The sanctions against the Kremlin were supposedly intended to ruin Moscow’s coffers and thus force Vladimir Putin to his knees before the United States and Europe so that he would accept Ukraine as a member of the North Atlantic Treaty Organization (NATO), the main reason for the outbreak of the war. The result, so far, has been a resounding failure.
In 2023, Russia’s Gross Domestic Product (GDP) grew by an enviable 3.6%.
Washington and kyiv once sought to secure the Ukrainian border with missiles and sophisticated weapons just a few kilometres from Russian territory. This idyll between Biden and Zelensky stemmed from a historic trail of great economic interests and political power in that region by Washington and the tycoon and radical left-wing activist, George Soros, several years before the overthrow of Ukrainian President Viktor Yanukovych.
Soros and his Open Society Foundations never worked alone in their desire to change the political spectrum in Ukraine and to occupy key positions in the so-called Granary of the World. He had the backing, behind the scenes, of the Clintons, the Barack Obama administration and other major left-wing investors convinced that kyiv represented a very important geopolitical centre of operations for Europe, much of Asia and the US.
Putin and his option B
Ukraine was considered one of the largest producers of corn, wheat and barley in the world, but its large reserves of gas, lithium and other valuable minerals for the development of technology and industry (iron, titanium, mercury and uranium) made it a unique and highly coveted attraction.
The sanctions imposed by the US on Russia, together with lukewarm European measures, led Putin to make an attempt that he considered as an option B, if Washington decided to confront him after the end of the Cold War and the fall of the socialist camp in Eastern Europe.
Biden’s actions on Moscow, far from benefiting the US, have harmed it in the short and medium term, and have generated greater international interest in finding ways to end dependence on the dollar and create an alternative macro financial market between the euro, the yuan and the ruble. Germany, France, Pakistan and Saudi Arabia have shown their enthusiasm for the idea and have joined the activism of more than 40 countries seeking to end the reign of the dollar in the world.
When the war between Russia and Ukraine broke out, the Biden-Harris administration ordered the freezing of $300 billion of the Russian Central Bank’s foreign exchange reserves within 72 hours. It also did the same with Iran, which agreed to join the BRICS payment system to trade in local currency, based on the platform of this movement that seeks to weaken and dethrone the US through Maoist economic strategies of the so-called Cultural Revolution of the 21st century.
The war in Ukraine has finally convinced the Kremlin chief that the US has never ceased to be a direct enemy, and has become Ukraine’s deadly and destructive nightmare: Nearly 7 million Ukrainians are now refugees, 25% or more of Ukraine’s territory is occupied by Russia. More than 115,000 Ukrainian soldiers have been killed and more than 140,000 have been slightly and seriously wounded. 40% of the infrastructure has been devastated.
The coalition
The other major consequence of the war between kyiv and Moscow is the consolidation of the most dangerous anti-American and anti-Western coalition since the end of the Soviet era: the BRICS+, made up of 10 countries including China, Russia, Iran, Brazil, the United Arab Emirates, South Africa and India. This group accounts for 51% of the world’s oil, gas and coal production under a population of some 3.2 billion people on a surface area of more than 15,440,000 square miles.
To date, the US dollar accounts for nearly 90% of global transactions and accounts for nearly 60% of central bank foreign exchange reserves.
However, warnings from major investment banks to their clients have put the issue in the spotlight around the world, with all eyes on whether the Federal Reserve begins to lower interest rates and by how much.
Morgan Stanley has quietly sounded the alarm about the “death of the US dollar” when it told its major clients about the first-ever “Anti-Dollar Alliance” made up of 42 nations.
That Alliance owns almost 70% of the US dollar. If they decide to dump their holdings, the US could be hit by a tsunami of US dollars that would trigger hyperinflation and a Wall Street crash so deep that it would wipe out trillions of greenbacks.
Peter Schiff, who predicted the famous housing crash, has said that “this is going to have a much bigger impact than the 2008 crisis.”
Former President Trump and conservative groups warn it will be like “losing a world war.”
Trump announced the upcoming launch of a cryptocurrency platform, which he presents as an alternative to the offerings of major banks and financial institutions.
