The New Russian Empire

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The last two years of Barack Obama’s presidency will see the rise of a new Russian empire.

This new empire will resemble the Soviet Union in shape, the Czars in style.

We looked at this subject over the summer (here and here). To summarize those blogs:

  • The US-led coup of Ukraine convinced Putin to reassert safer borders
  • Russia wants to build a buffer between itself and NATO

  • Putin wants to re-establish a Russian Empire to revitalize Russian pride and influence

  • Western debt and war-weariness make NATO impotent

  • Putin knows the next US president might be more of a man than Obama, even if its Hillary

  • Putin will want to complete his expansion by January 20, 2017

  • Ukraine is as good as done and Poland will fall under Russian influence

I still believe all of that. And today we learned that Ukraine has entered its death-spiral as an independent country. Hyperinflation–the thing Krugman says went extinct with the gold standard–has returned. As ZeroHedge points out, this is the end-game for Ukraine.

And here’s more, also via ZeroHedge:

So as the Ukraine government watches its country go down in flames, with the blessings of the US State Department of course, it decided to take action. According to Reuters, with the hryvnia in free fall (see above) the central bank tried to call a halt on Wednesday by banning banks from buying foreign currency on behalf of their clients for the rest of this week.

To summarize:

  • The US backed a coup of Ukraine’s pro-Russian president (because US foreign policy had been so successful backing coups in Bay of Pigs, Iran, Iraq, Libya, Egypt, and Syria)
  • Putin retaliated by seizing Crimea

  • Then Putin attacked Ukraine proper

  • Then the US and Saudi Arabia flooded the oil market to hurt Russia

  • Then Ukraine went into hyperinflation, which will end with capitulation to Russia

  • Then Poland will ask, “should we trust America’s promises or Russia’s threats?”

  • If you were Poland, how would you answer that question?

    The Other Shoe Drops

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    For months I’ve been echoing the warnings of Peter Schiff and others:  when China stops buying American debt, we’re in deep, deep trouble.  The possibility for hyperflation, prices rise by double-digits on daily or weekly measures, becomes palpably high.

    Even though this article from IHT failed to suprised me, I have a sick, frightened gnawing in my stomach:

    China has bought more than $1 trillion in American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home – a shift that could pose some challenges to the U.S. government in the near future but eventually may even produce salutary effects on the world economy.

    Thanks to Hank Paulson’s Bailoutpalooza followed by Obama’s promises to pile on more bailouts and $1 trillion or more in stimuli, the US single-year deficit for 2009 will be between $1.2 trillion and $2.5 trillion.

    There are three ways to finance that deficit: tax, print, or borrow.

    A tax increase, as we have been told, could push us into a deep depression.  We don’t want that.

    Printing $2.5 trillion in new cash would lead to hyperinflation.  Unless you want to buy bread for $3,000 a loaf, that’s not good.

    Borrowing delays the reckoning.

    One way or another, we will deal with depression, hyperinflation, or–like Germany in the 1930s–both.  At least in a depression with deflation, cash will save you.  In hyperinflation, it’s every man for himself.