Ruble Gains Against US Dollar, Yield Curves Invert, Home Prices Out of Control

Russia has announced that as of March 31, all of its gas exports to Europe are to be priced and paid for in rubles:

No rubles, no gas. Those are Russia’s terms now.

This is obviously expected because America and NATO have taken steps to sanction Russia into economic oblivion. So why would Russia continue to play ball with them?

Of course, the G7 countries have rejected these news terms, but all that means is that they’re not getting their natural gas anymore. They either play ball or find a new energy supplier.

As a result of Russia exercising its leverage, the ruble is actually recovering quite well against the dollar:

Before the war broke out and the sanctions were imposed, the ruble was at around 75 per dollar. In the early days of the war, it spiked up to about 140, which represented a massive blow to the Russian currency.

But now it’s at around 96 per dollar, which is a significant improvement over the past few weeks. If the ruble gets back into the 70s, that ought to be considered a massive win for Russia in that it would mean their currency essentially suffered no ill consequences as a result of the war and the subsequent sanctions.

Why is the ruble gaining? Because Russia is using its leverage in terms of natural resource production to support the ruble. You want Russian energy? You need rubles. Russia is no longer playing nice, and it’s coming at the expense of the US dollar. At least it will over the long term.

Right now, America is inking deals with Europe to step in and replace the natural gas shipments that were previously coming from Russia. (I’m sure this was not at all part of the plan and a mere happy accident that all of this just fell into America’s lap.)

But over the long run, will Europe be able to continually afford American gas, when Russia’s is closer and cheaper? That’s the big question.

And the other thing is this: Russia and India seem poised to announce the creation of a ruble-rupee payment system that will enable the two countries to conduct business without having to use the US dollar.

The larger trend is de-dollarization all throughout Asia. None of these countries want to be at the mercy of the wicked and cruel Americans anymore. They are seeing what happened to Russia: America took over Ukraine, threatened Russia, and then sanctioned Russia into oblivion for daring to take action against Ukraine. The Americans will needle and provoke you to the point of going to war, and then destroy your economy for going to war.

America’s government is literally evil. It is run by wicked and terrible people. Why would a country want to have anything to do with America anymore beyond what is absolutely necessary?

De-dollarization is happening. These countries around the world like Russia, India, Iran, China, Saudi Arabia—they’re all looking to minimize their reliance on the US dollar. They’re looking to minimize their exposure to America altogether—including payments networks like SWIFT. Basically anything that is subject to American sanctions and asset seizures. If the Americans can freeze you out of it, then it is not real wealth.

That’s why de-dollarization is happening. America is increasingly erratic, greedy, power-mad and vicious. Who’s to say they won’t sanction someone simply for not building a rainbow colored statue of George Floyd? Who wants to deal with an insane, depraved, vindictive empire that is hell-bent on ensuring the rainbow and BLM flags fly above every capital city on earth?

Countries will look to limit their exposure to all things America as much as possible. Many feel like their values are in extreme misalignment with America’s first and foremost, and then they realize that America views itself as the only country that is allowed to pursue its interests. Any other nation that attempts to pursue its own national interests will be angrily and mercilessly punished by the Americans.

This is not a tenable situation for anyone else in the world. They see American power and influence waning, and at the same time America’s desperation to hold on to that power and influence make it capable of extraordinary and horrible things. What if an increasingly unstable America decides that “If I can’t win, then nobody can win,” and uses a nuclear weapon to prevent a rising rival from gaining more power and influence? You just don’t know.

So the point is, the other powerful nations of the world are moving away from the dollar and away from the US-dominated world financial and economic systems. Nobody wants to be at the mercy of the depraved, evil and increasingly psychotic American government anymore.

And, as I predicted before, that will eventually include Western Europe. They will get to the point where they no longer want to continue bearing the brunt of the consequences for America’s greed and arrogance. All these sanctions America is placing on Russia? Western Europe is paying the price for that. Canceling the Nord Stream 2 pipeline hurts Germany the most. But they had to do it because America has them by the balls, and if America says you’re not allowed to get gas from the Russians, it looks like millions of Germans can’t heat their homes this winter.

You will freeze and starve for the Global American Empire, Europe. You will sacrifice and suffer until the day the rainbow and BLM flags are flying above the Kremlin.

