Did Biden Shoot Himself in the Foot by Putting the Kibosh on Russian Oil?
by John Lawrence
If Putin wanted to ruin the US economy, he couldn't have done it more successfully than if he himself had refused deliveries of Russian oil. The US and European embargo on Russian oil has driven the price of oil on the world market sky high, and Putin is benefiting from the price increase! In fact he has made more money from the sale of oil this year than he did last year! No wonder Putin is smiling. He's laughing all the way to the bank as his war in Ukraine not only devastates Ukraine but drives inflation in the US, UK and the rest of Europe while US sanctions on Russia's economy does little or no damage. Do they really need imports from Europe or the US when China is the world's manufacturer of practically everything, and China is an ally of Russia? Not every financial transaction in the world involves the US dollar. Furthermore, Russia's blockade of Ukrainian grain is causing food prices to rise which makes for another increase in inflation. But even worse than that, countries that depend on that grain consumption will likely find their citizens going hungry further contributing to world political instability.
Biden's insane pandering to Saudi Arabia after declaring them a pariah country will not do much to lower the price of gas even if Saudi Arabia increases production to their limit. They don't have the ability to fully replace the potential supply of Russian oil. So win or lose the war in Ukraine, Putin is having a debilitating effect on the US economy while there is not that much of a debilitating effect on Russia's economy. Another reason this is so is that the Russian ruble is a fiat currency not pegged to the US dollar so the Russian central bank can spend as many rubles as necessary to keep consumers and businesses going. Even MacDonald's has been "Russianized" so that MacDonald's pull out has had little or no effect on the Russian preference for US fast food. Furthermore, Russia and China, among a few other nations, have been hard at work to limit the US dollar as the world's reserve currency. The Asian Development Bank (ADB) envisions a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty in the region. China's Belt and Road initiative also is furthering the cause of dedollarization of the world economy. However, China's currency is pegged to the US dollar so China needs to hold dollars in its account at the Federal Reserve, but Russia's currency is fully convertible. That's how it can demand that Finland pay for its gas in rubles thus supporting that fully convertible currency. Russia, therefore, is not dependent on the US dollar. It just needs to import anything that it doesn't produce domestically and China can provide that.
Meanwhile, the US is dependent on the supply chain from China which has been disrupted lately causing more inflation. Dependency on China for most of its products while trying to cast China as an adversary is not a very good idea. The proposed Cold War with China is only pushing Russia and China closer together. Meanwhile the war in Ukraine is becoming a money pit for the US government which is spending billions and billions to give Ukraine a never ending supply of weapons. This is also inflationary because, whereas the product is shipped to Ukraine, the money is spent right into the US economy via the US weapons manufacturers. To fight inflation money needs to be extracted from the US economy hopefully by means of taxing the rich and not taxing anyone making less than $400,000 a year as Biden has proposed. Whatever the outcome of the war in Ukraine, Putin has proven that by withholding Russian oil from world markets, he can drive up the price of gas and cause inflation in car centric America.