Lew Rockwell Institute

It might succeed in terms of optics, but this won’t make any substantive difference in reality.

The US’ latest sanctions against Russia, the first under the second Trump Administration, are intended less as a weapon against the Russian economy and more as a means of weaponizing energy geopolitics in a bid to break apart BRICS, especially its Russia, India, China (RIC) core. This assessment is based on India and China’s close trade ties with the US in spite of its respective 50% and 55% tariffs on them, their continued rivalry despite their incipient rapprochement, and their triangulation with Russia.

In the order that they were shared, India’s and China’s trade with the US is much larger than their trade with Russia, but Russia importantly supplies a significant share of their energy. While neither wants to pay more for oil, however, the overall costs of the US raising its tariffs on them as punishment for defying its latest sanctions as well as the secondary ones that could be leveled against those of their financial institutions that facilitate this trade might be even more. This could arguably compel them to reconsider.

As for the second point, being in better graces with the US than the other is with it serves their interests vis-à-vis one another since neither wants to risk the scenario of their rival teaming up with the US against them, which could have strategic implications. They might therefore calculate that they have more to lose by defying the US in pursuit of lower oil prices and retaining closer ties with Russia if the other doesn’t too so it’s better to comply. This amounts to a weaponization of the prisoner’s dilemma.

Building upon the above, the last point is that each might have accordingly calculated that their rival won’t obtain better ties with Russia at their feared expense so long as both of them informally comply in part (key qualifier) with the US’ latest sanctions, which each might do in spite of publicly criticizing them. As it turns out, they were already decreasing purchases of Russian oil even before the sanctions, with India’s dropping 14% from August to September and China’s 8.1% in the first nine months of the year.

No matter how compelling these points might seem, nobody should assume that India and/or China will totally stop importing Russian energy, let alone right away. There simply isn’t enough supply on the market right now for them to do so. Even if others ramp up production, those two might still only gradually wean themselves off of Russian energy, which would then likely be sold at an even steeper discount to incentivize them to retain some purchases. Everything will therefore likely balance itself out.

Nevertheless, the US could still highlight India’s and China’s reduced imports under duress (the first’s confirmed by its top buyer and the second’s only reported) to debunk the BRICS myth of them all (especially RIC) working in harmony against the US, which Trump has complained about before. It doesn’t matter that such information warfare would have no tangible effect on global processes since all that’s important to Trump is the perception of the US having broken BRICS’ (and especially RIC’s) unity.

On that note, Russia’s special operation wouldn’t be curtailed even in the political fantasy that India and China soon dump its energy for good since the Kremlin has a big enough war chest to keep financing its side of the conflict for at least the next few years, though this might come with some opportunity costs. The takeaway is that the US is indeed weaponizing energy geopolitics in a bid to break apart BRICS, which it might succeed with in terms of optics, but this won’t make any substantive difference in reality.

This article was originally published on Andrew Korybko’s Newsletter.

The post The US Is Weaponizing Energy Geopolitics in a Bid To Break Apart BRICS appeared first on LewRockwell.

In Wednesday’s episode of The Peter Schiff Show, Peter concentrates on the fallout from gold breaking $4,000 and what that means for the dollar, monetary policy, and crypto. He ties the metal’s surge to the structural consequences of the dollar’s reserve status, calls out surprising admissions from big-name financiers and former Fed officials, and argues that Bitcoin’s “digital gold” story is unraveling.

He opens by noting how the media finally pays attention once a price gets headline-grabbing, even if they miss the deeper story about why gold is rising:

Well, it’s been one week since I did my last podcast and when I did my last podcast, it was also on a Wednesday and what prompted me to do it that day was the fact that it was the first day that gold broke 4000 and there was a lot of media attention. And of course, they missed the bigger picture as to why gold was at 4000 and what it pretended. But they did cover it. The media had pretty much ignored gold all the way up to 4000. But when it got there, all of a sudden it was a bit of a story.

He then explains why $4,000 gold is more than a price milestone — it’s a symptom of deeper reliance on the dollar’s special role and on fiat money creation:

And this probably has even bigger implications for us than going off the gold standard did either for them or us, because our entire economy, our entire way of life over that time period has evolved to become dependent on the dollar’s reserve status, dollars that we can create out of thin air. Not that we have to back by gold or anything. We just conjure them into existence. And we use those dollars to buy consumer goods that we don’t produce. So we get to live beyond our means.

He highlights how even mainstream bankers are conceding that gold’s run is not a trivial matter, pointing to Jamie Dimon’s blunt acknowledgment:

Probably one of the most significant admissions that I’ve heard was from Jamie Dimon, who is a highly respected guy. And Jamie Dimon was quoted as saying gold can easily go to 10,000. And I agree it can easily go to 10,000, and it very well will go to 10,000 and a lot higher than that. But here is the more significant aspect of the Jamie Dimon quote. Jamie Dimon said, quote, “This is one of the few times in my life, it’s semi rational to have some gold in your portfolio.”

Peter also recounts an extraordinary candor from a former Fed chair, using it to question the credibility of official narratives during crisis periods:

But no, that’s not what Ben Bernanke said. He said, and I, I’m not making this up. He said, well, you know, to be honest, I really couldn’t speak my mind back then because I was part of the, the, the Bush administration. And so I had to maintain the narrative that the administration, you know, was advancing, which I, you know, I couldn’t believe that he said this. So basically Ben Bernanke’s excuse for why he was so wrong wasn’t that he got it wrong and that he wasn’t smart.

He reminds listeners that any praise for Alan Greenspan must be honest about Greenspan’s own warnings on gold and loose policy, and he calls out commentators who dismiss the metal today:

So if you’re going to praise Alan Greenspan, you can’t just selectively praise him. You can’t ignore what he said about gold. So what would Alan Greenspan say today in the face of $4,000 gold? He wouldn’t dismiss it the way Scott Bessent is dismissing it. He would say $4,000 gold means monetary policy is much too loose because Alan Greenspan said $400 gold meant he was too loose.

Finally, Peter pivots to crypto and argues that gold’s rise is actively puncturing the narrative that Bitcoin is a superior store of value — a point listeners in the crypto world should take seriously:

The people in crypto, I think, have already lost a ton of money. They just don’t know it yet. Gold is not just pricking the dollar bubble. It’s pricking the Bitcoin bubble. The whole false narrative that Bitcoin is digital gold is being destroyed right now. Bitcoin is in a major bear market; it is down by more than 25%. 

This article was originally published on SchiffGold.com.

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