Wargames Come to Life

A Real-Life Scenario [The Daily Reckoning] April 17, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Wargames Come to Life - Finally, a real war to wargame… - The primary reason the sanctions against Russia have failed… - Is Janet Yellen finally getting it?… [President Biden just dug his own grave]( He killed the Keystone XL pipeline project which was expected to carry 830,000 barrels per day of Alberta oil sands crude to Nebraska… He put sanctions on Russia that ultimately strengthened their relationship with China... Then began to freeze all decisions about new federal oil and gas drilling. The repercussions of these decisions are about to hit America hard in the coming weeks thanks to the recent OPEC+ cuts. I just detailed my summer playbook on how to prepare & profit from Biden’s latest blunder. [Watch My Short Presentation Now]( Portsmouth, New Hampshire [Jim Rickards] JIM RICKARDS Dear Reader, I’ve taught a seminar on financial warfare at the U.S. Army War College for the past seven years. It’s always a delight and a challenge because these people are so smart to begin with. These are serious, super sharp people that any top corporation would love to have. They certainly refute the popular refrain that military intelligence is an oxymoron. I can assure you, it’s not true. I usually have about 12 students from all branches (Army, Navy, Marines, Air Force, and Coast Guard) as well as civilians from the State Department, CIA and other agencies. They’re generally mid-career, about 35-years old. Some are older, with the rank of Lt. Colonel, Commander, or fighter pilot. I once had the real TOPGUN from the U.S. Navy Fighter Weapons School in my class. Great guy. Finally, a Real War to Discuss The students are all hand-picked as part of the Advanced Strategic Arts Program. They’re being fast-tracked toward future high leadership positions in combat commands or the National Security Council. My 2023 seminar is coming up soon. I can’t wait to see what emerges from all the back and forth. So much has taken place over the past year. My 2022 seminar was the most interesting so far because I told the students that after six years of studying hypothetical financial wars… we finally had a real war to discuss. That is of course the war in Ukraine. That’ll Fix ‘Em! The U.S. and allied financial sanctions on Russia were extreme and unprecedented. To a great extent, the Russian economy had been cut out of the global economy. Russia was kicked out of the SWIFT global financial telecommunications system, which was a momentous development. A long list of Russian banks, oligarchs and major companies were listed among those who cannot transact with Western parties. These included Gazprom (the major Russian natural gas company), among others. Biden also prohibited exports of semiconductors, high-tech equipment and other technology to Russia. All this allowed us to discuss real world outcomes instead of war gaming scenarios. I told the class that the U.S. sanctions would be worse than failures. [BREAKING: Elon Musk Bets Big On One Crypto.]( [Click Here Now For The Details]( I argued that not only would the sanctions fail to deter Russia or even cause much economic damage, they would blowback to the U.S. and injure our economic standing in the world. I encountered a lot of skepticism from the class. That’s OK; that’s how seminars are conducted. They’re intended to be round table discussions with lots of interaction and debate. It’s definitely not a case of “teacher knows best.” These kinds of seminars are designed to bring out the best in everyone so that nothing is overlooked. That said, my forecast was exactly right. Russia Isn’t a Punching Bag When you add all the sanctions together, many expected a decline on the order of 25% in Russian GDP in 2022. That's massive. But in reality, the Russian economy had only a mild slowdown in 2022, not the collapse many predicted. The best estimates for 2023 are that the Russian economy will outperform the U.S. economy. Why was I able to successfully forecast that the sanctions wouldn’t work when so many other “experts” got it wrong? The answer is that I knew Russia simply wasn’t a punching bag that would take hits without designing inventive workarounds designed to defeat the sanctions. For example, as I explained to last year’s class, it’s easy to evade sanctions even in a world of satellite surveillance and GPS tracking. The U.S. and EU have prohibited the purchase of oil exported by Russia using tankers unless the price falls below an arbitrary price cap imposed by the U.S. This ban on high-priced oil exports by tanker was enforced by denying insurance to the shippers and prohibiting any tanker that shipped Russian oil from participating in commerce with any state that joined the sanctions. How’s that working out? It’s not. The Emergence of a “Ghost