It is\u00a0the<\/em>\u00a0miscalculation of this era \u2013 one that may begin the collapse of dollar primacy, and therefore, global compliance with U.S.\u00a0political<\/em>\u00a0demands, too. But its most grievous content is that it corners the U.S. into promoting dangerous Ukrainian escalation against Russia directly (i.e. Crimea).<\/p>\n Washington dares not \u2013 indeed cannot \u2013 yield on\u00a0dollar primacy<\/em>, the ultimate signifier for \u2018American decline\u2019. And so the U.S. government is hostage to its financial hegemony in a way that is rarely fully understood.<\/p>\n The Biden Team cannot withdraw its fantastical narrative of Russia\u2019s imminent humiliation; they have bet the House on it.<\/strong><\/p>\n Yet it has become an existential issue for the U.S. precisely because of this egregious initial miscalculation that has been subsequently levered-up into a preposterous narrative of a floundering, at any moment \u2018collapsing\u2019 Russia.<\/p>\n What then is this \u2018Great Surprise\u2019<\/em>\u00a0\u2013 the almost completely unforeseen event of recent geo-politics that has so shaken U.S. expectations, and which takes the world to the precipice?<\/strong><\/p>\n It is, in a word,\u00a0Resilience<\/em>.<\/p>\n The Resilience displayed by the Russian economy after the West had committed the entire weight of its financial resources to crushing Russia. The West bore down on Russia in every conceivable way \u2013 via financial, cultural and psychological war \u2013 and with real military war as the follow-through.<\/p>\n Yet, Russia has survived, and survived relatively handsomely. It is doing \u2018okay\u2019 \u2013 maybe better, even, than many Russia insiders were expecting. The \u2018Anglo\u2019 Intelligence services however, had assured EU leaders not to worry; it\u2019s \u2018slam dunk\u2019; Putin cannot possibly survive. Rapid financial and political collapse, they promised, was certain under the tsunami of western sanctions.<\/p>\n Their analysis represents an Intelligence failure on a par with the non-existent Iraqi weapons of mass destruction. But instead of critical re-examination, as events failed to provide confirmation, they doubled down. But\u00a0two<\/em>\u00a0such failures are just \u2018too much\u2019 to bear.<\/p>\n So why does this \u2018failed expectation\u2019 constitute such a world-shaking moment for our era? It is because the West fears that its miscalculation might well lead to the collapse of its dollar hegemony. But the fear extends well beyond that too \u2013 (bad as \u2018that\u2019 would be from the U.S. perspective).<\/p>\n Robert Kagan has\u00a0outlined<\/a>\u00a0how external forward motion and the U.S.\u2019 \u2018global mission\u2019 is the lifeblood of American internal polity \u2013\u00a0more than any equivocating nationalism<\/a>, Professor Paul suggests. From the founding of the country, the U.S. has been an expansionary republican empire; without this forward motion, civic bonds of\u00a0domestic\u00a0<\/em>unity\u00a0come into question<\/a>. If Americans are not united for expansionary republican greatness, by what purpose Professor Paul asks, are all these fissiparous races, creeds, and cultures in America, bound together? (Woke culture has proved no solution, being divisive rather than any pole around which unity can be built).<\/p>\n The point here is that Russian Resilience, at a single stroke, shattered the plate-glass floor to western convictions about its ability to \u2018manage the world\u2019. After the several western debacles centred on regime-change by military shock-and-awe, even hardened neo-cons \u2013 by 2006 \u2013 had conceded that a weaponised financial system was the only means to \u2018secure the Empire\u2019.<\/p>\n But this conviction has now been upended \u2013 and states around the world have taken notice.<\/p>\n This shock of miscalculation is all the greater because the West disdainfully had taken Russia to be a backward economy, with a GDP on a par to that of Spain.<\/strong>\u00a0In an\u00a0interview<\/a>\u00a0with\u00a0Le Figaro<\/em>\u00a0last week, Professor Emmanuel Todd noted that Russia and Belarus, taken together, constitute only 3.3% of global GDP. The French historian questioned therefore, \u2018how then is it possible that these states could have shown such resilience \u2013 in the face of the full force of the financial onslaught\u2019?<\/p>\n Well, firstly, as Professor Todd underlined, \u2018GDP\u2019 as a measure of economic resilience is wholly \u201cfictional\u201d. Contrary to its name, GDP measures only aggregate expenditures. And that much of what is recorded as \u2018production\u2019, such the over-inflated billing for medical treatment in the U.S.\u2019 and (said, tongue in cheek) services such as the hundreds of economists\u2019 and bank analysts\u2019 highly-paid analysis, are\u00a0not<\/em>\u00a0production,\u00a0per se<\/em>, but \u201cwater vapour\u201d.<\/p>\n Russia\u2019s resilience, Todd attests, is due to the fact that it has a\u00a0real economy\u00a0of production. \u201cWar is the ultimate test of a political economy\u201d, he notes. \u201cIt is the Great Revealer\u201d.<\/strong><\/p>\n And what is it that has been revealed? It has revealed another quite unexpected and shocking outcome \u2013 one that sends western commentators reeling \u2013 that Russia has not run out of missiles. \u2018An economy the size of Spain, the western media ask, how can such a tiny economy sustain a prolonged war of attrition by NATO without running out of munitions?\u2019.<\/p>\n But, as Todd outlines, Russia has been able to sustain its weapons-supply because it has\u00a0a real economy of production<\/em>\u00a0that has the capacity to maintain a war \u2013 and the West no longer does. The West fixated on its misleading metric of GDP \u2013 and with its normalcy bias \u2013 is shocked that Russia has the capacity to outpace NATO\u2019s arms inventories. Russia was billed by western analysts as a \u2018paper tiger\u2019 \u2013 a label that now seems more likely to apply to NATO.<\/p>\n The import of the \u2018Great Surprise\u2019 \u2013 of Russian Resilience \u2013 resulting from its real economy of production\u00a0vis \u00e1 vis<\/em>\u00a0the evident weakness of the hyper-financialised western model scrabbling for sources of munitions has not been lost on the rest of the world.<\/strong><\/p>\n There is old history here. In the lead-up to WW1, the British Establishment was concerned that they might lose the coming war with Germany: British banks tended to lend short-term, in a \u2018pump and dump\u2019 approach, whereas German banks invested directly in long-term real-economy industrial projects \u2013 and therefore were thought to be able to better sustain war materiel supply.<\/p>\n Even then, the Anglo \u00e9lite had a quiet appreciation of the inherent frailty to a heavily financialised system for which they compensated by simply expropriating the resources of a huge Empire to finance preparation for the coming Great War.<\/p>\n The backdrop then, is that the U.S. inherited the Anglo financialising approach which it subsequently turbo-charged when the U.S. was forced off the gold standard by ballooning budget deficits. The U.S. needed to attract the world\u2019s \u2018savings\u2019 into the U.S., by which to finance its Vietnam war deficits.<\/strong><\/p>\n The rest of Europe from the 19th century outset had been wary of Adam Smith\u2019s \u2018Anglo-model\u2019. Friedreich List complained that the Anglos assumed that the ultimate measure of a society is always its level of consumption (expenditure \u2013 and hence the GDP metric). In the long run, List argued, a society\u2019s well-being and its overall wealth were determined not by what the society can\u00a0buy<\/em>, but by what it can\u00a0make<\/em>\u00a0(i.e. value coming from the real, self-sufficient economy).<\/p>\n The German school argued that emphasizing consumption would eventually be self-defeating. It would bias the system away from wealth creation, and ultimately make it impossible to consume as much, or to employ so many. Hindsight suggests List was correct in his analysis.<\/p>\n \u2018War \u2013 is the ultimate test \u2013 and Great Revealer\u2019 (per\u00a0<\/em>Todd). The roots to an alternative economic view had lingered on in both Germany and Russia (with Sergei Witte), despite the recent preponderance of the hyper-financialised Anglo-model.<\/p>\n And now with the \u2018Great Reveal\u2019, the focus on the real economy is seen as a key insight underpinning the New Global Order, differentiating it sharply in terms both of economic systems and philosophy from the western sphere.<\/p>\n The new order is separating from the old, not just in terms of economic system and philosophy, but through a reconfiguring of the neurons through which trade and culture travels. Old trade routes are being bypassed and left to wither \u2013 to be replaced by waterways, pipelines and corridors that avoid all the choke points by which the West can physically control commerce.<\/strong><\/p>\n The\u00a0north-east Arctic passage<\/a>, for example, has opened an inter-Asian trade. The untapped oil and gas fields of the Arctic eventually will fill the gaps in supplies resulting from an ideology that seeks to end investment by western oil and gas majors in fossil fuels. The North-South corridor (now open) links St Petersburg to Bombay. Another component links waterways from northern Russia to the Black Sea, the Caspian and from thence to the south. Yet another component is expected to pipe Caspian gas from the Caspian pipeline network south to a Persian Gulf gas \u2018hub\u2019.