Why would a rational government spend two years trashing its own economy?
Simple answer: it wouldn’t. The key word here is ‘rational’, and the British government, like many others worldwide, has shown that it does not warrant the term. Having hammered (small and medium-sized) businesses into the ground since the first ‘pandemic’ lockdown in 2020, the mitigation measure was to conjure mountains of currency out of thin air to replenish corporate coffers and pay millions of workers not to do any work.
This saga of apparent lunacy was predicated – publicly at least – on a contrived viral illness with a 99.9% survival rate and which had already been downgraded from high-consequence infectious disease (HCID) status before any lockdown restrictions had been imposed.
So far, so blatantly self-defeating; and the economic consequences of such folly were only too easy to anticipate: in a word, inflation. The Austrian School of Economics defines inflation as an increase in the general supply of money and credit. Rising prices are an unavoidable consequence of this, as too much money ends up chasing too few goods.
And so it has come to pass. All nations that recklessly printed and borrowed money as a substitute for productivity and profit are now experiencing runaway price increases in essential goods (Figure 190.1). All those myopic fools who supported lockdowns have, in my view, no right at all now to complain. On the other hand, I sympathize with all who recognized the obvious danger but were, as I was, shouted down by deranged Covidian banshees.
Figure 190.1: Given the common knowledge that governments fiddle cost-of-living (Consumer Price Index) rates – in a downward direction, of course – more accurate figures, compiled by statistician John Williams (pictured above right), are available at:
These data appertain to the USA, but valid comparisons may be drawn.
Copyright © 2022 Kitco News
As things stand, the US, UK, and particularly the EU, are in a gigantic financial hole of their own making. From there, however, only a bunch of weapons-grade imbeciles would keep digging. Step forward Biden, Johnson, Macron, Trudeau et al., who have decided to down shovels and bring in a mass excavator. Biden can be partially forgiven, his marbles having already left the building, but otherwise, none can have any excuses. Having provoked the Russian government into entering Ukraine to protect persecuted ethnic Russians in Donbas, Western leaders saw fit to impose economic sanctions on Russia, including sequestration of foreign-based assets and currency reserves along with immediate expulsion from SWIFT (Society for Worldwide Interbank Financial Telecommunications).
The stupidity of this tactic is boundless. I bet even Putin himself could scarcely believe that the West would take aim at its own feet and merrily pull the trigger. No sane country will now trust SWIFT or hold US Treasuries abroad. Biden, crassly, thought he had pulled off a masterstroke, as the value of the rouble plummeted 40% on foreign exchanges. Rouble to rubble, he boasted.
The Russian response could have been predicted by anyone with a functioning brain. Putin’s counterattack was quick and decisive: Russian commodities, such as gas and oil, could henceforth be purchased by ‘unfriendly nations’ only in roubles. Thus, the West must either: pay in gold bullion; or sell gold to Russia in exchange for roubles, which would then be exchangeable for essential commodities. Furthermore, Russia, having spent the past decade wisely increasing its gold reserves, has placed a floor under the gold price, which threatens to lead to a unilateral establishment of a new gold standard.
Results: (1) The value of the rouble has appreciated back to its antebellum level (Figure 150.2); (2) Germany, being hopelessly dependent on Russian gas, is sprawled over a barrel with its pants down; (3) The rest of the lame European Union, being highly indebted to Germany, is staring down a barrel of a different kind; and (4) If Russia does back the rouble with gold, then all fiat currencies, along with the petrodollar, would collapse.
Figure 150.2: The rouble rebounds. Touché, Joe.
Copyright © 2022 Trading View
Putin is fully aware that Russia is, unlike the West, self-sufficient in terms of commodities and holds relatively little sovereign debt. Hence, the recent economic tit-for-tat is not likely to deprive him of any sleep, particularly as he would undoubtedly have seen it coming. The US and the EU, by contrast, with the dollar and euro inflating ominously, have, in effect, sanctioned only themselves.
In a promising new era of sound money (bitcoin and/or gold), fiat currencies are rickety glasshouses managed by a bunch of deceitful fools who have calculatedly picked a fight with an unflinching man who never bluffs and has at his disposal a large pile of rocks.
It really does seem, therefore, that our (Western) leaders are, for some reason, hell bent on destroying our entire economic framework. Is it pure stupidity, though, or a deliberate strategy designed to make a tyrannical replacement system – of one-world government, cash abolition, mandatory medical treatments and State-controlled digital IDs – more likely to be embraced by a desperate and impoverished populace?
Remember Hegel (Article 150, 24 Jan 2021)? Problem, reaction, solution?
Copyright © 2022 Paul Spradbery
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