Fleet” A“Ghost Fleet” has emerged to ship Russian oil regardless of the sanctions. The vessels were sold by prior owners to new owners whose name and address is unclear. The tankers can turn off GPS transmitters while underway. Offices of the ship operators were moved frequently. Insurance is obtained from ad hoc syndicates that can use self-insurance pools or that can obtain reinsurance through layers of shell companies. Some essential services can be obtained from countries like India and China that never joined the sanctions regime. In short, it’s business as usual for Russian oil exports subject to a few documentation hurdles and some fees to middlemen. This technique was perfected by world famous commodities trader Marc Rich in the 1990s to help Iraq export oil at a time when Saddam Hussein and Iraq were the target of sanctions. Rich made a fortune in the process. [“The Mainstream Media Is Lying To You!”]( The media would have you believe that the worst of the supply chain issues are over. But the opposite is true… Behind the scenes, things are getting much, much worse. Bob Biesterfeld, CEO of one of the biggest logistics firms in the world, warns “the pressures on global supply chains have not eased, and we don’t expect them to any time soon.” This is going to impact every American’s life in a potentially major way… And I’m urging everyone I can to prepare now… [Click Here Now]( Is Yellen Beginning to Get It? Seasoned observers of international trade and sanctions know the sanctions are easy to work around. The only ones who don’t know how easy are eggheads like Janet Yellen who have spent their entire careers in a government cocoon and have never worked in the real world of international trade. Maybe she’s finally getting a clue. Yellen admits that weaponizing the dollar can result in the destruction of the dollar as adversaries seek alternatives. I explained this dynamic to the Pentagon and Treasury ten years ago. The slow kids in the class are finally catching up. Even when the kinetic war is over, the economic war will continue and the effects on the global economy (not just Russia) will last for decades. Even now, the U.S. dollar is being widely displaced around the world as a payment currency in favor of rubles, yuan, rupees, and other developing market currencies. I Predicted This Years Ago In 2009, I facilitated and participated in the first-ever financial war game hosted by the Pentagon. This war game was conducted at the top-secret Warfare Analysis Laboratory of the United States (code name: WALRUS) located in the Applied Physics Laboratory, about halfway between Washington and Baltimore. I wrote about this in 2011 in Chapters 1 and 2 of my book Currency Wars. The scenario I presented at the time was that Russia and China would accumulate large gold reserves, pool their gold and launch a new digital currency backed by gold in place of the U.S. dollar. Russia and China would then insist that any purchases of Russian energy or Chinese manufactured goods be paid for in the new currency. It would be a clear-cut effort to get out from under U.S. dollar hegemony and to protect themselves from dollar-based economic sanctions. Of course, that's exactly what's playing out today. The Russian central bank just announced that its foreign currency reserves and gold holdings stand at $600 billion. That’s just $30 billion short of pre-war levels and they’re continuing to grow. Russia has been able to do this in the face of the most aggressive sanctions regime ever imposed. I’ll be sure to explain this carefully to my upcoming class. Let’s hope they’re in charge sooner than later. Regards, Jim Rickards for The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) P.S. [Did you see the recent attack our enemies have just submitted?]( Mark my words — this will result in massive natural gas and oil spikes, possibly starting just days from now. Let me ask you this… What happens when energy prices spike just as things start heating up this summer? Are you prepared for a new wave of blackouts? Regardless of your politics, Biden’s solely to blame here. He systematically drained a strategic U.S. oil reserve and sold it on the global market. Now the U.S. is left with dangerously low inventories. That’s why I’m calling this coming economic disaster [Biden’s Crude Cover Up.]( And now our enemies are lining up to hit us where it hurts. What can you do to insulate yourself from the damage? [Click here to see me urgent warning and get my #1 oil play.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [Jim Rickards] [James G. Rickards]( is the editor of Strategic Intelligence. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is the author of The New York Times bestsellers Currency Wars and The Death of Money. [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. 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