There is much fallout this evening and there will be for months stemming from the arraignment of the Republican frontrunner in Manhattan yesterday and we’re going to cover that in some detail, but we want to start tonight with a trend that we have noticed that might be worth knowing about and it has to do with the dollar. For nearly 80 years since the end of the Second World War, the U.S. dollar has effectively been the currency of the world for our entire lifetimes. There was virtually no place on the entire globe you could go that would turn down a 20. Andrew Jackson’s face beside the famous seal of the U.S. Treasury was probably America’s best-known export.
From Dar es salaam to Sri Lanka to the smallest gold mining outpost in the Amazon basin. Every shopkeeper on Earth recognized a $20 bill. The dollar was universal and not just universal in commerce, though the majority of international transactions were conducted in dollars, but universally held as a long-term store of value globally.
The world’s central bank stockpiled U.S. dollars far more than any other currency. Now, most Americans may not have known that, or they did, but it doesn’t matter what they knew. It was very good for everyone who lives here. Because there were so many U.S. dollars in circulation outside of the country, the cost of borrowing money inside the country remained artificially low and that’s one of the reasons that in this country, America, middle-class people could buy their own homes. The U.S. government, meanwhile, was able to run up astronomical debts without many obvious consequences.
Now, from time to time, the Congress would debate something called the debt ceiling, but it was abstract. For most people, the entire topic didn’t seem very relevant to their lives because, for most of the time, it really wasn’t. America printed the U.S. dollar. We controlled the global reserve currency and that meant that for us, money was cheap. We had privileges that nobody else in the world had. It’s been very nice, but what would happen if it ended? You don’t even really want to think about that because the consequences would be too ugly, really ugly, but we started to worry about it about a year ago, really the day the Russian military rolled over the Ukrainian border.
Now, by itself, that was a destabilizing event. War always is a destabilizing event. It always challenges the existing order, but it was the West’s reaction to the Russian invasion that seemed too ominous. Policy makers in the U.S. went insane. Joe Biden, helped by his Republican allies in the Senate, appear to be determined not simply to topple the Russian government in some kind of regime change war, but to blow up the postwar economic order that had served the U.S. so generously for so long. So, we thought at the time that the real threat to our future wasn’t just the billions we were sending to Zelenskyy. That was reckless, but probably not going to end America. The real threat was the unprecedented economic sanctions that Joe Biden was allowed to, in fact, encourage to impose. Those sanctions, you’ll recall, were supposed to hurt Russia, but even in March of last year, it seemed obvious they were going to hurt the United States much more than they hurt Russia. Here’s what we said 13 months ago.
We should prepare to lose our position as holder of the world’s reserve currency. That is happening in slow motion. It’s unmistakable. Now, the Biden people seem to have no idea this is going on or maybe they want it to happen. Joe Biden was up there at the State of the Union bragging about how he took 30 points off the Russian ruble in a single day. Hurray. Good for us, but once we stop celebrating our win, the destruction of the Russian economy, they deserve it. You have got to wonder, is there a downside to this? Could it be a pyrrhic victory? Let’s see. These policies have driven Russia, China, India, Turkey and other countries to accelerate their flight from the U.S. dollar. Let’s be clear. That’s the majority of the global economy. This may be the most reckless and destructive thing any American president has ever done to the United States.
So, that was last year and at the time it was really just yelling into the wind. Those views were considered absurd, even treasonous. Biden and his Republican allies described sanctions against Russia as morally essential. We seized oligarchs’ yachts at anchor. We closed the Apple Store in Moscow. We were all assured these were important victories and anyone who has questions what their long-term economic consequences was a Putin stooge. That was the consensus in Washington last spring. In case you’ve forgotten what it sounded like
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KAMALA HARRIS: The purpose of the sanctions has always been and continues to be deterrence, but let’s also recognize the unique nature of the sanctions that we have outlined. These are some of the greatest sanctions, if not the strongest, that we’ve ever issued.
