Hear us out here. The Donald himself is the approximate casus belli of the World War III prelude now raging in Ukraine, reminding us once again that sometimes history morphs in the strangest ways.
But the truth is, Trump single-handed generated such a deep, intense and irrational wave of TDS (Trump Derangement Syndrome) in the Imperial City that Washington – berserk with anti-Putin hysteria – essentially shoved Cool Hand Vlad right over the brink.
To to be sure, before Trump came down the escalator in June 2015 Washington was already rife with Russophobia. But that emanated chiefly from the war-loving neocons of the GOP and the porkers and bag carriers for the military industrial complex, including the vast array of think-tanks and NGOs whose livelihoods depend on military threats, real or imagined, to America’s security.
But what turned the Washington of these failed proponents of the Afghan, Iraq, Syria and Libya invasions into an implacable and aggressive foe of Russia’s legitimate security interest in its own backyard was the utter, absolute and unremitting demonization of Vlad Putin himself by the Dems and incumbent Washington political class, which bought hook, line and sinker the hoary RussiaGate story.
That is to say, America was allegedly besmirched and defiled by the election of Donald Trump in November 2016 to such a ghastly degree that the man who single-handedly made it possible–Vlad Putin – deserves a place in the pantheon of historical evil-doers right up there with Adolf Hitler and Attila the Hun.
That’s right. The everlasting blot of the Trump presidency never, ever could have happened, according to the RussiaGate narrative, save for Vlad Putin’s nefarious and sweeping interference in the 2016 election. So this evil needs be avenged and the most effective avenue now consists of raining smack right in Putin’s face on the Ukrainian frontier.
As a result of the Dem establishment’s raging, unquenchable quest for revenge, however, the normal balance of power within the Imperial City and the national security Deep State has been upended.
Lifetime Swamp creatures like Secy Blinkey, Snake Sullivan and Whinny Sherman have been given a free rein to push to the maximum extent possible their phony neo-liberal “rules based” and “pro-democracy” foreign policy model; and especially its virulently anti-Russian coda with respect to the idiotic project of sending NATO eastward to Russia’s very door step.
Yet ordinarily this flimsy policy model would not have gained a lot of traction. After all, no one from the land of the Monroe Doctrine and the 1962 Cuban Missile Crisis showdown could possibly argue for a “open door” NATO membership policy without regard for the geo-military context.
Likewise, no one from a war capital that attempted to overthrow 72 different foreign governments in the last seven decades should have been so easily and sanctimoniously allowed to prattle on about sacrosanct borders generally, but especially the historically random borders of Ukraine, which were forcibly drawn by the force of commie rifles under Lenin, Stalin and Khrushchev.
But with the Dem politicians and beltway regulars (we are talking about you, Mitch McConnell) already off on a historic anti-Putin Hysteria, there was nothing to stop the anti-Russian madness, which has only gotten more shrill since Russia’s last Thursday invasion.
Now, of course, the neocon warmongers in the GOP egg them on to greater and greater feats of recklessness through cascading economic and financial sanctions, which are aimed at the very heart and functionality of the global trade and financial payments system. These fools think they are waging economic war on Putin when, in fact, they are insuring double digit inflation and ceaseless global financial disorders for months and years to come.
In effect, the sweeping sanctions regime now being instituted will finally end Tom Friedman’s so-called flat earth economy. They are causing global trade and finance to segment and splinter into politically-driven safe harbor blocs – thereby insuring that the huge deflationary economics of post-1995 global supply chains will rapidly disintegrate.
And we are not talking about just America’s modest trade – outside of commodities – with the world’s 11th largest economy. After all, the real message of Washington’s frenzied sanctions attack on Moscow is actually directed at Beijing. In straight out Clint Eastwood style, it is telling Xi Jinping “don’t even think about it” when it comes to reunification with Taiwan – whether by force, diplomacy, bribe or otherwise.
Except we don’t think the Chinese or any other foreign rulers are as dumb as Washington seems to believe, and that they will simply hang-around the basket until Washington finds a reason to get all cross-eyed and bring down the sanctions hammer for one infraction and pretext or another.
As former Societe Generale strategist Dylan Grice described it, Washington’s recent barrage of sanctions amount to the “weaponization” of dollar-based money.
“You only get to play the card once,” he tweeted. “China will make it a priority to need no USD before going for Taiwan. It’s a turning point in monetary history.”
He got that right. China and the rest are not waiting to be bushwhacked in the ditch of the next crisis. Instead, what is actually happening underneath is a great preemption maneuver, whereby money and goods alike are being rerouted away from Washington’s weaponization of the world’s dollar-based economic system to new channels and institutions beyond its reach.
Of course, none of this is a surprise to Russia, which has been feverishly rotating out of its dollar reserves since 2018, including dumping off all of its U.S. Treasuries, and amassing a record stockpile of gold in the process. In fact, as one expert on the world’s monetary plumbing noted over the weekend,
“the Bank of Russia now has more gold than deposits at foreign central banks!”
