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Is Mr. Putin "crying wolf"?

 -- Published: Friday, 15 August 2014 | Print  | Disqus 

By Bill Holter

  I will answer the title's question first with a flat "NO" and then explain.

  Thursday, Vladimir Putin made the comments "Russia should aim to sell its oil and gas for roubles globally because the dollar monopoly in energy trade was damaging Russia's economy"... and ..."At the moment we are trying to agree with some countries to trade in national currencies". 

  If this were 10 or 20 years ago, his comments would be laughable.  Fast forward to present day, his comments are not laughable at all, they are the words of outright WAR!  Do you understand this?  Mr. Putin is surely in talks with Brazil, India, China and South Africa, the "other four letters" which make up the BRICS.  You can bet he is in talks with Mrs. Merkel regarding natural gas for Germany, you can also be assured that when, not if a deal is struck...there will be no "$ signs" in the contract.

  Germany is very significant because as goes Germany, so goes the rest of Europe.  The rest, from France, Belgium and Holland on down to Italy, Spain and Portugal will follow.  Before continuing on, Germany just announced negative GDP numbers as did Italy earlier this week.  Economic weakness is sweeping Europe again, what will they do?  Most every and all policy bullets were already fired to emerge from the 2007-09 meltdown, what is left?  It cannot be more fiscal stimulus as we went through 2012 and 2013 watching country after country go to and far through 100% of debt to GDP ratios, almost no room left here.  No, the only thing left is monetary stimulus and outright debasement.  The "technical term" for this of course is monetization which prior to 2007 was considered a disastrous policy until "wasn't so bad".  We will in my opinion soon, by necessity see Europe's version of QE which will add to the coming currency crisis. 

  The U.S. can only blame themselves for Mr. Putin's actions.  He and Russia were basically sanctioned out of the SWIFT system and told they could not use dollars anymore, he has complied.  Do not take the words "the petrodollar must die" lightly.  Just to his south, the Chinese have been "courting" the rest of the world for several years now.  In particular, they have been investing in and partnering through trade deals many African and South American countries.  This is significant because they all currently use(d) U.S. dollars for trade and nearly all of them use dollars as "reserves" for their banking systems. 

  So why is this important to you?  Because most people who read this, work, get paid, and save in dollars.  It means the purchasing power of the dollar is being threatened.  It means that once the dollar does devalue sharply and quickly, your labor will be paid less in real terms.  It means everything you have saved over the years will be worth less in real terms.  It also has a very ugly meaning for U.S. trade with other countries.  If the dollar become an "un" sought after currency it will then take MORE dollars to complete trade for anything and everything from high tech widgets to bananas.  This is how "inflation" works, you suddenly get paid less, have less in savings and everything you need to survive goes up in price.

  Getting back to Mr. Putin and the question of whether he is crying wolf or trying to spread propaganda, I think not.  Russia and China have lined up for the "one, two punch".  Russia is now the world's largest energy producer while China is the world's largest holder of gold.  When they "spring this trap" and I am positive that they will, what will western countries pay in exchange for oil?  Dollars?  Will Russia accept them?  How about Saudi Arabia?  We haven't heard from them yet but I'm quite sure we will, soon. 

  I have a question for you, if dollars are not accepted for oil and gas, how will this work?  Simple you say?  "No problem, "dollar based" countries will just "buy" rubles, euros, yuan or even gold ...depending on what the seller wants to be paid with".  Really?  And the sale of dollars to buy rubles, euros, yuan or gold will do what exactly?  Maybe push the value of the dollar lower versus the currencies that are being bought?   ...And the value of the currencies being bought will be pushed higher?  Do you see what happens?  A new "petro currency" backed by energy production and a new "Ft. Knox" ...Chinese style?

  Mr. Putin is a strategist, he doesn't play checkers he plays chess ... I believe he is playing for all the marbles and for "keeps".  Many of you may remember a picture of Mr. Putin holding a large (looked like a 400 ounce) bar of gold many years ago.  Do you believe that photo op was by chance or "just happened"?  If you remember the photo, did you see the smirk on his face and the smiles on those around him?  In case you didn't remember, here it is below.


  This photo if I recall was taken about 10 years ago (in 2004?), do you really believe Mr. Putin did not know 10 years ago where the financial system was headed and that oil and gold would have a role?  I guess I'll answer the question with a couple of other questions.  Did the BRICS "just form" one night during a boy's night out friendly poker game?  Did China really believe they were "giving" Hong Kong away with their 99 year lease?  Did a high ranking KGB officer really forget that the U.S. bankrupted his country 25 years ago?  The answers of course are no.

  Vladimir Putin knew, and knows exactly what he is doing.  Here in the U.S., all you need to do is ask the question; "could anyone have been stupid enough to put the policies we have in place by mistake"?  The answer again is "no", we were sold out long ago.  By whom and why, I can't say because I'm not sure.  What I do know is that from a personal standpoint, the ownership of gold will help you "step aside" as the death of the petrodollar takes place.  

   Just before sending this, news has broken that Ukraine has destroyed part of an armed Russian convoy.  If you were waiting for a "shot" to be fired that is pointed at as the beginnings of WW III, this is likely it.  The paper markets are so fragile at this point, this coming Monday may be a shocker.  Do not be complacent here.


Bill Holter


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