Rickards: I’ve Never Heard So Many Lies
All wars are full of lies. Winston Churchill famously said, “In wartime, truth is so precious that she should always be attended by a bodyguard of lies.”
We accept that idea broadly. Secret invasion plans should be closely held. The identities of spies must be kept under wraps. New weapons and defensive tools should not be revealed because enemies will be alerted to their potential and begin offensive workarounds.
Still, just because the government has legitimate reasons to deceive the public in wartime does not mean that citizens don’t have a duty to find the truth to the extent they can.
The Russian-Ukraine kinetic war and the broader U.S.-Russian economic war are full of more lies than any public events I’ve seen in my lifetime including Vietnam, Watergate and the Iraq War.
That’s how big the lies are.
The Bodyguard of Lies
Here’s the official U.S. narrative as echoed by the mainstream media: Russia’s invasion of Ukraine was unprovoked, Putin’s three-day blitzkrieg of Kyiv has failed, Russian forces are bogged down and valiant Ukrainian troops are putting up a powerful defense and regaining lost ground with the help of weapons from NATO.
In this version, President Zelenskyy is the new Churchill rallying patriots against an evil dictator. All of that is either entirely or mostly false.
Here’s the real story: Russia’s invasion is the end result of 14 years of provocation by the West, including repeated declarations that Ukraine will join NATO and a U.S.-backed coup d’état in 2014 that displaced a pro-Russian president.
Russia never planned a blitzkrieg on Kyiv. That’s a Western invention intended to make Putin look like a failure. In fact, Russia is slowly and methodically taking territory in the south and east of Ukraine in order to control the seacoasts, eliminate pro-fascist elements in Mariupol and establish pro-Russian autonomous zones in Donbas.
A full assault on Kyiv, if it ever comes, is last on the list. Ukraine may reoccupy a village here and there, but they’re losing ground in Kherson, Mykolaiv, Melitopol, Mariupol, Kharkiv, Luhansk, Donetsk and surrounding areas.
Moreover, Zelenskyy is no Churchill.
He’s succeeded in presenting himself as a strong wartime leader, standing up to the big, bad Putin. But in reality, he’s a corrupt oligarch with millions of dollars hidden offshore. His acting skills have enhanced his propaganda efforts, but it doesn’t take much training to see how phony he is.
Innocent civilians, including women and children, are dying under his failed leadership and inability to come to terms with Putin before the invasion began. In a nutshell, Zelenskyy bet on support from Biden and the West and lost.
There is ample evidence from numerous sources to support this analysis. Some of the best sources come from Switzerland, where military experts are infuriated that traditional Swiss neutrality has been cast aside.
Most tellingly, Pentagon leaks say the same thing. The story from inside the Pentagon is that Putin is not acting recklessly but is being patient and methodical. It also says that, despite some civilian casualties, Putin is actually using a restrained approach. Furthermore, there are no signs he is preparing for the use of chemical or biological weapons.
So what about the economic sanctions? Are they working?
The Most Severe Sanctions in History
Payments in and out of Russia have been blocked. The Central Bank of Russia has been banned from the global dollar payments systems. The same is true for the 10 largest Russian banks and a long list of oligarchs and Russian government officials.
Accounts of Russian targets in Western banks have been frozen. Exports of critical technology and high-tech equipment to Russia have been banned. U.S. and European airspace has been closed to Russian airlines.
Secondary sanctions have been imposed so that if another nation like China sells goods to Russia made with U.S. technology or machines, that nation will be punished also. The list goes on.
Economic sanctions of these kinds sound powerful when they’re announced and do have some impact. But in the long run they never work. In the end, the costs are real but the effects of the sanctions are nil. It’s a lose-lose proposition.
Sanctions Against Oligarchs Are Doing Putin a Favor
Some losses are incurred by those whose accounts are frozen or whose businesses are handicapped. A few Russian oligarchs may lose their yachts, but guess what? Putin doesn’t like the oligarchs anyway.
We’re actually doing Putin a favor by clipping the oligarchs’ wings. Putin’s power comes from the military and security services, not the oligarchs.
Tellingly, the strategic goals that justified the sanctions are never achieved. At most, they are slowed down temporarily. It’s just a matter of time before the affected parties devise workarounds to the sanctions.
The bottom line is Russia has not stood still. Russian exports of critical strategic metals such as nickel, titanium, palladium and aluminum have been cut off. Russian (and Ukrainian) wheat and other grains have also been cut off.
This will result in starvation in certain parts of the world and massive food price inflation everywhere. Given the extent of these sanctions and the retaliation, the damage to world trade, supply chains and even the availability of goods will be massive.
But what about the strategic aims of the sanctions?
Sanctions Won’t Stop the Ukrainian War
Here, the sanctions are a complete failure. They have had zero impact on Russian advances on the battlefield and Russian goals in Ukraine. In fact, Putin has proved to be a master chess player as he runs rings around the sanctions.
When the U.S. imposed sanctions on Russian banks, the value of the ruble collapsed. Still, oil and natural gas exports from Russia were allowed because Europe is dependent on them and the world is facing an energy shortage independent of the war in Ukraine.
Oil and natural gas are paid for in dollars. In a masterpiece of judo, Putin is now demanding that Russian oil and natural gas bought by states imposing sanctions be paid for in rubles. This mystified many. If Russia needs dollars (they do), why be paid in rubles?
The answer is that the only way for Europe to get rubles quickly is to buy them from the Central Bank of Russia using dollars. Under Putin’s plan, Russia still gets the dollars, still sells oil and natural gas but he has the added benefit of making rubles stronger because Europe has to buy them to pay for the energy exports.
Cutting off Russian exports of oil and natural gas is pointless because Russia will just sell the same energy to China and India. But the price will go up. It’s a world market, after all.
Putin’s Many Moves Ahead of Biden
This is how judo works. You use your enemy’s power against him by avoiding the main attack and turning the tables. Putin’s a judo expert in real life and he just demonstrated that he can practice it in economic warfare. The West will now be engaged in propping up the ruble after they did so much to destroy it.
Putin thinks many moves ahead on the chessboard while Biden is playing pin the tail on the donkey, blindfolded.
Sanctions ultimately harm everyday citizens and consumers most. Inflation is surging in Russia and the United States because of the sanctions. But the pain on the American people has only begun. It’s about to get much worse.
U.S. consumers and investors will suffer as prices soar, growth lags and stocks collapse.
This is all unpleasant news for Western warmongers. But it’s critical for investors to know what’s actually going on so they don’t lose money in the chaos to come.
The best information is that the war in Ukraine will last longer than most expect, will produce supply chain disruptions and will amplify the inflation that’s already present.
In the end, Putin will prevail in Ukraine, while the Ukrainian people and Western consumers will pay the heaviest price.
for The Daily Reckoning