Here uber economist Paul Craig Roberts is interviewed for his views of Washington’s pressure on Russia and where it all may end. PCR responded that western financial institutions, e.g., the World Bank, IMF, and SWIFT currency transfer bank have been exploitive of the rest of the world, which therefore may soon abandon them. Asked what may happen to Russia, PCR explains that the “stupid” people running Washington have unknowingly invited all manners of “black swans,” i.e., unexpected events of large magnitude and grave consequences. For example Russia could retaliate for pressure on the ruble by delaying payment of its debts to European banks in 2015, which would promptly crash virtually all of them. Alternately, Russia may buy gold on the paper-gold COMEX and demand payment in bullion, as is anyone’s right. And if they are ever refused, COMEX (representing 80 times more paper gold than its supposed bullion bank) would crash, whereupon the demand for (and dollar price of) gold bullion would sky rocket. Another thing Russia could do would be to use its dollar holdings to buy up all the western world’s (greatly devalued) rubles and subsequently demand that any one dealing with Russia must either buy revalued-in-dollars rubles or be members of the BRICS countries, which would pay with their own currency at mutually agreed exchange rates. Finally, although PCR doesn’t think he would do it, Putin could announce that Russia will no longer sell energy to NATO, which would result in its instant disintegration as a military threat.

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Today Dr. Paul Craig Roberts warned King World News that the Russians are going to unleash what he called the "ultimate black swan" against the West.  Dr. Roberts also discussed how a terrifying series of events would then bring the Western financial system to it knees as the banking system completely collapses.

Dr. Roberts:  “I was listening to the news today and there were all these self-righteous people just happy as all get out that they had finally stomped Russia into the ground and ‘Russia is now finished,’ and Russia was broken and ‘would soon be an American vassal state where it belongs.'  And I was listening to this rot and got to thinking, ‘How can people be so utterly stupid?’  But they are, and they are just as stupid in Washington.

And in the meantime, as part of this process, Eric, we may see Russia unleash black swans that bring down the Western house of cards….

Blogger's Note: There is an audio interview associated with this which could not be embedded here.  So you must click the link below to play it.  The photo below the link is an image of the functional audio that you will find at the new site.

http://kingworldnews.com/dr-paul-craig-roberts-12-20-14/

You will also find Doctor Roberts' very impressive curriculum vite here.

Wonder which direction the U.S. economy is headed? Then turn to Paul Craig Roberts, Ph.D. in economics and practical experience as Assistant Secretary of the Treasury and associate editor of the Wall Street Journal. Here are some his remarks in this post: "As most Americans, if not the financial media, are aware, Quantitative Easing (a euphemism for printing money) has failed to bring back the US economy." "In the US QE caused inflation in stock and bond prices as most of the liquidity provided went into financial markets instead of into consumers’ pockets." "The extent of financial corruption involving collusion between the mega-banks and the financial authorities is unfathomable. The Western financial system is a house of cards resting on corruption."

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A Global House Of Cards — Paul Craig Roberts

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November 14, 2014 | Original Here                                            Go here to sign up to receive email notice of this news letter

A Global House Of Cards

Paul Craig Roberts

As most Americans, if not the financial media, are aware, Quantitative Easing (a euphemism for printing money) has failed to bring back the US economy.

So why has Japan adopted the policy? Since the heavy duty money printing began in 2013, the Japanese yen has fallen 35% against the US dollar, a big cost for a country dependent on energy imports. Moreover, the Japanese economy has shown no growth in response to the QE stimulus to justify the rising price of imports.

Despite the economy’s lack of response to the stimulus, last month the Bank of Japan announced a 60% increase in quantitative easing–from 50 to 80 trillion yen annually. Albert Edwards, a strategist at Societe Generale, predicts that the Japanese printing press will drive the yen down from 115 yen to the dollar to 145.

This is a prediction, but why risk the reality? What does Japan have to gain from currency depreciation? What is the thinking behind the policy?

An easy explanation is that Japan is being ordered to destroy its currency in order to protect the over-printed US dollar. As a vassal state, Japan suffers under US political and financial hegemony and is powerless to resist Washington’s pressure.

The official explanation is that, like the Federal Reserve, the Bank of Japan professes to believe in the Phillips Curve, which associates economic growth with inflation. The supply-side economic policy implemented by the Reagan administration disproved the Phillips Curve belief that economic growth was inconsistent with a declining or a stable rate of inflation. However, establishment economists refuse to take note and continue with the dogmas with which they are comfortable.

In the US QE caused inflation in stock and bond prices as most of the liquidity provided went into financial markets instead of into consumers’ pockets. There is more consumer price inflation than the official inflation measures report, as the measures are designed to under-report inflation, thereby saving money on COLA adjustments, but the main effect of QE has been unrealistic stock and bond prices.

The Bank of Japan’s hopes are that raw material and energy import prices will rise as the exchange value of yen falls, and that these higher costs will be passed along in consumer prices, pushing up inflation and stimulating economic growth. Japan is betting its economy on a discredited theory.

The interesting question is why financial strategists expect the yen to collapse under QE, but did not expect the dollar to collapse under QE. Japan is the world’s third largest economy, and until about a decade ago was going gangbusters despite the yen rising in value. Why should QE affect the yen differently from the dollar?

Perhaps the answer lies in the very powerful alliance between the US government and the banking/financial sector and on the obligation that Washington imposes on its vassal states to support the dollar as world reserve currency. Japan lacks the capability to neutralize normal economic forces. Washington’s ability to rig markets has allowed Washington to keep its economic house of cards standing.

The Federal Reserve’s announcement that QE is terminated has improved the outlook for the US dollar. However, as Nomi Prins makes clear, QE has not ended, merely morphed. http://www.nomiprins.com/thoughts/2014/11/10/qe-isnt-dying-its-morphing.html
 
The Fed’s bond purchases have left the big banks with $2.6 trillion in excess cash reserves on deposit with the Fed. The banks will now use this money to buy bonds in place of the Fed’s purchases. When this money runs out, the Fed will find a reason to restart QE. Moreover, the Fed has announced that it intends to reinvest the interest and returning principle from its $4.5 trillion in holdings of mortgage backed instruments and Treasuries to continue purchasing bonds. Possibly also, interest rate swaps can be manipulated to keep rates down. So, despite the announced end of QE, purchases will continue to support high bond prices, and the high bond prices will continue to encourage purchases of stocks, thus perpetuating the house of cards.

As Dave Kranzler and I (and no doubt others) have pointed out, a stable or rising dollar exchange value is the necessary foundation to the house of cards. Until three years ago, the dollar was losing ground rapidly with respect to gold. Since that time massive sales of uncovered shorts in the gold futures market have been used to drive down the gold price.

That gold and silver bullion prices are rigged is obvious. Demand is high, and supply is constrained; yet prices are falling. The US mint cannot keep up with the demand for silver eagles and has suspended sales. The Canadian mint is rationing the supply of silver maple leafs. Asian demand for gold, especially from China, is at record levels.

The third quarter, 2014, was the 15th consecutive quarter of net purchases of gold by central banks. Dave Kranzler reports that in the past eight months, 101 tonnes have been drained from GLD, an indication that there is a gold shortage for delivery to physical purchasers. The declining futures price, which is established in a paper market where contracts are settled in cash, not in gold, is inconsistent with rising demand and constrained supply and is a clear indication of price rigging by US authorities.

The extent of financial corruption involving collusion between the mega-banks and the financial authorities is unfathomable. The Western financial system is a house of cards resting on corruption.

The house of cards has stood longer than I thought possible. Can it stand forever or are there so many rotted joints that some simultaneous collection of failures overwhelms the manipulation and brings on a massive crash? Time will tell.

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