At this very moment China, India and countless more are exploring ways to de-dollarize and create alternative institutions to the likes of SWIFT: A new Russia-China payment system bypassing SWIFT, for example, combining the Russian SPFS (System for Transfer of Financial Messages) with the Chinese CIPS (Cross-Border Interbank Payment System) is a distinct possibility. Moreover, the Global South might seek to join, moving their own reserves into the new system.
This preemption process is now on full display. Sanctions have yet to specifically target Russian energy, wheat and mineral exports or non-military containerized goods, for example, but that doesn’t appear to matter. Many tanker owners, bulk carriers and container line operators are preemptively pulling out of Russia.
In the short-run, of course, that will severely curtail Russian oil (and wheat, nickel, cobalt etc) sales to western customers, but only temporarily. Commodities are fungible and cargoes will be displaced with China, India, Asia and Africa buying more – delivered under alternative insurance, carrier and delivery venues–and Europe and North American buying less.
Indeed, it will be the same global pool of supply and demand, except sliced and diced in a manner that will do nothing but raise costs and prices for all parties concerned..
Needless to say, these preemptive moves away from the pre-existing Russia trade are not being done out of patriotic zeal or humanitarian regard for the suffering of the Ukrainian people. The are being done out of an abundance of caution – fear that the next wave of sanctions could catch global operators and vendors with their own Russian pants down.
Thus, on Tuesday MSC, Maersk and CMA CGM – the top three liner companies in the world – temporarily suspended Russian bookings. Yang Ming, the ninth largest, also suspended Russian bookings on Wednesday, while ONE, the sixth largest, did so on Sunday; and Hapag-Lloyd, the fifth largest,did on Thursday. These six carriers control 62% of global capacity.
As one shipping executive explained:
“Not only do you have to make sure [a shipment] is legally permissible, you’ve got to make sure every other party to the transaction thinks so: your banks, insurer, shipper, receiver, charterer, owner, etc. Otherwise, you won’t get paid, you won’t have a completed shipment or you’ll lose your insurance.”
“Even if you do all of those checks and you are comfortable at this precise moment in time that you can take a ship and go and load cargo or do a transaction with some Russian connection, and you get comfortable with all the parties – that’s just for now. Things are shifting so quickly. What happens if the counterparty that you just signed a charter party with or shipped cargo for gets sanctioned tomorrow, or in the next hour, or in the next 20 minutes?”
If the coming fragmentation of the global economy into government driven, weaponized trading blocs sounds a lot like the Donald’s version of an impoverishing, protectionist mercantilist economic order that’s because it’s exactly what it is, as we address below.
But the spoiler alert is this: Was having the world driven to the brink of WWIII by the TDS worth the time Donald Trump sojourned on the American political stage?
Not at all: Trump wasn’t worth it because he stood for nothing worth fighting for – and an awful lot of statist bile.
Trump-O-Nomics Failed
Ironically, the war that the Donald triggered is generating the world that Trump wanted. That is to say, a politically-driven economic regime based on the hoary principles of mercantilism, protectionism, and autraky.
Needless to say, free market advocates have long warned this is also a prescription for a devastating fall in capitalist prosperity and declining living standards. Now we are about to get a live fire experiment in globalized Trump-O-Nomics, delivered by Sleepy Joe and his minions!
We are referring, of course, to Washington’s bipartisan war on the dollar-based global trading and payments system, which they are pleased to call “sanctions”. What these numbskulls do not understand in the slightest is that the faux prosperity of the last three decades was the spawn of ultra-easy central bank money, which dodged the bullet of runaway goods and services inflation only due to the deflationary effect of the one-time globalization of the planet’s supply chain.
But in the annals of oil and water not mixing, to say nothing of cats and dogs, there is nothing more incompatible than a tightly integrated global economy, on the one hand, and an economic warfare based neocon imperialism, on the other. The former reflects the idea of peaceful commerce among nations; the latter the arrogance of an empire that has lost all touch with its own vital interest.
So, fine, Russia shouldn’t have invaded Ukraine. By the same token, however, who appointed Washington as Spanker-in-Chief for nations of the world who get out of line?
Yet Spanker-in-Chief is the only possible justification for Washington’s ravenous economic attack on Russia’s role in the global economy. The fact is, the United States has no strategic interest in the spat between Russia and Ukraine, and Russia is no military threat to the American homeland, or even Europe for that matter.
Needless to say, these truths run contrary to the war hysteria being peddled by all three cable TV networks and the risible claims that Putin in trying to reconstitute the old Soviet Empire. The man himself once made the opposite perfectly clear, but has been misquoted over and over with malice aforethought ever since via the trick of dropping the bolded part of his oft-quoted sentence:
Whoever does not miss the Soviet Union has no heart. Whoever wants it back has no brain.