VIDEO: The president believes that sanctions are intended to deter.
VIDEO: As to the sanctions, the most important thing we can do is to use them as a deterrent, as a means of dissuading Russia from engaging in further aggression.
BIDEN: We are right now enforcing powerful economic sanctions. We’re cutting off Russia’s largest banks in the international financial system, preventing Russia’s central bank from defending the Russian ruble, making Putin’s $630 billion war fund worthless.
These people are such buffoons and all the Republican senators nodding in agreement. You watch that and you wonder if they really believe what they were telling you, if they really did believe that they’re stupider than they look. These sanctions were never going to work in the way they promised because unlike the United States, Russia does not have a late stage financed economy. Russian oligarchs do not get rich from credit default swaps. They get rich from selling actual things that people need in order to live: Oil, natural gas, iron, fertilizer, coal, wheat. By some measures, Russia has the largest resource economy in the world. Oh, OK.
So, they can barter if they needed to? A year later, despite the sanctions, you were told are the greatest ever devised, the Russian ruble is just as strong against the U.S. dollar as it was before the war in Ukraine. So, we didn’t really hurt Russia with those sanctions, certainly not long term, but we hurt ourselves. E.J. Antoni and Peter St Onge wrote an incisive piece in The Daily Caller last week that explains part of why this happened “A critical feature of reserve currency is its apolitical nature, which Biden is now gutting after both parties in Washington destroyed the dollar’s stability with inflation. Now, the Biden administration has chosen to wield the dollar as a weapon. Together, these two factors send a message to foreigners, which is they should get out while they still can. In response to Russia’s war with Ukraine, the U.S. froze the dollar reserves of Russia’s central bank. To be clear, these were not American assets. These were dollars owned by the Russian Central Bank and the Russian people. “The seizure was intended to cause bank runs and collapse Russia’s credit system. It didn’t work. Instead, it exposed the Biden administration’s willingness to violate the trillions of dollars that foreigners rightfully own. The danger of this president is difficult to overstate.”
Now, all of us saw that happening, but you couldn’t see anything because Russia bad. We can’t even watch their hockey teams. All right. What do you think happened next as we’re jumping up and down and talking about Winston Churchill? Well, smart, foreigners and there are some, believe it or not, started to dump the U.S. dollar. Why? Because the U.S. dollar was no longer a reliable store of value. Suddenly, it was a political weapon that could be wielded at will against anyone who held it. So, what if you had a border dispute with one of your neighbors that the State Department hadn’t authorized? Or what if you accidentally criticized transgender theology and irritated the Human Rights Campaign? Well, the U.S. government might denounce you as immoral and then confiscate all your money because they just did that with Russia and as a result, dollars begin to look much less appealing to the rest of the world and so de=dollarization began, and it has accelerated at remarkable speed, almost without comment in the American media over the last year. So, Russia announced it will conduct business in Asia, Africa and Latin America in Chinese currency.
Brazil, which has a brand-new government supported by the Biden administration, announced it will do the same thing. Brazil’s largest economy in the hemisphere after hours. Pakistan is doing the same thing. That’s a longtime U.S. ally. India and Malaysia, two of the biggest economies in the world, announced they’ll be settling their trade in their own currencies, not the dollar. Even France, which we liberated, is using Chinese currency in a new liquefied natural gas trade. China and Saudi Arabia are now major business partners and again, etc., etc., etc.. This is happening around the world and all of it is shutting out the U.S. dollar and it’s happening a lot faster than anybody could have predicted and yet no one in Washington seems aware that it is happening. So, if you want the rest of the world to trust your currency, the last thing you would do is use it as a weapon or print too much of it. Printing too much of your currency causes inflation and that saps the value of the currency. No one wants to hold a currency that is worth less consistently every year. That’s sixth grade economics, but Joe Biden can’t be bothered with that. So, he’s printing more money. Here he is last week announcing another $10 billion check. Not for you or his Palestine or anyone in our country who needs it, but for foreign governments.
