[Soulflytribe]

I really don't know if this interesting perspective from Ron Paul on the possible effects the US sanctions might cause has already been posted.

POLICIES WILL LEAD TO AMERICA’S ECONOMIC ISOLATION

By Ron Paul

The US government’s decision to apply more sanctions on Russia is a grave mistake and will only escalate an already tense situation, ultimately harming the US economy itself. While the effect of sanctions on the dollar may not be appreciated in the short term, in the long run these sanctions are just another step toward the dollar’s eventual demise as the world’s reserve currency.

Not only is the US sanctioning Russian banks and companies, but it also is trying to strong-arm European banks into enacting harsh sanctions against Russia as well. Given the amount of business that European banks do with Russia, European sanctions could hurt Europe at least as much as Russia. At the same time the US expects cooperation from European banks, it is also prosecuting those same banks and fining them billions of dollars for violating existing US sanctions. It is not difficult to imagine that European banks will increasingly become fed up with having to act as the US government’s unpaid policemen, while having to pay billions of dollars in fines every time they engage in business that Washington doesn’t like.

European banks are already cutting ties with American citizens and businesses due to the stringent compliance required by recently-passed laws such as FATCA (Foreign Account Tax Compliance Act). In the IRS’s quest to suck in as much tax dollars as possible from around the world, the agency has made Americans into the pariahs of the international financial system. As the burdens the US government places on European banks grow heavier, it should be expected that more and more European banks will reduce their exposure to the United States and to the dollar, eventually leaving the US isolated. Attempting to isolate Russia, the US actually isolates itself.

Another effect of sanctions is that Russia will grow closer to its BRICS (Brazil/Russia/India/China/South Africa) allies. These countries count over 40 percent of the world’s population, have a combined economic output almost equal to the US and EU, and have significant natural resources at their disposal. Russia is one of the world’s largest oil producers and supplies Europe with a large percent of its natural gas. Brazil has the second-largest industrial sector in the Americas and is the world’s largest exporter of ethanol. China is rich in mineral resources and is the world’s largest food producer. Already Russia and China are signing agreements to conduct their bilateral trade with their own national currencies rather than with the dollar, a trend which, if it spreads, will continue to erode the dollar’s position in international trade. Perhaps more importantly, China, Russia, and South Africa together produce nearly 40 percent of the world’s gold, which could play a role if the BRICS countries decide to establish a gold-backed currency to challenge the dollar.

US policymakers fail to realize that the United States is not the global hegemon it was after World War II. They fail to understand that their overbearing actions toward other countries, even those considered friends, have severely eroded any good will that might previously have existed. And they fail to appreciate that more than 70 years of devaluing the dollar has put the rest of the world on edge. There is a reason the euro was created, a reason that China is moving to internationalize its currency, and a reason that other countries around the world seek to negotiate monetary and trade compacts. The rest of the world is tired of subsidizing the United States government’s enormous debts, and tired of producing and exporting trillions of dollars of goods to the US, only to receive increasingly worthless dollars in return.

The US government has always relied on the cooperation of other countries to maintain the dollar’s preeminent position. But international patience is wearing thin, especially as the carrot-and-stick approach of recent decades has become all stick and no carrot. If President Obama and his successors continue with their heavy-handed approach of levying sanctions against every country that does something US policymakers don’t like, it will only lead to more countries shunning the dollar and accelerating the dollar’s slide into irrelevance.

Ron Paul is a former U.S. Congressman from Texas and the leader of the pro-liberty, pro-free market movement in the United States. His weekly column – reprinted with permission – can be found here.

http://www.fitsnews.com/2014/08/12/ron- ... kylUD8S.99

Thoughts?

[Rei Murasame]

Ron Paul is wrong as usual and is just shaping his narrative to please his pseudo-libertarian audience. He'll never support an aggressive foreign policy, so going to him to find out about foreign policy is useless. You might as well put a sign of a full-body sized Ron Paul poster, with a speech bubble coming from its mouth that says "No!", and then ask that sign any time you want to know what Ron Paul's position on aggressive war or economic warfare is.