How much longer will Europe tolerate this arrangement? At what point will Europe conclude that its interests have diverged from America’s when it comes to Russia?

Objectively, it’s in Europe’s best interest to play nice with Russia. But they antagonize Russia because it’s what the Americans want.

How much longer will Europe keep doing this? How much longer will they continue antagonizing Russia on America’s behalf?

I think eventually America is going to be left high and dry here. I can’t imagine there are many governments out there that don’t wish to be free from the yoke of the GAE.

And that’s what’ll drive de-dollarization. Russia was just the first domino to fall. The chain reaction has begun.

The world financial system is now in the beginning stages of being cleaved in half, and a new Cold War has begun. There is now the American side, and then the China-Russia side. It hasn’t fully materialized yet, but it will eventually. Russia, the second-strongest military in the world and arguably the world’s leader in natural resource production, has been completely excommunicated from the dollar-dominated world financial system. Russia literally has no use for dollars anymore. None.

And so what’s happening is Russia and its friends–or really just any country that hates the US and no longer wants its economic health to be contingent upon the approval of the increasingly erratic US government–are building an alternative global financial system that is not dependent on the US dollar or the US government.

It’s Cold War 2.0.


The Yield curve is officially inverted:

Bond yields are skyrocketing as the market is essentially forcing the Fed’s hand. Bond traders are hiking rates themselves—Fed be damned. What this means is that government bond yields are leading, rather than following, the Fed funds rate. The market is genuinely panicking about inflation. We are seeing quite literally the biggest moves in the history of the bond market in percentage terms.

30 year mortgage rates are now spiking as rapidly as they ever have, and now sit near 5%. Mortgage rates are not as high as they’ve ever been, but they have increased by the most on record over a short period of time. It is now, in the span of under a year, more than 50% more expensive to get a mortgage in America.

And as a result, consumer confidence is near 2008 financial crisis lows as inflation ravages the American consumer. Gas is wildly expensive. Food is outrageously more expensive than it was even a year ago. And now homes are increasingly unaffordable. The average American is being financially decimated right now.

The average house in America costs over $500,000:

Home prices have almost doubled in a decade now.

This is insane. Most of my life, I’ve always thought a $500,000 home was in the category of an “expensive home,” as in most Americans simply could not afford to pay $500,000 for a home. Now it’s the average price.

More and more Americans are simply being priced out of the housing market. The American dream of home ownership is in shambles. We are becoming a feudal nation of renters, or people who are up to their eyeballs in mortgage debt and are effectively debt serfs.

This is not going to end well. The dream of home ownership is why we in America put up with so much bullshit–corruption from our government, being overworked at a job we hate, etc. We deal with all that shit so that we can own a home–so that we can have our own domiciles, our own castles, where we are the masters of our own domain. We finish out the basement, build a nice patio in the back, maybe even put in a pool–your home is your sanctuary. You are safe there, you can raise your family there, you can lie your weary head down to sleep there–having a home is what it’s all about.

And multiple generations of Americans have been raised to believe that the ultimate goal is to be able to afford a home. Millennials saw their parents buy homes and probably even upgrade to very nice homes over the years. A lot of Gen Xers and Boomers now even own multiple homes–the lake house retreat, or the beachfront condo down in Florida. Gen X and the later Boomers were raised by parents who were homeowners.

And over that time, living standards in the country increased. Material wealth has gone up–the average American today is wealthier in material terms than the average American of 1970.

But now it seems like that’s coming to an end. The days of each new generation having it better than their parents did unfortunately appear to be over, and it’s because home ownership is increasingly unattainable. It’s really difficult for people to afford homes nowadays.

And the problem, as I was alluding to earlier, is that people have grown up expecting to one day be able to afford a home. That’s their expectation. They feel as if it is their right as an American citizens to be able to afford a home once they reach adulthood and lock down a stable job.

That’s just no longer the case anymore. And this is going to cause some serious problems down the road, or maybe sooner than that. For three plus generations, Americans have come to believe it is their birthright to become homeowners, and now they’re realizing that’s no longer true.

You cannot just tell a homeowner society that they are now expected to transition to feudalism and expect them to accept it. That’s not going to happen.

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