“Americans have been squeezed by big banks and financial elites for far too long,” the Republican presidential candidate for the White House wrote on the X network and on Truth Social. “It’s time for us to fight back, together,” he added.
Trump did not give details about the project, called The DeFiant Ones.
The international pressure on the US financial system, following the bankruptcy of four major banks in 2023, is more than evident.
The big wake-up call came on August 5, when global stock markets plummeted following the publication of US employment figures, but rather than a reaction, it was a warning of what could happen if the Central Bank’s benchmark rate remains at 5.25%-5.50% for much longer.
That is to say, even though Americans do not perceive any real relief from inflation, the Fed has had to yield to international pressures regarding confidence in the soundness of American finances.
Buffet gives signals
Warren Buffet, one of the most successful investors in the world and known as the “Oracle of Omaha,” began in recent weeks to build a mountain of liquidity by selling millions of assets, a forced movement that has not gone unnoticed by financial markets, analysts and investors at all levels.
Between cash, money market funds, Treasury bonds and pure liquidity, Buffet has raised a tornado of doubts about the dollar.
In the last few days, selling off some of its positions in Apple and other risky assets, the 93-year-old billionaire’s investment vehicle, Berkshire Hathaway, has dumped around 14 million Bank of America shares for a total of $550.6 million. According to records from the Securities and Exchange Commission (SEC), Buffett’s firm disposed of 13.968 billion Bank of America shares in three transactions between August 15 and 19.
With this sale, Buffett seems to sense that the Fed will be forced to lower interest rates more sharply than expected to counteract the slowdown in the labor market that has been occurring since late 2023, even though the mainstream left-wing press and data from the Biden-Harris administration’s Department of Labor say otherwise.
Following the sale of its stake in Apple and shares in Bank of America, among other assets, Berkshire Hathaway’s cash equivalents increased by nearly $90 billion and hit an all-time high of more than $277 billion in the second quarter of 2024.
That increase brought the cash position relative to total assets to 25%, the highest level in at least 24 years, according to experts. The “mountain of liquidity” is the largest in nominal terms in Berkshire Hathaway’s history. Notably, this was the seventh consecutive quarter in which Buffett and his team sold more risky assets than they bought, with net equity sales totaling $131.63 billion since Oct. 1, 2022.
For analysts, the visionary investor is trimming the sails before the powerful storm hits.
With all that cash piled up, Berkshire Hathaway could, if it wanted, buy McDonald’s at the chain’s current share price and still have $80 billion left — or even acquire a stake larger than Mark Zuckerberg has in Meta, the parent company of Facebook, Instagram, WhatsApp and Threads.
War on the dollar
From the sidelines of JPMorgan Chase, experts warn: “In these difficult times, it is best to resort to basic principles: recessions are typically disruptions in behavior driven by an adverse shock interacting with a set of imbalanced macroeconomic conditions… Although the lack of macroeconomic imbalances seemed to prevent recession, recent data calls this view into question.”
The dollar has fallen 5% in value over the past two months, its lowest level in 13 months, due to two years of high interest rates caused by inflation created by the Biden-Harris administration and the failure of its economic policies.
Currency hedge fund manager Stephen Jen, of the “Dollar Smile” fame, predicts that Chinese companies could liquidate and repatriate a flood of up to $1 trillion in US-based assets, leading to a 10% appreciation of the yuan against the US dollar, but China’s dire investment situation suggests that such an analysis has no real chance, at least for now.
A weaker dollar or the partial or complete eradication of its dependence means a wider range of opportunities for emerging economies and commodity exporters, which tend to reap greater dividends when the US currency weakens.
This is because the correlation between commodities and prices generally moves inversely to the value of the dollar. This is also the case for most emerging markets, especially those with high import costs for commodities quoted in dollars.
With the call for a New World Order, promulgated by organizations and entities that are enemies of the economic, military and technological hegemony of the United States, more and more countries are joining the global coalition that is trying to get rid of dollarization in their economies, despite the strong and direct impact that this would represent.
Whether or not they will succeed, in what time frame and under what conditions remains to be seen. The US is not expected to sit idly by either, unless Biden-Harris-like administrations remain in power.
