The Last Straw
The comments below are an edited and abridged synopsis of an article by James Rickards
The US, the EU and others around the world have imposed the harshest economic sanctions on Russia that have ever been used. In the past, even nations directly at war with each other would continue to pay the debts they owed each other.
Since this war is in Ukraine, Rickards looks at another war that took place in Ukraine from 1854–56, during the Crimean War.
Britain and France were at war with Russia. Yet throughout the war, the Russian government kept paying interest to British holders of its debt. The British government also kept paying its debts to the Russian government. One British minister said that civilized nations should pay their debts, even to an enemy during wartime.
But that was then and this is now. The US and its European allies outside of Ukraine aren’t even directly at war with Russia (not yet anyway), but they’ve still imposed the most punitive economic sanctions in history. To a great extent, the Russian economy has been cut out of the global economy.
Up for discussion: The effects will last for decades, good luck sanctioning Russian gold; unintended consequences; Rickards’s vision is coming to pass; and the last straw for Russia and the world.
“The US is destroying the value of the dollar by abusing sanctions. In the future, the dollar will not be that important. It won’t happen overnight, but the unprecedented sanctions against Russia will only accelerate the process.”
“Investors can prepare for the coming collapse of the dollar by increasing their allocations to physical gold. That’s the one form of money you cannot freeze or seize.”