How Russia Could Set Off an Inflationary Spiral in the United States – Podcast

JM Bullion
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Podcast Summary

How Russia Could Set Off an Inflationary Spiral in the United States

0:00-3:00 Introduction

3:00-4:45 discussion of comments by Katherin Austin Fitts , former HUD Assistant Housing Secretary, who claims that government is not incompetent but that there is a plan but you just can’t see what its is.

4:45-7:20 discussion of the economic recovery mirage and the Housing Recovery and the Law of Small Numbers.

How The United States Has Used Monetary, Fiscal and Military Policies to Control The Global Economy Since World War II

7:20-11:55 Discussion of how the United States used its position of military and economic dominance to expand its influence around the globe. Disussion of how the United States funded the welfare/warfare state while on the gold standard until 1971. Discussion of how Nixon took the United States off the gold standard in 1971 and substituted the Petro dollar for the gold standard that allowed the United States to continuing spending money on the welfare/ warfare state.

Discussion of how the United States has abused its stewardship of having the dollar as the world’s reserve currency by engaging in a $4 trillion quantitative easing program and a continuation and increase in deficit spending. For a short history of U.S. monetary policy since the Bretton Woods Agreement of 1944 see “Why Saudi Arabia Matters In Helping to Keep the U.S. Dollar as the World’s Reserve Currency“.

How Russia Can Set Off an Inflationary Spiral In the United States

11:55-15:25 Review of the situation with Russia, Ukraine and Crimea. The United States has threatened sanctions against Russia and Russia has responded that if sanctions are imposed that they may dump their U.S. Treasury reserves in retaliation. Discussion of the amount of U.S. treasuries that Russia holds and how the U.S. and the Fed may react-perhaps buying the Treasuries sold by Russia to limit the impact of a large scale dumping of U.S. Treasuries on the market. Russia holds about $200 billion worth of US. Treasuries or about a few months worth of QE.

Russia and China have been accumulating large sums of gold at lower prices for the past three years. If they were to dump their U.S. Treasuries they would take a loss. But if Russia were to couple their threat to sell their U.S. Treasuries with a requirement that gold be used for payment for the oil and gas that they sell (as Goldcore speculates), the value of their gold reserves would rise in price probably more than enough to cover their dollar losses.

Russia has been steadily adding to its gold reserves

Russia Has Steadily Increased its Gold Reserves

The impact of a move by Russia to require gold as payment would require many countries to sell some of their U.S. Treasury reserves to raise capital to acquire gold so they can use it as payment for Russian oil and gas. This would cause the dollar to weaken and the price of imports to increase and since the United States is a net debtor and net importing nation, the impact would be rising consumer prices.

How the United States Has Maintained its Global Dominance Since 2008

15:25-19:00 Discussion of how the U.S gained global dominance: by winning World War 2, having a vibrant economy post war and winning the Cold War. When the financial system collapsed in 2008, the U.S. maintained its dominance by printing over the issue via QE and via a show of military force. Discussion of whether Russia or China present viable threats either in a military or currency war. Discussion of how the U.S. works with the multinational corporations (banks and oil companies) to maintain economic dominance. Comparison to British mercantilism.

19:00-23:04 Discussion of who benefits from the relationship between big business and government. The Fed and the government tells it citizens that its policies are for their benefit and that they are working even though they are not. Discussion of the poor housing economy and how few homes have been sold to middle class people during the “recovery”. Discussion of a recent Bloomberg poll that shows that three quarters of people do not believe the rising stock market has helped them. Discussion of how journalists are now also starting to question the strength of the housing recovery. Discussion of how the media spin the initial jobless claims data each month.

23:04-29:00 Discussion of the numbers behind the economic “recovery”- rising stock and home prices mask a poor economy. Discussion of why banks hold on to foreclosed homes. Discussion of potential excuses the Fed might use to continue QE.

Ban Bossy!

29:00-34:25 Discussion of a recent corporate sponsored Ban the Word “Bossy” campaign. Discussion of how distractions and fake issues are created. Discussion of the irony of people telling people what they can say and trying to ban what people say. Discussion of the delay in the implementation of Obamacare and the movement to increase the minimum wage. How large corporations actually support greater regulation.

The Law of Small Numbers and Small Minds

34:25-36:06 Discussion of what a real economic recovery would look like. Discussion of how the law of small numbers makes the improvements in the economy look better than it is. Discussion of how there is little analysis on some of the more pertinent economic data. Discussion of the overuse of the word “recovery”.

36:05-39.58 Speculation on the 2016 elections. Concern is expressed that the current administration does not have the same standing in the world now that the Nixon administration had in 1971 or the same array of political, economic or military options. If the U.S. responds to Russia requiring gold to settle payments with them by having the Fed print more dollars, there will be massive consumer price inflation in the United States.

39.58-52:05 Discussion of the weeks economic data and mortgage interest rates. Discussion of the irony of how investors buy U.S. Treasuries during times of economic crisis-even those relating to the United States. Discussion of the difficulties people are having getting mortgages. Discussion of the economic plight of millennials.

52:05 Credit tip of the week

How Russia Could Set Off an Inflationary Spiral in the United States

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Further Reading:

If Russia Sells its U.S. Treasuries Will The Fed Buy Them?

Russia adds to its Gold Reserves

Why Saudi Arabia Matters in Keeping the U.S. Dollar as the World’s Reserve Currency

Why the End of Quantitative Easing May be Bad for the Dollar (and Good for Gold and Silver)

Gold and Silver Price Manipulation – Suspected

Initial Jobless Claims

The False Housing Recovery of 2013 and How it Unravelled

Fed Presidents Continue to Talk Taper

Royal Canadian Mint

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