[Soulflytribe]

Ron Paul is wrong as usual and is just shaping his narrative to please his pseudo-libertarian audience. He'll never support an aggressive foreign policy, so going to him to find out about foreign policy is useless. You might as well put a sign of a full-body sized Ron Paul poster, with a speech bubble coming from its mouth that says "No!", and then ask that sign any time you want to know what Ron Paul's position on aggressive war or economic warfare is.

I tend to agree with you on this one, but some of the things he wrote are actually happening.

1- The BRICS are getting closer and distancing from EU/US. Something that scares me.
2 - The dollar is gradually ceasing to be the world's reserve. Something that should scare Americans.

[Rei Murasame]

BRICS is just an acronym that means 'Brazil, Russia, India, China, South Africa'. These countries don't have that much in common, and I don't see any particular cause for concern. BRICS is not an institution like how the EU is an institution.

BRICS produce 'nearly 40 percent of the world's gold' according to Ron Paul. Too bad for him that no one actually cares about that, because currency is backed by a lot of things other than gold.

[Mircea]

BRICS is just an acronym that means 'Brazil, Russia, India, China, South Africa'. These countries don't have that much in common, and I don't see any particular cause for concern. BRICS is not an institution like how the EU is an institution.

I tend to agree with you on this one, but some of the things he wrote are actually happening.

1- The BRICS are getting closer and distancing from EU/US. Something that scares me.
2 - The dollar is gradually ceasing to be the world's reserve. Something that should scare Americans.

BRICS is the best thing that ever happened to the World.....get over yourselves already.....you ain't that exceptional (except as a murdering thieving thug).

The only thing to fear from BRICS is that the US and its puppet Britain in a last chance last ditch go-for-broke dying gasp to maintain their economic slave empire, start WW III.

You don't think BRICS has anything in common? Better look again, because they certainly do have commonalities: Wages & Standard of Living. And it doesn't end there. BRICS does something the US has never done, and that is engage in nation-building. Unlike the US, BRICS is building future trading partners in the Developing-States and Emerging-States, which is why BRICS will bury the US economically, and then Geo-politically.

The future Geo-political and economic hub of the Earth is going to be the center of the Indian Ocean, so the EU needs to distance itself from the US as much as possible.

In terms of Standard of Living, the US should be about a step to a step-and-a-half from where Russia is right now this minute.

Obviously, the US is not there, but that's only due to the fact that the US murdered, tortured, maimed and stole its way to the Standard of Living that it has now. BRICS is putting an end the US World Torture & Theft Tour, and so...naturally....the US economy is going to implode and devolve, and with that de-evolution will be a devolving Standard of Living. Americans are just going to have to accept it and get used to it.

Regarding Ron Paul, he is too damn dumb to understand US policy Ukraine, which has remained unchanged since the Clinton Administration began channeling money to "pro-democracy" groups to over-throw the government.

[Rich]

Wasn't Ron Paul one of those Libertarian retards that was predicting hyper inflation? We should have been seeing Americans (and British and a lot of other people) taking their wages home in wheel barrows along time back. Really looking to types like Ron Paul and Peter Schiff for economic advice is like looking to a pig to teach you quantum mechanics.

[Emptyskin]

You people trash Ron Paul, but my guess is that not one of you can explain the petrodollar system (to which he alludes in the OP) or the grand strategy of the US (which he is against).

You're not worried about BRICS, but can you explain Bretton Woods? Do you see the similarity? BRICS is a long term strategy not something that will matter overnight.

As for Ron Paul "predicting" hyperinflation. A necessary consequence of the Bretton Woods system deteriorating is tat US dollar assets will eventually end up here.

The ignorance in this thread is just staggering. OP, go to a different forum if you want to talk about these things. The average person isn't well educated enough to know anything about Bretton Woods, its origins, or its purposes.

[park]

He's right,if the US tries to impose sanctions on Russia then Russians can turn to the new powers of the world,China,India,Brazil and their allies. It makes them closer instead of splitting them.

