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.
24 comments
I disagree. We have 2 things going for us still. 1) we are the strongest military by far and the Saudis will not give up the dollar as long as we promise to protect them, and 2) which currency are you going to replace it with?? Euro, they may break up at some point. China? It is tied to the US dollar and refuse to let it float. Russia? Yeah right, their economy is about to collapse on itself. Just ask the wealthy who are leaving the country as fast as possible and taking their money with them.
wow, amazing . chemtrails and fluoride have done their job
are you day dreaming my friend….!!!! strongest military??? you should check ur facts.. fancy guns and planes dont make a strong army.. Dollar can be replaced with EUro very much… even BRICS countries are also planning the same…. and regarding your remark against Russia that their economy is collapsing… i think you are dreaming or you dont have brains… it was decades back that Russia was on brink on collapse today the RUSSIAN economy is easy challenging the US one.. It has simply no effect of US bans… let see how US copes up
Grow closer to the BRIC countries? Seriously? The BIC of the BRIC (Brazil, India, China) have much more at stake with the West than they do with the Russians. Brazil is on the verge of becoming a full-fledged first world country, India has more trade with the West than Russia and no longer is reliant on Russia for arms, and the Chinese are more than happy to let Russia struggle so long as they get Russian gas (and I don’t mean from the food).
They’ve been saying that about Brazil for about 50 years.
Brazil is still very much a state-managed economy. They will never become “first world” until their government lets go of the reigns. Dilma is widely hated for her propensity to spend billions on stadiums in the jungle while millions of individuals are living in abject poverty due to government economic management.
Aren’t there millions of americans living in poverty as well? :-)
There certainly are. Did someone make a claim otherwise?
This is accurate, Obama will have well and truly earned his nobel peace prize. He should be awarded the prize for the biggest idiot ever to get elected twice, what does that say about the IQ of the average US voter?
Bye America, it was great knowing you.
Yeah, America is DOOOMED because Russia isn’t buying our chicken, fruits and vegetables.
case in point…
The sky is falling….The sky is falling….The sky is falling. Have to wonder if Paul ever sees sunshine.
Gold. Gold! GOLD! BUY GOLD! GOOOOOLD! THE DOLLAR WILL SINK THIS TIME, WE PROMISE! PLEASE BUY OUR GOLD! IT TOTALLY WON’T TANK THIS TIME WHEN OUR PREDICTIONS FAIL YET AGAIN! GOOOOOOOOOOOOOOOOOOLD!
[Insert advertisement for company that scams dumb people with crappy coins here.]
Glenn Beck will only take GOALD coins from non-governmental entities when Freedomtown gets off the ground. Better spend all your money on GOALD coins and canned goods.
Goldline – Levin, Beck, Limbaugh all invest in the 1mg of pure gold clad collector’s edition.
“…… if the BRICS countries decide to establish a gold-backed currency to challenge the dollar.”
All together now….
Follow the yellow BRICS road.
Follow the yellow BRICS road.
Faa-la-la-la-la-la-la
Follow the yellow BRICS road.
This does not read like something Paul wrote. It is not in his terse writing style. Is old Ron now publishing for pay?
Well, since they came to light, he’s said he never wrote all those anti-black and pro-militia newsletters…
Well, since the anti-black articles contained some of the most absurd claims that even the KKK wouldn’t try to pass off, as well as the most ridiculous medical claims that a pre-med student knows are false, I think even hinting that he wrote them is almost more insane than the claims themselves.
A loaf of bread was $0.05 in 1913, the year the Federal Reserve took over protecting the value of the dollar. A silver dollar had one ounce of silver in it. It would buy 20 loaves of bread.
Today a loaf of bread is about $1.00 (not counting the fancy designer breads). A silver dollar containing one ounce of silver will cost you around $20.00.
Conclusion: the dollar has lost 95% of its value in the last 100 years. Silver has lost nothing. One ounce still buys 20 loaves of bread the same way it did 100 years ago. The dollars you put in the bank, investments, real estate etc…well, not so much.
Since 2008 through QE1, QE2, QE3 the Federal Reserve has more than quadrupled the money supply. More than all the expansion in the previous 95 years combined. They have handed over this “printed-out-of-thin-air” money (backed by nothing) to the people who caused the housing market crash.
What could possibly go wrong?
How do you spell derivatives?
This reminds me of the time Paul told everyone in 2002 that there was a housing bubble forming, everyone laughed and called him a kook then too.
buy Pinto beans, ammo, guns, cross-bows,pasta, rice, seeds(heirloom , unless hybrid will produce), cb’s with sideband in that faraday box, crank lites/radios, uh…..bicycles/tubes, plate metal to bulletproof your house, pinto wagon, bikes, and learn how to use A4V. Oh, hand pumps for water, outhouses, woodstoves, woods, woodsheds, stocked ponds, nets, snares, salt, rib-eye bone in , Honda Mini-Trails , 2 gallons gas, candles, kerosene, duct tape.
“All cats are libertarians.
Completely dependent upon others, yet entirely convinced of their independence.”
Everyone is dependent on others to live a high standard of living. That’s how the economy works. But there’s difference in being dependent on their cooperation, and being dependent at their expense. As Bastiat said,“”Government is the great fiction through which everybody endeavors to live at the expense of everybody else.” However, to engage in the economy, one must cooperate with others to trade on freely negotiated terms.
Your obfuscation of terms certainly lends no clarification to libertarian principles.