<\/p>\n Look at it in this way, it is as if the neural connectors in the real economic matrix are, as it were, being lifted up from the west, and are being set down in a new location to the East. If Suez was the waterway of the European era, and the Panama Canal represented that of the American Century, then the north-east Arctic waterway, the North-South corridors and the African railway nexus will be that of the Eurasian era.<\/p>\n In essence, the New Order is preparing to sustain a long economic conflict with the West.<\/strong><\/p>\n Here, we return to the \u2018Egregious Miscalculation\u2019. This evolving New Order existentially threatens dollar hegemony \u2013 the U.S. created its hegemony through demanding that oil (and other commodities) be priced in dollars, and by facilitating a frenetic financialisation of asset markets in the U.S. It is this demand for dollars which alone has allowed the U.S. to fund its government deficit (and its defence budget) for\u00a0nothing<\/em>.<\/p>\n In this respect, this highly financialised dollar paradigm possesses qualities reminiscent of a sophisticated Ponzi scheme: It pulls in \u2018new investors\u2019, attracted by zero-cost credit leverage and the promise of \u2018assured\u2019 returns (assets pumped ever upwards by Fed liquidity). But the lure of \u2018assured returns\u2019 is tacitly underwritten by the inflation of one asset \u2018bubble\u2019 after another, in a regular sequence of bubbles \u2013 inflated at zero cost \u2013 before being finally \u2018dumped\u2019. The process then, is \u2018rinsed and repeated\u2019\u00a0ad seriatim<\/em>.<\/p>\n Here is the point: Like a true Ponzi, this system relies on constant, and ever more, \u2018new\u2019 money coming into the scheme, to offset \u2018payments out\u2019 (financing U.S. government expenditure). Which is to say, U.S. hegemony now depends on constant overseas dollar expansion.<\/p>\n And, as with any pure Ponzi, once \u2018money in\u2019 falters, or redemptions spike, the scheme collapses.<\/p>\n It was to prevent the world quitting the dollar scheme for a new global trading order that the signal was ordered to be promulgated, via the onslaught on Russia, to warn that to quit the scheme would bring U.S. Treasury sanctions upon you, and to crash you.<\/p>\n But then came\u00a0TWO<\/em>\u00a0game-changing shocks, in close succession: Inflation and interest rates spiralled, devaluing the value of fiat currencies such as the dollar and undermining the promise of \u2018assured returns\u2019; and secondly, Russia DID NOT COLLAPSE under financial Armageddon.<\/p>\n The \u2018dollar Ponzi\u2019 falls; U.S. markets fall; the dollar falls in value (vis \u00e1 vis<\/em>\u00a0commodities).<\/strong><\/p>\n This scheme might be felled by Russian Resilience \u2013 and by much of the planet peeling away into a separate economic model, no longer dependent on the dollar for its trading needs. (i.e., new \u2018money in\u2019 to the dollar \u2018Ponzi\u2019 turns negative, just as \u2018money out\u2019 explodes, with the U.S. having to finance ever bigger deficits (now domestically)).<\/p>\n Washington clearly made a stratospherically bad error in thinking that sanctions \u2013 and the assumed collapse of Russia \u2013 would be a \u2018slam dunk\u2019 outcome; one so self-evident that it required no rigorous \u2018thinking through\u2019.<\/p>\n Team Biden thus has painted the U.S. into a tight Ukraine \u2018corner\u2019. But at this stage \u2013 realistically \u2013 what can the White House do? It cannot withdraw the narrative of Russia\u2019s \u2018coming humiliation\u2019 and defeat. They cannot let the narrative go because it has become an existential component to save what it can of the \u2018Ponzi\u2019. To admit that Russia \u2018has won\u2019 would be akin to saying that the \u2018Ponzi\u2019 will have to \u2018close the fund\u2019 to further withdrawals (just as Nixon did in 1971, when he shut withdrawals from the Gold window).<\/p>\n Commentator Yves Smith has provocatively\u00a0argued<\/a>,\u00a0\u2018What if Russia decisively wins \u2013 yet the western press is directed to not notice?\u2019<\/strong><\/em>\u00a0Presumably, in such a situation, the economic confrontation between the West and New Global Order states must escalate into a wider, longer war.<\/p>\n![\"\"](\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/image1-24%20%281%29.jpg?itok=BGuhTPva\")
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