Phillip Patrick: How Biden's Russia Sanctions Punished YOU, Not Putin

In response to Russia’s invasion of Ukraine earlier this year, Biden and the leaders of the G7 enacted a series of economic sanctions against Moscow. Four months later, Phillip Patrick shows us we can evaluate these moves and conclude that not only were they totally ineffective, they were also self-defeating…

Phillip Patrick: How Bidens Russia Sanctions Punished US (not Putin)
Image by Bandar Algaloud, courtesy of Saudi Royal Court
Image by Bandar Algaloud, courtesy of Saudi Royal Court

By Phillip Patrick, for Birch Gold Group

In response to Russia’s invasion of Ukraine earlier this year, Biden and the leaders of the G7 (Canada, France, Germany, Italy, Japan, and the United Kingdom) enacted a series of economic sanctions that included freezing Russia’s international bank accounts. Four months later, we can look back on these moves and conclude that not only were they totally ineffective, they were also self-defeating.

The sanctions against Russia have been an utter disaster on a global scale. I’m not just talking about pain at the pump from higher gas prices, either…

Anatomy of an economic failure

What’s the point of economic sanctions?

Simple: they’re a form of warfare. Sanctions don’t put boots on the ground in a foreign nation. They don’t put U.S. troops in harm’s way. Instead of blood, red ink is spilled.

How does this work?

By preventing the target nation from engaging in international trade. Essentially, isolating and punishing an entire nation for its leadership’s decisions.

James Dobbins of the RAND Corporation think-tank puts it like this:

Economic sanctions and carpet bombing have a lot in common. They are indiscriminate, tend to damage disproportionately the most vulnerable and often the most innocent elements of society, and they seldom have the desired effect unless followed up with a military invasion.

And this indiscriminate aspect of sanctions are part of the point…

What’s the goal?

Again, simple: to pressure a nation into compliance – without risky, expensive direct action. Financial sanctions can impoverish a nation, wrecking its economy to the degree that its citizens turn against their political leaders and either vote them out or take up their AK-47s and forcibly evict them from office.

Either the target nation’s leadership buckles and toes the line, or they’re replaced by a more compliant administration.

That’s the way it’s supposed to work.

Junkies can’t sanction their dealer

I’d give my 10 oz Valcambi gold bar to have been a fly on the wall in that G7 meeting. I’m sure Biden went in demanding that every nation stop doing business with Russia completely.

He was probably pretty surprised to learn that Russia is basically Western Europe’s gas station. Germany and Italy both rely on Russian exports for nearly half their energy imports. Eventually they all hashed out an agreement to sanction everything except Russia’s energy exports: crude oil, natural gas and coal would be allowed. Everything else, verboten, as Olaf Scholz (PM of Germany) would say.

So they settled for enacting sanctions on everything except Russia’s energy exports. In response, exactly as you’d expect, crude oil prices soared 50%. (Right now, oil prices are up 150% from just two years ago!)

Here’s the thing: fully 50% of Russia’s economy is based on energy exports. When the price of oil surged, Russia raked in massive profits. Rather than crushing the ruble and wrecking the nation’s economy, Moscow now has too much cash. The ruble is so strong that, while the rest of the world is struggling with inflation, the Central Bank of Russia is concerned about deflation due the ruble’s soaring value.

Instead of punishing Russia by wrecking the nation’s economy, Biden’s sanctions have punished the rest of the world with higher gas prices.

Remember this the next time you hear the phrase “Putin’s price hike” or “Putinflation.”

Unintended consequences are one thing, but sheer incompetence is something else

Here’s what really bothers me about this whole sordid episode: How can the leaders of the free world make such a basic economic mistake?

How could they have possibly failed to think through their actions?

Some analysts are so confounded they believe this must’ve been a deliberate policy move, more or less an attempt to accelerate the world’s transition away from fossil fuels, toward renewable energy. I don’t believe that.

Rather, I think Hanlon’s razor applies:

Never attribute to malice that which is adequately explained by stupidity.

I believe Biden’s recent hat-in-hand trip to beg Saudi Arabia to boost oil output was sincere. Now that the consequences of his disastrous economic decisions are unavoidable, he’s at least trying to do something about it. Failing, but trying.

What truly concerns me is Biden’s talent for taking a bad situation and making it worse. If his recent threat to take “strong executive action” to implement his climate crisis and green energy policies materializes, I wouldn’t be surprised to see my electric bill quintuple and the beginning of a new Ice Age.

Irresponsible leaders make personal responsibility even more vital

When we can’t count on our leadership to make sound economic decisions, our own, individual decisions become vastly more important.

Every day, I speak to everyday Americans who are aghast so see their purchasing power melt away like ice cream on a summer day. They’re alarmed by recent losses in both stocks and bonds and are asking me the same question on everyone’s minds these days: “What is anyone supposed to do with their money?

If you share these concerns, we can help you transfer money you’ve already saved for the future into a precious metals IRA. Most people find that owning their own, physical safe haven helps them feel much more confident in their own financial security.

Want to learn more? You can get started here. (By the way, if you call in, please be patient – we’re busier right now than ever.)

BGG - CTA Option 2

Get Your Free 2024 Gold IRA Information Kit


By submitting this form, you agree to receive automated text messages. This agreement is not a condition of any purchases. Msg & Data rates may apply. Reply STOP at any time to unsubscribe.