The Gladstone
Economic Newsletter
Volume 17, No. 7
April 28, 2022
Watching the G7 Commit Suicide
and Running (Rather Than Stumbling) Into World War III.
DISCLAIMER: The following is not intended as investment advice, but is rather intended to promote your own analysis of markets and the economic climate. The author is not a registered investment professional. Any action taken as a result of this analysis carries a high degree of risk. This newsletter contains the personal opinion of the author.
Dear readers-
When I look at the world economy, today’s environment is the worse I have seen in my lifetime. This includes the energy crisis of 1972-73, the stagflationary 1970s, the Depression of 1982, The Financial Crisis of 2008-2009, and the Pandemic. Things are bad. Yet our stock market sees the Dow climb 720 points today as I write this. The heck of it is, things are only going to get worse, much worse. First Quarter official GDP was negative 1.4%, per today’s news release. Not that I believe official GDP figures, by the way. I know some of my readers accuse me of being a “permabear,” and I am probably guilty of this. Since I started this newsletter 17 years ago to warn people of the coming credit and housing crises, we have not had anything near a normal economy. The last 17 years have seen a US economy continuing to be strip mined of productive economic activity, all courtesy of economic and monetary policy. The “chickens are coming to roost” in spades in the coming months. We are entering a deep, nasty recession as far as I can see. This is not “Putin’s fault” as the erstwhile leader of the free world (AKA Dementia Joe) puts it. The cake was well baked before the invasion of Ukraine.
As long time readers know, I very much follow what Martin Armstrong publishes in his public blog, https://www.armstrongeconomics.com/blog/ Armstrong’s computer program on the world economies has an unparalleled track record of success. He is steadfastly predicting the following:
“The dollar is pushing higher and it will rise to test the 12300 level. Exceed that area will also confirm we are looking at a European war. The Swiss will NOT be the hedge it once was. The New York Times just reported:
“Switzerland, a favorite destination for Russian oligarchs and their money, announced on Monday that it would freeze Russian financial assets in the country, setting aside a deeply rooted tradition of neutrality to join the European Union and a growing number of nations seeking to penalize Russia for the invasion of Ukraine.”
It is just amazing to me that no matter what country we look at, we have the absolute most braindead leaders ever to claim office in human history. I know people hate the dollar, but we will see the dollar RISE initially in this confrontation. Eventually, the collapse in world currencies and the rise in the dollar will be the catalyst to seize all capital and force it into a digital currency.
When we look at the currencies around the globe, they are all confirming that war lies on the horizon. I hate this forecast, but this is not my personal opinion. “
(Note: Martin Armstrong is discussing world war. I just don’t know if he means in 2022 or 2023)
The G7/Nato/EU are rushing headlong into a world war. One always hopes that common sense will prevail, but it appears that common sense is completely absent at this point in time. Dementia Joe proudly announced today that he is seeking another US$33 billion to pump into Ukraine by September. This is insane- both in terms of the money involved, and in terms of the harm US/Nato/EU weapons and fiscal support has done to the people of Ukraine and world peace. Personally, I have my doubts that Ukraine will even exist by September. A few newsletter issues ago, I made the prediction that Ukraine would be partitioned into two or more entities and that Poland would at some point try to take the western seven provinces of Ukraine (which were Polish until 1945). Today, we have news reports from Russia that Poland is readying its army to advance into the west of Ukraine. Poland has also (quietly) stationed a large number of troops to potentially move to take the Russian enclave of Kalinigrad (the old city of Konigsberg) on the Baltic. If this move into western Ukraine is done, expect Ukraine to at best end up as a “rump” state of the area around Kiev. The rump Ukraine would get all of its foreign and domestic debt, and not much of an economy. Here is map of the potential partition of Ukraine as broadcast by a Polish television station:
The world is closely watching another land grab potentially occurring in the breakaway region of Transnistria. Transnistria is a narrow sliver of land that separated from Moldova, and it borders Ukraine for its entire length. There are about 2,000 to 3,000 Russian “peacekeepers” in Transnistria. The above map shows Romania grabbing the entirety of Moldova at the end of the day, plus a province of Ukraine. Hungary grabs one Ukrainian province in the map.
On a daily basis, we are seeing the US/Nato/EU continue to double or triple down on the lunacy of their policies regarding Ukraine. While there is not a lot of news concerning the war in Donbass, it appears that the Russians are systematically destroying the Ukrainian Army in the east, and almost all of Ukraine’s military infrastructure. As fast as the West supplies advanced weapons and supplies to Ukraine, it appears that they are being destroyed in Russian missile strikes or captured by Russia. The Ukrainian Army has been running out of fuel and ammunition for weeks now. At some point, probably not far away in time, the Ukrainian Army in the east is going to disintegrate. The way will then be open for the “great Ukraine land grab.”
What will the world look like after the war in Ukraine ends? It will be vastly different from what it looked like in January, 2022. As far as currencies in the world go, Sergei Glazyev, noted Russian economist, said the following in an interview with “The Cradle”:
“The third and the final stage on the new economic order transition will involve a creation of a new digital payment currency founded through an international agreement based on principles of transparency, fairness, goodwill, and efficiency. I expect that the model of such a monetary unit that we developed will play its role at this stage. A currency like this can be issued by a pool of currency reserves of BRICS countries, which all interested countries will be able to join. The weight of each currency in the basket could be proportional to the GDP of each country (based on purchasing power parity, for example), its share in international trade, as well as the population and territory size of participating countries.
In addition, the basket could contain an index of prices of main exchange-traded commodities: gold and other precious metals, key industrial metals, hydrocarbons, grains, sugar, as well as water and other natural resources. To provide backing and to make the currency more resilient, relevant international resource reserves can be created in due course. This new currency would be used exclusively for cross-border payments and issued to the participating countries based on a pre-defined formula. Participating countries would instead use their national currencies for credit creation, in order to finance national investments and industry, as well as for sovereign wealth reserves. Capital account cross-border flows would remain governed by national currency regulations.”
The above sounds like a real road map to a successor currency for part of the world to the fiat system we exist in now.
On to graphics: