The Golden Trap of Chess Master Vladimir Putin

Accusations of the West towards Putin traditionally are based on the fact that he worked in the KGB. And therefore he is a cruel and immoral person. Putin is blamed for everything. But nobody ever accused Putin of lack of intelligence.

Any accusations against this man only emphasize his ability for quick analytical thinking and making clear and balanced political and economic decisions.

Often Western media compares this ability with the ability of a grandmaster, conducting a public chess simul. Recent developments in US economy and the West in general allow us to conclude that in this part of the assessment of Putin’s personality Western media is absolutely right.

Despite numerous success reports in the style of Fox News and CNN, today, Western economy, led by the United States is in Putin’s trap, the way out of which no one in the West can see or find. And the more the West is trying to escape from this trap, the more stuck it becomes.

What is the truly tragic predicament of the West and the United States, in which they find themselves? And why all the Western media and leading Western economists are silent about this, as a well guarded military secret? Let’s try to understand the essence of current economic events, in the context of the economy, setting aside the factors of morality, ethics and geopolitics.

After realizing its failure in Ukraine, the West, led by the US set out to destroy Russian economy by lowering oil prices, and accordingly gas prices as the main budget sources of export revenue in Russia and the main sources of replenishment of Russian gold reserves.

It should be noted that the main failure of the West in Ukraine is not military or political. But in the actual refusal of Putin to fund the Western project of Ukraine at the expense of the budget of Russian Federation. What makes this Western project not viable in the near and inevitable future.

Last time under president Reagan, such actions of the West’s lowering of oil prices led to ‘success’ and the collapse of USSR. But history does not repeat itself all the time. This time things are different for the West. Putin’s response to the West resembles both chess and judo, when the strength used by the enemy is used against him, but with minimal costs to the strength and resources of the defender. Putin’s real policies are not public. Therefore, Putin’s policy largely has always focused not so much on effect, but on efficiency.

Very few people understand what Putin is doing at the moment. And almost no one understands what he will do in the future.

No matter how strange it may seem, but right now, Putin is selling Russian oil and gas only for physical gold.

Putin is not shouting about it all over the world. And of course, he still accepts US dollars as an intermediate means of payment. But he immediately exchanges all these dollars obtained from the sale of oil and gas for physical gold!  ….

Thus, in exchange for Russian oil, gas and uranium, the West pays Russia with dollars, purchasing power of which is artificially inflated against oil and gold by the efforts of the West. But Putin uses these dollars only to withdraw physical gold from the West in exchange, for the price denominated in US dollars, artificially lowered by the same West.

This truly brilliant economic combination by Putin puts the West led by the United States in a position of a snake, aggressively and diligently devouring its own tail.

The idea of this economic golden trap for the West, probably originated not from Putin himself. Most likely it was the idea of Putin’s Advisor for Economic Affairs – doctor Sergey Glazyev. Otherwise why seemingly not involved in business bureaucrat Glazyev, along with many Russian businessmen, was personally included by Washington on the sanction list?  The idea of an economist, doctor Glazyev was brilliantly executed by Putin, with full endorsement from his Chinese colleague – XI Jinping….

China recently announced that it will cease to increase its gold and currency reserves denominated in US dollars. Considering the growing trade deficit between the US and China (the current difference is five times in favor of China), then this statement translated from the financial language reads: “China stops selling their goods for dollars”. The world’s media chose not to notice this grandest in the recent monetary history event . The issue is not that China literally refuses to sell its goods for US dollars. China, of course, will continue to accept US dollars as an intermediate means of payment for its goods. But, having taken dollars, China will immediately get rid of them and replace with something else in the structure of its gold and currency reserves. Otherwise the statement made by the monetary authorities of China loses its meaning: “We are stopping the increase of our gold and currency reserves, denominated in US dollars.” That is, China will no longer buy United States Treasury bonds for dollars earned from trade with any countries, as they did this before.

Thus, China will replace all the dollars that it will receive for its goods not only from the US but from all over the world with something else not to increase their gold currency reserves, denominated in US dollars. And here is an interesting question: what will China replace all the trade dollars with? What currency or an asset? Analysis of the current monetary policy of China shows that most likely the dollars coming from trade, or a substantial chunk of them, China will quietly replace and de facto is already replacing with Gold.

In this aspect, the solitaire of Russian-Chinese relations is extremely successful for Moscow and Beijing. Russia buys goods from China directly for gold at its current price. While China buys Russian energy resources for gold at its current price. At this Russian-Chinese festival of life there is a place for everything: Chinese goods, Russian energy resources, and gold – as a means of mutual payment. Only US dollar has no place at this festival of life. And this is not surprising. Because the US dollar is not a Chinese product, nor a Russian energy resource. It is only an intermediate financial instrument of settlement – and an unnecessary intermediary. And it is customary to exclude unnecessary intermediaries from the interaction of two independent business partners.

It should be noted separately that the global market for physical gold is extremely small relative to the world market for physical oil supplies. And especially the world market for physical gold is microscopic compared to the entirety of world markets for physical delivery of oil, gas, uranium and goods.

Emphasis on the phrase “physical gold” is made because in exchange for its physical, not ‘paper’ energy resources, Russia is now withdrawing gold from the West, but only in its physical, not paper form. So does China, by acquiring from the West the artificially devalued physical gold as a payment for physical delivery of real products to the West.

The West’s hopes that Russia and China will accept as payment for their energy resources and goods “shitcoin” or so-called “paper gold” of various kinds also did not materialize. Russia and China are only interested in gold and only physical metal as a final means of payment.

For reference: the turnover of the market of paper gold, only of gold futures, is estimated at $360 billion per month. But physical delivery of gold is only for $280 million a month. Which makes the ratio of trade of paper gold versus physical gold: 1000 to 1.

Using the mechanism of active withdrawal from the market of one artificially lowered by the West financial asset (gold) in exchange for another artificially inflated by the West financial asset (USD), Putin has thereby started the countdown to the end of the world hegemony of petrodollar. Thus, Putin has put the West in a deadlock of the absence of any positive economic prospects.

The West can spend as much of its efforts and resources to artificially increase the purchasing power of the dollar, lower oil prices and artificially lower the purchasing power of gold. The problem of the West is that the stocks of physical gold in possession of the West are not unlimited. Therefore, the more the West devalues oil and gold against the US dollar, the faster it loses devaluing Gold from its not infinite reserves.

In this brilliantly played by Putin economic combination the physical gold is rapidly flowing to Russia, China, Brazil, Kazakhstan and India, the BRICS countries, from the reserves of the West. At the current rate of reduction of reserves of physical gold, the West simply does not have the time to do anything against Putin’s Russia until the collapse of the entire Western petrodollar world. In chess the situation in which Putin has put the West, led by the US, is called “time trouble”. …

What the BRICS countries, led by Russia and China, are doing now is actually changing the role and status of the US dollar in the global monetary system. From the ultimate means of payment and asset accumulation, the national currency of the USA, by the joint actions of Moscow and Beijing is turned into only an intermediate means of payment. Intended only to exchange this interim payment for another and the ulimate financial asset – gold. Thus, the US dollar actually loses its role as the ultimate means of payment and asset accumulation, yielding both of those roles to another recognized, denationalized and depoliticized monetary asset – gold.

Traditionally, the West has used two methods to eliminate the threat to the hegemony of petrodollar model in the world and the consequent excessive privileges for the West.

One of these methods – colored revolutions. The second method, which is usually applied by the West, if the first fails – military aggression and bombing.

But in Russia’s case both of these methods are either impossible or unacceptable for the West. …

https://syrianfreepress.wordpress.com/2014/11/27/putin-golden-trap-1/

It’s bad enough to have an imperialist predatory government.  But to have an incompetent imperialist predatory government is just a bit much.    They have bet the house on this one last gamble for world hegemony, and they have lost.  But they expect the rest of us to go down with them and we don’t have to.  If we nationalize the federal reserve and renounce the fraud street scam artists’ empire games we could jettison them to their fate and once again set an example for the world of how to throw off the yoke of a ridiculous inbred aristocracy masquerading as a government.

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