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Sam Ursu's avatar

Thank you for yet anothe comprehensive analysis.

A couple of notes:

1) When the United States first began, the ONLY income the gov't received was from import duties/tariffs. There was no income tax, sales tax, restaurant tax, hotel tax, property tax, gasoline tax, inheritance tax or anything else. Only goods imported from abroad (not between US states) were taxed. So Trump's proposal isn't totally bananas.

2) I don't think most people realize just how lethal these US sanctions are toward the US dollar. On the entire planet, the USA holds roughly one-third of ALL public debt. And that debt is entirely in US dollars. How does the USA pay its debt obligations? Largely by issuing NEW debt in the form of treasury bonds, etc. Again, all demarcated in US dollars.

If demand for US dollars goes down because countries are switching to using different currencies to settle their trade/debts with each other, then it gets increasingly expensive for the USA to pay off its existing debt, meaning that the servicing cost just grows and grows until it will consume literally everything (i.e. the entire federal budget).

If the USA were financing its debt in the way that China and Russia do (and the majority of countries on earth), by selling tangible goods abroad, then the US dollar might have a chance to survive the same way Ceausescu saved the leu in the 1980s in Romania (via massively ramping up exports and huge cuts domestically). But the US dollar is resting on a foundation of literally nothing except a collective suspension of disbelief - a parlor game in which non-Americans give their blood and sweat to make the US dollar have any value.

It literally is a case of Monopoly money. When you're playing the game, the guy with Park Place is rich. But as soon as you get up from the table, all that wealth is just colored pieces of paper. That's where the US dollar is rapidly heading thanks precisely to sanctions because even countries which had no desire to abandon the dollar are being FORCED TO in order to keep doing business.

It's literal insanity, but the tiny hats are too greedy to stop it.

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Bash's avatar

You know, Russia may be playing a long game but the West isn't pulling punches. They appear quite united, perhaps in servitude to their masters, but united nonetheless. Money keeps pouring in, unlimited, Russian money will be stolen - the $300bn is as good as gone - and the sanctions DO hurt. And because of that unity, they are able to gang up on countries like Kazakhstan, the UAE, whoever, and bully them into sanctions compliance.

They will come up with more levers to pull, and the cost/benefit works just fine, nobody cares that in the end 2mn Ukrainian men will be dead, as long as Russia is a net loser. The Chinese are kingmakers here but too timid, passive, and in a USD dollar prison of their own.

Yes, EU publics are against this thing but elections long stopped mattering, anyone who thinks the EU is a democracy ought to get in line for bidding for the Kerch bridge, I'll send a link lolz. Europe has given up economic development - its been 2+ years of 0 growth - and was happy to write checks to the US instead and tie the noose around their own neck re: stealing Russian sovereign assets. Sure, rule of law and all that but in the end laws are only as useful as the integrity of the societies that enforce them. The Americans meanwhile with their USD hegemony have issued more debt in the last 2 years than the last 20 or something insane like that, Yes, in the long term; like 20 years, this will hurt them and blow up in their faces but not if they are the only ones left standing.

Many say that the Ukr army will collapse or cease to be able to fight. Clearly in Western capitals they think otherwise, and frankly I'm starting to lean in that direction too. Their supply chain is wide open, the entire military-industrial capacity of the west is being provided to them, unlimited money, ISR, you name it. Yes, here we say "they will run out of men" but if thats the strategy, to literally kill everyone; well look at the Israelis in Gaza.

The BRICS alternative for SWIFT/USD needed to be rolled out yesterday.

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