Thursday, May 22, 2014

We're in a Financial War With Russia

We’re in financial war with Russia and this centers around Crimea. Russia invaded Crimea. They’ve taken it over. I think it’s now a part of Russia and nobody in the United States, whether you’re left or right or Republican or Democrat, nobody thinks that we should intervene militarily there and I don’t either and that’s not going to happen. But the US wants to appear to be doing something, so we threatened economic sanctions, which is a form of financial warfare.

The problem is if these sanctions are more than mild, right now they’re extremely mild. It really amounts to saying a couple of oligarchs can’t go to the Super Bowl next year. But if the sanctions were to get more serious what would happen is Russia would begin to take sanctions with us and the financial war between Russia and the United States would begin to escalate. So what could we do?

That would be more serious. Well, we could freeze the assets of Vladimir Putin’s personal assets which are held in Swiss banks or Austrian banks. We could freeze that. We could kick major banksthe two biggest Russian banks are Sberbank and VTB and Gazprombank. We could kick them out of the global currency system.

Well, if we do that, I agree that would hurt Russia, but they would fight back. They would nationalize US dollar assets or freeze US corporate assets in Russia. They could dump their treasury notes, drive up US interest rates, sink our stock markets, and sink our bond market.

They could use their hackers to shut down the New York Stock Exchange. So some very, very disastrous, disruptive things could happen if we allow the financial war to escalate. So first of all we are in a financial war, however I would say that it won’t go very far because the United States knows that if we push it too far, the Russians will escalate and then we’ll have disastrous outcomes.

The US has a lot more to lose than Russia. You have all the talk is about imposing costs on Russia, that’s fine. But if they start imposing costs on us, the United States, we have a lot more to lose and we would lose that war as it went on.

So for people who are thinking ahead and Putin, I would say is thinking three moves ahead, he knows that he could take Crimea. We’re not going to intervene militarily and we’re not even going to intervene financially because he can fight back and we would lose the financial war. But we are seeing financial war breaking out around the world.

- Source, Jim Rickards: