The President of the United States in an address to the nation publicly acknowledged the fall of the American economy, blaming Russia for this. Collapse is inevitable…
US President Joe Biden warned his fellow citizens in a recent address to the nation that they would have to suffer for democracy in Ukraine.
At the same time, he deftly linked official inflation, gigantic by the standards of the United States, with the events taking place around Ukraine. Well, as always, only Russia is to blame for this.
A very strange explanation of the situation, given that the liberals assured us that the Russian economy is only a statistical error in the overall world economy. And, in general – since 2018, Apple Corporation alone is worth more than the entire Russian economy! If you are to believe these “evaluations”.
But the US government knows better. Since the average American has to suffer for democracy in Ukraine (through frenzied inflation and rising prices for everything), then let him suffer.
Russia’s actions really affect inflation in the United States regardless. That could lead to the collapse of not only their economy, but also to the collapse of the entire modern financial system. This is due to the fact that Russia has gained sovereignty and no longer sells its natural resources for almost free, especially energy. Something that was happening during the last decade of the last century. Arrival of Putin changed that situation.
In Russia today, too, high inflation, which is 8.7%. In the US, inflation is 7.5%. But there is one big difference: in Russia, inflation is in rubles, while in the US it is in dollars.
What does it mean?
Prices for goods are always rising with us, as there is inflation. But they grow in rubles, while in dollars they, on the contrary, fall.
- For example, just yesterday the dollar exchange rate was 77 rubles, and today it costs 80 rubles.
That is, goods produced within Russia fell in price against the dollar.
Let’s take gasoline as an example.
In 2014, a liter of 95th gasoline cost 35 rubles, or 1 dollar (the dollar exchange rate was also 35 rubles then).
Today, a liter of AI-95 gasoline costs 53 rubles, that is, $0.69 at a dollar rate of 77 rubles (or $0.66 at a rate of 80 rubles).
By manipulating the ruble exchange rate, it is possible to minimize the damage from dollar inflation within the Russian economy. Another thing is that the real incomes of citizens will decline, but the economy will only develop and grow. That is why, even with high oil prices, the ruble still does not return to its previous values of 50 or even 30 rubles per dollar. And this will not happen as long as the US economy (and with it the EU economy) is in crisis.
- However, the crisis in the United States did not arise because of the situation in Ukraine, as Joe Biden talks about it. Ukraine is just a good excuse to divert the attention of US citizens from the really fundamental economic problems.
The United States, like no one else, knows how to manipulate inflation and dispel any threats and risks to its economy in the global financial system.
Their freshly printed candy wrappers are supplied by market demand and supply
US economists are very smart people. They have built an economic model in which the US economy will grow and develop in almost any circumstances. And if something goes wrong, you can always print more money and pour it into the economy. Like doping.
The worst nightmare for the US economy is the deficit generated by excessive inflation. And this can happen only in one case. It is when there is not enough goods in the world that the United States needs. And it cannot be bought for any money. Under such conditions the more dollars are printed, the more expensive the desired product will be, and the more expensive the product, the more inflation will be. And it goes in spiral.
Look at the US inflation chart:
1. 1951-1954: Anglo-Iranian Oil Company in Abadan (oil crisis)
2. Arab-Jewish war (oil crisis of 1973-1974)
3. Islamic revolution in Iran (oil crisis of 1979-1980)
4. The global financial crisis of 2008 (a lot of oil)
5. Present time (physically there is not enough oil).
The real cause of the inflation
The cause of inflation in the US is the global energy crisis. All statements that US inflation is a temporary event were based on the erroneous hope that demand for hydrocarbons would soon stabilize. Today, however, it has become clear that this will not happen. As a result, the States even had to unpack their strategic oil reserves and enter the world market with it. However, all this was in vain, as the price of oil is already approaching $100 per barrel. Price of oil started rising before Ukrainian crisis. It is true that current crisis is certainly making it even worse.
The world simply no longer has enough energy resources to meet all the needs of the world economy. Russia controls around 23% of energy exports in the entire world economy (oil, gas, coal, electricity). Any provocation of Russia will only raise energy prices.
The United States is well aware of this.. Without long-term access to resources, it is impossible to contain inflation, since energy is the basis for the production of any product and service. It seems that fracking is approaching its maximum. It probably already happened. Not to mention that energy acquired by that methodology is expensive. Only weak Russia would allow plundering of its resources as during Yeltsin era. All sanctions introduced by US and EU against Russia since 2014 simply failed.
US dollar is not only currency but commodity as well
Remember the times when the price of oil reached the mark of more than $140 per barrel? But even then there was no such inflation in the US. Why? It’s simple: oil can be arbitrarily expensive – the United States will always buy it and in any quantity. But what to do if there is no physical oil? Then the price is absolutely not important – it still will not be enough for everyone.
Importance of “petro-dollar”
How is oil (and most other goods) traded on international markets? Saudi Arabia has made agreement with US that all oil trading will be in US dollar. Other oil producers (including USSR) followed. That means that anyone with need to buy oil would have to pay it in US dollar. Many were forced to buy US dollar making it become some sort of a commodity. That is aloso one of the reasons of it being “reserve currency”.
US and the rest of the “west” relied od cheap energy and commodities to support their growth, high living standard and world domination. In their greed they “exported” manufacturing industries to developing countries (China being one of them some 20 years ago). That made American rich class even richer. It also deprived American government revenue from taxes. Accelerated development of the “third world” countries also means higher demand for energy and resources.
V.V. Putin, in a recent address to the people of Russia, during which recognition of the independence of the DPR and LPR was announced, confirmed what has been obvious for a long time – US sanctions are aimed at curbing the development of Russia. Nothing to do with democracy, human rights, ot any other reasons that CNN/BBC would like you to believe.
As long as there is government in Moscow that will not allow pillaging of Russian natural resources, there will be pressure through sanctions and attempts to surreound it with unfriendly regimes in their neighborhood. Prices of natural gas went through the roof not because of Russia using it as a weapon but because someone in EU decided to go “green” overnight. It failed miserably.