So let us state it once again: This is strictly an intramural spat between Russians and Ukrainians that has gone on for centuries in the very territories now at war. Indeed, Russia was born in Kiev 1100 years ago, with the borders, populations and sovereignties moving around the Black Sea region like play-dough ever since.
The reason for Putin’s attack is nothing more, therefore, than the obdurate determination of post-Maidan Coup governments in Kiev to turn their country into a doormat for NATO and a potential launching pad for US/NATO missiles located cheek-by-jowl on Russia’s border and within spitting distance as missiles fly (470 miles) of Moscow.
Putin first warned against this at the Munich Security Conference in 2007; renewed the warning over and over thereafter; and, most recently, insisted upon it intently during his un-reciprocated attempts to negotiate a new security arrangement with Washington.
So, no, Putin cares about Russia’s own security. He doesn’t lust for the Baltics or Rumania, and, for crying out loud, already has all the Poland Russia ever wanted.
That’s right. The ex-generals coming on cable TV who suggest Poland is next are simply reminding us why the US has not won a single-war in their lifetimes. To wit, they are ignorant of history beyond measure.
As it happened, Stalin did want the gray area of the map from the so-called Curzon Line (blue line) eastward, which comprised the eastern provinces of the revived state of Poland created at Versailles in 1919. So he ask FDR and Churchill for their blessing at the Tehran Conference in 1943; insisted upon it at Yalta in early 1945; and obtained Churchill and Truman’s official approval at Potsdam in July 1945, where as territorial compensation, Poland got the pink areas from the defeated carcass of Nazi Germany.
Like the doings of a sausage factory, of course, the viewing of what actually happened may not be uplifting. But the fact is, at no time during the Soviet era, even at the peak of its power circa 1960, did Moscow try to add these or even more Poles to Russia proper. They ended up in the Soviet provinces of Lithuania, Belarus and Ukraine because the Slavic Russians knew better than to incorporate the Catholic Poles, and so does Putin.
Poland Was Already Annexed Long Ago
So, yes, Washington is aflame with anti-Russian blood-lust because the role of Spanker-in-Chief suits the careerist pols and apparatchiks domiciled in the beltway. But the economic wreckage of their unhinged sanctions palooza will be biblical in scope before it’s over.
That because among the many victims of the world economy dissolving into segmented money and trade blocs will be the easy central bank money that is the foundation of today’s bubble-ridden financial system. To wit, just as the spread of global supply chains to the lowest cost corners of China and the planet after 1995 created a deflationary tide, their unwinding will generate the opposite.
That is, rising costs and inefficiencies that will cause measured price indices to soar relentlessly in the months and years ahead. Central banks will therefore be hopelessly behind the curve, tightening “policy” relentlessly for years to come because the deflationary sabbatical of 1995-2019 is being supplanted by the inflationary gale which is inherent in the breakdown of the dollarized global supply chain.
Again, we offer the chart below depicting the humble case of children’s toys. During the years between 1978 and 1996, before the great China-based supply chain deflation worked up a head of steam, the CPI for toys rose by +3.03% per annum.
Yet did toys suddenly go full retard deflationary for the next 23 years owing to economic immaculate conception?
No, they did not. The migration of the toy business to the cheapest nooks and crannies of the global supply chain is what caused the CPI for toys to crash, dropping continuously by -6.0% per annum for more than two decades running. And the same is true to a less dramatic degree for manufactured goods generally.
CPI For Toys, 1978-2022
So the question recurs. Was the Donald’s four-year sojourn in the White House worth the candle, given that the resulting TDS has brought the world to the present fraught state of global madness?
The question answers itself, of course, because among other things the double digit inflationary blow-off that is already enveloping the world owing to the sanctions war is exactly where Trump-O-Nomics was always headed, anyway.
Moreover, the idea that the current sanctions madness will soon end is naive in the extreme. At length, Russia will subdue the Kiev government, and either the current clown car president or his designee will embrace a neutralist Ukraine shorn of its eastern Russian speaking territories and left with a military reduced to the status of a glorified constabulary.
Will that “settlement” cause Washington to call off the dogs of sanctions warfare?
It will not. Washington is literally intoxicated making war by US Treasury edict.
So too, the Kiev government which makes peace with its Russian neighbor will be denounced by Washington as a Quisling government, justifying an even more drastic level of anti-Russian sanctions.
So buckle-up. We are about ready to delve into a live fire experiment in global Trump-O-Nomics.
David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He’s the author of three books, The Triumph of Politics: Why the Reagan Revolution Failed, The Great Deformation: The Corruption of Capitalism in America and TRUMPED! A Nation on the Brink of Ruin… And How to Bring It Back. He also is founder of David Stockman’s Contra Corner and David Stockman’s Bubble Finance Trader.