BIDEN: Working in close cooperation with the United States Congress, we plan to add another $690 million for new funding for the presidential initiative over the next two years and over the course of three years, my administration intends to work with Congress to commit $9.5 billion across all our efforts to advance democracy around the world. We’re all safer when that occurs.
We’ve been asking for months for any Republican senator who supports this, whether it’s Thom Tillis or John Cornyn of Texas, to come on the show and calmly explain why you support this. None of them have accepted an invitation, but at this point, you begin to wonder, what does the United States have that will retain its value over time? We should do an inventory of our assets. Biden, as you just saw, is continuing to send the contents of our Treasury, our dollars to corrupt oligarchs in Eastern Europe and around the world and yet at the very same time and you should pay attention to this, he’s selling off America’s most valuable hard asset. That’s our Strategic Petroleum Reserve, because unlike the U.S. dollar, oil, which is in the reserve, has inherent value. Oil is the densest store of transportable energy known to man.
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So, unlike fiat currencies like the dollar, oil will always have value. That’s why Russia is not now impoverished because they have a lot of oil, but we have less because the SPR has been drained. In the last fiscal year, the Biden administration sold off 218 million barrels of oil, including bewilderingly criminally, to the government of China. How much oil it’s at, it’s more oil sold from the SPR in one year than in all previous years combined. What happens when we empty? Well, there’s not much left. What about our gold?
Oh, America’s gold reserves have not been fully audited in generations. They can say whatever they want, but the truth is, we don’t really know how much gold is in Fort Knox. The SPR becomes even more vital, and now it’s disappearing and as it does, the power of the United States ends. At some point, what’s going to be left? They’ll be draining the Great Lakes and shipping water to the Gobi Desert for cotton farming. They’ll be selling the curtains. How do you fix this? Well, ending the war on Ukraine immediately would help, which we could do because we’re in charge of NATO, but we’re not even trying. In fact, we’re pushing even harder for direct conflict with nuclear armed Russia and politicians in Washington remain mired in their weird boomer World War II fantasies where they’re all Winston Churchill and Zelenskyy as the head of the French Resistance. We can give a million examples, but we can’t resist. Once again, the leader of the Republicans in the Senate, Mitch McConnell, last month.
MITCH MCCONNELL: I’m going to try to help explain to the American people that defeating the Russians in Ukraine is the single most important event going on in the world right now.
Defeating the Russians in Ukraine is not the single most important event in the world from the perspective of the United States. It’s not even number 15 on the list. It’s way below ending the importation of fentanyl into this country and it’s way, way below preserving the strength of the U.S. dollar, but if Mitch McConnell and Joe Biden and the rest of these reckless leaders have their way, an increasing number of countries will do what so many have already done, which is begin to reject the U.S. dollar and what will happen then? Well, all those dollars will come home and the value of our currency will plummet even further, and that will lead to poverty across the United States, and that will lead to the typical political and cultural volatility that inevitably follows economic collapse, disaster, and we’ve seen it before.
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Of course, you know, the famous pictures from Germany in the early twenties, banknotes in wheelbarrows. Want to buy a cup of coffee? That will be £30 of currency. Kids playing with worthless stacks of deutschmarks. That was called Weimar, the Weimar Republic and that government collapsed because of hyperinflation and then economic collapse led to communist revolutions across Germany and ultimately to fill in the blank the Nazi regime. That’s well known. I
In fact, it’s a cliche at this point, but here’s the thing that nobody seems to remember What brought on the economic collapse that set the world on fire. Does anyone remember that? Why did the German government blow up its own currency? Well, simple. The German government took on too much debt in order to pay for a pointless war. Yes, a pointless war did that and if that sounds familiar, it’s because exactly what we have done repeatedly for decades. We did it in Vietnam. We did it in Iraq. We did it in Afghanistan and every time we got away with it, because uniquely, we held the world’s reserve currency, but this time could be very, very different. War against Russia will be the last war we can afford to fight.
