now? China and Russia are close allies, and the U.S. is the odd man out. We’re the sucker. This shows that the people in charge in DC don’t know what they’re doing. The situation never should’ve come to this. We leave goat herders in Afghanistan $85 billion in equipment when we cut and run from them. Why Americans think a war would be different against Russia and China is beyond me. Wrap Up Like Jim says, “We’re the sucker.” And it never should’ve gotten to this point. America, in large part due to the current administration, has lost so much soft power. And that doesn’t begin to explain its hard power decline. The USG needs to step back and see the situation for what it is. If not, there’s a greater chance of a misstep later. Until tomorrow. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening In Case You Missed It… Some Repercussions of Bad Banking Policy [Sean Ring] SEAN RING Happy Tuesday! Yesterday’s markets were pancake-flat, so there’s not much to discuss. So after drinking a few coffees this morning, I remembered my good friend and colleague Justin Weisbecker sent me the name I missed last week. As a result, I omitted an important letter from the mailbag that I’d like to address today. They say, “Shit rolls downhill.” They forget to tell you the farther down the hill you go, the faster it rolls. So it is with the US dollar. Boy, are some friends, enemies, and frenemies getting uppity lately. It’s as if they can feel the unipolar American moment has passed. I will use Bruce P’s great comment below as the base for my argument that bad banking policy has led us to the brink of ruin. First, read this: I am not happy with the decision that all bank deposits will be covered in the recent SIVB and SBNY failures, but I strongly disagree with your characterization that “this may cause contagion (though I think, in this case, it’d be minor).” There were payrolls and operating funds were also on deposit. Kicking the SIVB high-tech customers would have dealt a stifling blow to one of our strongest elements of economic growth. There were also funds on deposit from foreign entities, which could have precipitated foreign depositors looking elsewhere with potential repercussions on the US Dollar. I know that you did not want to get into the weeds on the bank failure, but there will be negative consequences from the new Fed lending facility, backstopped by the US Treasury, which will allow banks to borrow face value (purchase price) on now devalued (low interest) treasuries. Although this facility only stands for 1 year, I suspect we will see it renewed next year and expanded to include other devalued securities. This will have a more serious result than the “bailout” of SIVB depositors. The immediate result could be an influx of cash in the banks (some of which will be required to go to “reserves”), and pump the economy with additional lending. Bruce P. Bruce, thank you for writing in with such a well-thought-out argument. I will present my rebuttals to each of your points in turn. Then, I’ll show some of the more immediate consequences I’ve seen lately. Contagion Risk Yes, Silicon Valley Bank was a big regional bank in the Bay Area. SIVB offered services specifically designed to meet the needs of the tech industry. It soon became the largest bank by deposits in Silicon Valley and the preferred bank of almost half of all venture-backed tech startups. The bank's customers were primarily businesses and people in the technology, life science, healthcare, private equity, venture capital, and premium wine industries. Ok, tech, life sci, healthcare… big industries. As are PE and VC. Premium wine? Not so much. This is why I think the “contagion” would’ve been minor. It’s just California businesses in a California bank. Were there exceptions? Sure. My friend’s London startup banked with them. But they are the exception to the rule. Payrolls and Operating Funds This was Bill Ackman’s and David Sacks’s big argument for saving SIVB. But for every company’s bank accounts, they’ve got payrolls and operating funds to mind. Everyone is making out like this is the first time it has ever happened. This stems from a fundamental misunderstanding. If you’re an uninsured depositor (anyone over $250,000), you are last in line in the case of bankruptcy. That’s right. It’s bondholders, then equity holders, and if anything is left over (usually not), uninsured depositors get that. They’re not first in line. It doesn’t matter if business owners think they haven’t taken on risk by putting all their eggs in one basket. They’ve taken on enormous risk. They and their defenders are just unaware of it. I’m gobsmacked at how many CFOs and company treasurers didn’t know that. It demonstrates the embarrassing lack of professionalism in the C-suite nowadays. (If you’ve got less than $250,000 in the bank, you don’t have to know that.) As a personal aside, I’ve got five