[Martin Kalyniuk]

Ron Paul is wrong as usual and is just shaping his narrative to please his pseudo-libertarian audience. He'll never support an aggressive foreign policy, so going to him to find out about foreign policy is useless. You might as well put a sign of a full-body sized Ron Paul poster, with a speech bubble coming from its mouth that says "No!", and then ask that sign any time you want to know what Ron Paul's position on aggressive war or economic warfare is.

Actually, he's quite right. I don't know if he usually is, but here: definitely.

The sanctions were not thought through and, by an EU representative's own admission, the possible consequences were not properly studied in advance of enacting them. Which is quite interesting. Even though the Russian Federation is a reluctant participant in the sanctions situation, the relevant departments have come up with appropriate responses for all possibilities.

The EU cannot do this because they can't forecast what the member States will do. They have had notoriously little luck in enforcing their stated Common Foreign and Security Policy because by it's very nature the EU is a collection of disparate countries whose national interests are not uniform. The Russian Federation does not have this problem.

He is perfectly right that the sanctions, since they mean cutting off mutually beneficial trade ties, are going to hurt the EU. According to Germany's Committee on Eastern European Economic Relations—German exports to the Russian market made up around 30% of the EU's total last year (€36 billion). Several EU members have their entire economies centered on the Russian market. And Russia's counter-sanctions stand to cost the EU as a whole up to €16 billion in that one year if they keep their course.

And for Russia, it is possible to pivot to other partners. It's simply easier to find someone else to buy from than it is to find another buyer, it is the difference between shopping and selling. Especially as Germany's exports were primarily technical equipment deliberately suited to extracting oil and hydrocarbons from Russia's unique (=difficult) terrain. The other countries hit hardest can't sell their products to anyone else because of time constraints (much of it is perishable), shipping costs and the cultural difference (Parisians don't eat what Russians and Poles do).

Furthermore, most of the European sanctions target banks, certain kinds of companies and individuals. They hurt, but Russia's energy exports remain unaffected (40% of Russian energy exports go to Europe). Since sales of oil and hydrocarbons are Russia's main source of revenue from the EU, all sanctions are necessarily comparatively weak. They can't break their dependency on Russian energy.

And even if they could, China would be falling over themselves to replace them. Already are. China has immense mining experience (in Africa, Australia, Canada) and will likely replace those companies who sold equipment and machinery to Russia in the coming years. Russia will in turn manufacture and sell similar but less technical equipment to Iran which has more oil than Russia (Iran has 9.3% of the world's proven oil reserves, Russia has 5.5%) and more hydrocarbons (Iran has 18.2% of the world's proven gas reserves, Russia has 16.8%) situated in much more accessible terrain. Iran will pay for it, as well as for Russian expertise and companies to come in, out of the investments of European companies as the sanctions against them are lifted. How wonderfully the world works.

Finally, he was also very right to note that the sanctions are going to make Russia develop closer and more intensive trade ties with economic rivals of the US and EU. Mainly China, India and Iran. The US's and EU's punitive measures may in the end only speed up the process of their displacement and decline in international economic importance, which is, if we are honest, the true reason for the sanctions.

I also wonder why just because the author doesn't support an "aggressive" foreign policy that makes him a priori not worth listening to...

[Harmattan]

European banks are already cutting ties with American citizens and businesses due to the stringent compliance required by recently-passed laws such as FATCA (Foreign Account Tax Compliance Act). In the IRS’s quest to suck in as much tax dollars as possible from around the world, the agency has made Americans into the pariahs of the international financial system. As the burdens the US government places on European banks grow heavier, it should be expected that more and more European banks will reduce their exposure to the United States and to the dollar, eventually leaving the US isolated.

As an European I would love if it was true but afaik there isn't an ounce of truth in that statement. I never heard of a single European bank that would be withdrawing from the US territory and I never heard a single politician or economical actor criticize the FATCA. So reading that the USA have become the "pariahs of the international financial system" made me laugh.