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The Madness of Clowns

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Summary

In March, the West imposed financial sanctions on Russia, expecting the Rouble to turn to rubble. However, the opposite happened and the Rouble appreciated due to how floating rate sovereign currencies work. The West is now trying to impose a price cap on Russian Oil to significantly reduce funding for its illegal war, but this won't work as the source of funding is not in the West. Russia can demand that its exports are settled in Roubles or simply stop exporting since there is no longer anything on the other side worth importing. The West is not prepared to send its soldiers to fight in a foreign land, so it lashes out with financial measures that are ineffective. The article concludes that the West's reaction is the Madness of Clowns.

Q&As

How will the West replace Russian oil and gas?
The West will need to find spare pump capacity and enough LNG ships to move the oil and gas across the globe.

What will happen to power prices in the West?
Power prices in the West will likely increase due to a constrained supply of LNG.

What consequences will the West face for imposing financial sanctions on Russia?
The West will face the consequences of inflation in the West, a large appreciation in the value of the Rouble, and a potential Oil and Gas crisis.

What is the source of funding for Russia?
The source of funding for Russia is the legislature's power to tax.

How does the West react to the illusion of financial alchemy?
The West reacts to the illusion of financial alchemy with surprise and indignation when the punches don't land.

AI Comments

👍 This article provides an in-depth analysis of the effects of sanctions imposed on Russia. The author clearly understands the complexities of sovereign currencies and how they interact with the global economy.

👎 This article is overly long and difficult to follow. The author's writing style is overly verbose and the points could have been made more succinctly.

AI Discussion

Me: It's about the financial sanctions the West imposed on Russia and how it could potentially backfire. The article is saying that if the West refuses to buy Russian gas and oil, it could lead to an energy crisis, and that the West isn't prepared to send its citizens to die in a foreign land in order to push Russia back.

Friend: Wow, that's really interesting. So, what are the implications of this article?

Me: Well, the main implication is that the West may not get the results it was hoping for when they imposed sanctions on Russia. It could potentially lead to an energy crisis, and the West would be powerless to do anything about it. Another implication is that the West needs to rethink its strategies if it wants to push Russia back, as economic sanctions may not be enough. Finally, the article suggests that the West should consider more physical approaches to deal with Russia, such as diplomatic or military interventions.

Action items

Join the New Wayland community on Discord to discuss MMT topics.
Research the effects of financial sanctions on Russia and the implications for the West.
Analyze the implications of Russia becoming the swing producer in the Oil market.

Technical terms

Wormtongue Advisors: Advisors who give bad advice.
Floating Rate Sovereign Currencies: A currency whose value is determined by the market forces of supply and demand.
LNG: Liquefied Natural Gas.
OPEC: Organization of the Petroleum Exporting Countries.
G7: Group of Seven, a group of seven countries with the largest advanced economies in the world.
Rouble: The currency of Russia.
Euro: The currency of the European Union.
Gazprombank: A Russian bank.
Foreign Reserves: Assets held by a central bank in foreign currencies.
MMT: Modern Monetary Theory.