different bank accounts in four different countries to keep my cash balances under each deposit insurance limit. I can’t recommend that strategy enough. Even if you can’t go global, going local will be good enough. [Response Requested]( 1/1000th of an ounce of gold available for Reader As a Rude Awakening reader, Jim Rickards is offering you 1/1000th of an ounce of gold when you upgrade your account. It will come in the form of a “Gold Back” - a new type of gold currency that’s starting to spread across America ([click here to view](. If you have not responded to Jim’s offer yet, and want to know how to claim yours… Please click the link below for details. [Click here to learn how to claim your new Gold Back Currency<]( Thanks! Amber Anderson Customer Service [Click Here To Learn More]( Foreign Entities Again, this has turned out differently than you think. Sure, would foreign entities have deposited at SIVB? Most likely. And would they have been angry at losing everything over $250,000? Probably. But that’s their own fault. Here’s what’s much worse: thanks to [Janet Yellen not insuring all deposits over $250,000]( now the entire world knows the USG plays favorites. This has put a big dent in the trustworthiness of the USD. Here’s Xi and Putin talking about changes they’re bringing about that are [greater than anything that’s happened in the last 100 years](. Here’s Russia risking it all by [using the Chinese yuan in international trade](. Here’s [India’s significant role in de-dollarization](. Here’s [Saudi Arabia and Iran getting together]( to take a chunk out of the USD. Here’s [Kenya’s president telling his people to dump dollars](. I know many of those plans were already in motion. But those countries have put their feet on the floor. Here’s [Fareed Zakaria talking about it](. Here’s [Fox News covering it](. My goodness, it must be serious if the MSM is talking about it. Treasury Facility “Nothing is so permanent as a temporary government program,” said Milton Friedman. The ability to pledge discount t-bonds for the full face value without a haircut (usually about 2-4%) is insanely inflationary. This is while the Fed is still hiking rates. If you’ve got contradictory policies, it’s usually between the Fed (monetary) and the Treasury (fiscal). But here, you’ve got the Fed hiking rates (contractionary) while expanding its balance sheet (expansionary). Powell is trapped. His next moves will be interesting. Now, ask yourself this: if they didn’t bail out SIVB and the rest, would this dopey Fed policy even happen? I don’t think so. Again, based on the balance of probabilities, I’d prefer to have let the bank fail. Will more people borrow? I don’t think so. And the TBTF banks don’t even want this kind of small(er) business to begin with. And we didn’t even mention the cost of First Citizens buying SIVB. [The FDIC is on the hook for $20 billion](. Small when compared to the totality of banking. But it’s significant when compared to its resources. How will the FDIC replenish the $20 billion hole in its deposit fund? By charging you, that’s how. Wrap Up Thanks again to Bruce P. for writing such a stimulating email. But I stick to my guns and say it would’ve been better to let SIVB and the rest fail. As a believer in free markets, there’s no place where free markets are more important than banking. Sure, there are consequences. But regulatory medicine doesn’t cure anything. In fact, it makes the gamble riskless to the perpetrator, which we know it’s not to the broader public. The dollar is suffering for this. Let’s hope it’s not too late to pull back from the brink. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening [The Daily FWD] URGENT! FREE Report: 6 Ways to Beat a Financial Disaster Another financial crisis could be just DAYS away! That’s why world-renowned macroeconomist Jim Rickards released this brand-new FREE report revealing the 6 most important things you NEED to do right now to protect yourself. Simply click below to sign up for the elite new research letter The Daily FWD – which will give you honest, unfiltered news on EVERY important issue impacting your wealth and security… The moment you do, we’ll rush you this exclusive new report straight to your inbox. [Click here to sign up to The Daily FWD – 100% FREE.]( By clicking the link above you agree to receive email updates and special offers from The Daily FWD. We will not share your email address with anyone. And you can opt out at any time. [Privacy Policy](. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. 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 [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. 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 allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other 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. Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by [whitelisting Rude Awakening.](