Global Isolation of Vladimir Putin’s Russia Is Impossible – America Is Losing the Game to China
All this will accelerate the emergence of a new world monetary order.
It is now a month since the war between Ukraine and Russia started. While Vladimir Putin envisaged a lightning war with a quick takeover of Ukraine, he has to face the facts: his army is far from being as powerful as he imagined, and above all, the Ukrainian people are ready to do anything to preserve their identity and their territory.
Finally, the Western world, which seemed weakened and divided, has united as never before for several years by finding a new threatening enemy in his person. In short, it would seem that Vladimir Putin has lacked judgment in starting this war.
We'll see what happens to this war in the weeks and months ahead, but in the meantime, I think it's important to take a step back to gain perspective. The big question I invite you to ask yourself is whether America and the European Union have succeeded in isolating Russia globally as they wanted to do.
The goal was to isolate Russia globally, but in the end, it is the American dollar that is now perceived as a threat
The stated goal was to bring the Russian economy to its knees so that Vladimir Putin would no longer be able to finance his war against Ukraine. As Joe Biden and other Western leaders have said, these sanctions will take time to take full effect and weaken Russia enough that Putin will be forced to end HIS war.
Nevertheless, it seems to me that America and the European Union had underestimated the will of the BRICS to no longer align themselves with their positions to reshuffle the cards at the global level. Do you remember the BRICS? It is an acronym that stands for Brazil, Russia, India, China, and South Africa.
Except for China, these countries are not strategic allies of Russia, but they have decided to continue to trade with Russia and to challenge the American giant. India, for example, has just concluded a deal with Russia to buy oil in rupees.
By freezing the assets of the Russian central bank, the West has taken the biggest gamble in the history of economic warfare. It is a huge risk for one central bank to decide to freeze the accounts of another central bank. Economically speaking, this means that the entire transatlantic West alliance has decided to default on our most important asset: our fiat money.
The perverse effect of these sanctions is that they will undermine confidence in the US dollar as the world's main reserve currency. It will even go further by damaging the euro, which could have been an alternative to the king dollar while reducing the solvency of our central banks. Moreover, it will strengthen China, which has been waiting for this.
More and more countries, starting with Russia, will throw themselves into China's arms
More and more countries will see a growing interest in throwing themselves into China's arms to no longer be at the mercy of the Western financial infrastructure. Bitcoin is also gaining credence as a respectable alternative transaction currency, which has the advantage of being censorship-resistant.
For its part, China is also realizing that its exposure to American assets represents a major risk. What America has just done to President Vladimir Putin could be done to President Xi Jinping in retaliation for the treatment of the Uighurs.
The process of de-dollarizing the world is something that will accelerate. It will take time, but China has always been patient with its long-term goals. For many, the US dollar and the euro are no longer risk-free assets. The probability of a default of dollar and euro-denominated assets can no longer credibly be positioned at zero. A simple arbitrary decision can decide otherwise as we have just seen.
A Bretton Woods III is being born before our eyes in which outside money will be king. Gold, commodities, and Bitcoin will be the central elements. The US dollar will continue to weaken to the benefit of China, which will be able to continue to advance towards its great goal: to become the world's leading superpower by 2030 / 2040.
Of course, there are still many challenges for China in the short and medium-term. A collapse of its economy cannot be excluded. Besides, China will face a huge demographic challenge in the future. However, China seems to be in a position to emerge as a winner from this situation, while America will continue to decline.
The sanctions decided by America and the European Union will accelerate the emergence of a Bretton Woods III
Defending freedom and democracy comes at a cost, and we must be prepared to pay it. However, it is questionable whether the strategy followed by America and the European Union is relevant. After all, after a month of war between Ukraine and Russia, Vladimir Putin is still the head of Russia. The European Union is not independent of Russian energy.
These sanctions will only throw Putin's Russia a little more into the arms of Xi Jinping's China. A Russia whose dependence on China will make it practically a satellite country. Russia is still not isolated on the world stage, and it is rather the Fed's side that is being looked at, as it has violated its Constitutional Mandate. America is trying to force Russia to default even though it has over $400 billion in foreign exchange reserves.
Russia continues to survive these sanctions, and it could be something lasting if China goes even further to help it escape American and European sanctions. A Russia that will now look to Asia and Africa.
The strategy followed by the Western world could be recalled in a few years as the starting point of a new world monetary order: a Bretton Woods III that will have marked the beginning of the end of the hegemony of the American dollar, and thus of America, over the world. It is too early to draw definitive conclusions, but it is something we will have to follow closely in the months and years to come.
Some reading
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