U.S. default: Apocalyptic for markets, but also for Ukraine

Republicans and Democrats are again arguing fiercely in Washington about raising the debt ceiling. A US default would not only be catastrophic for the Western financial system. Washington would also have to completely rethink its involvement in Ukraine.

The U.S. is once again faced with the choice of either raising the debt ceiling or paying off $32 trillion in government debt. Every year, Washington faces the same crisis and the same drama unfolds: the Democrats claim to want to expand government spending, and the Republicans claim to want to cut it. The fact is, however, that both parties are merely two sides of the same coin, because at the end of every staged debt crisis, the U.S. debt ceiling is raised and U.S. federal spending increases instead of decreasing. Both parties claim that the United States always pays its bills and that the debt ceiling must therefore be raised.

But in reality, this is not the case at all. The United States is not paying its debts. Basically, they exhaust their credit card and then decide to increase the credit limit on that credit card. Washington has always been able to get away with this approach because the US dollar is the world's reserve currency. Put simply, this means that the U.S. government, as an issuer of the U.S. dollar, has the capacity to export its inflation worldwide. The U.S. dollar is in demand all over the world because commodities are priced in U.S. dollars. International trade is also conducted in US dollars. Countries that want to engage in international trade must hold substantial U.S. dollar reserves to facilitate this trade, and in doing so, absorb much of the U.S. monetary expansion. Nations that do not want to have anything to do with the U.S. dollar are harassed by Washington by military means or color revolutions in order to impose the U.S. dollar on them. This point is crucial to understanding why Washington will raise the debt ceiling.

This year, however, the debt crisis is a little different than in previous years, and there are several factors that are doing this and giving us insight into why Washington will raise the debt ceiling despite all the rhetoric. The first and most revealing reason why they will do this can be gleaned from observing US efforts in Ukraine. The previous efforts of the West in Ukraine, of course, under the leadership of Washington, are unprecedented in history. To date, the United States has spent about $ 113 billion in Ukraine. Janet Yellen, the former head of the US Federal Reserve and current US Treasury Secretary, has now also claimed that the treasury could run out of money as early as June 1. Such figures are simply incomprehensible to the casual observer. Why, one wonders? Why these unprecedented expenses, sanctions and demonization of Russia for the sake of Ukraine, when the treasury is almost exhausted. How can that be?

Quite simply, the answer is as follows: Russia, despite the endless Western propaganda, is a nation that has strengthened internally and externally under the leadership of Vladimir Putin. Russia has decided to completely abolish the US dollar. Also, the country is able to protect and ally with other nations that don't want to have anything to do with the U.S. dollar, and Syria and Iran are two of the best examples. Russia's growth is organic, while the growth of the United States under the current system is more like that of a heroin addict who needs ever larger doses of heroin to maintain the high. This is how the current system based on the fiat dollar works. If the United States cannot export its inflation in ever-increasing quantities, it will not be able to create ever-increasing deficits. If they cannot produce ever larger deficits, they dry out and shrink enormously. It is on this artificial mechanism that all of Washington's power rests.

A strong Russia, which grows organically and is free from the influence of the US dollar, poses a threat to Washington's ability to expand its money supply, because it can and has chosen to abolish the US dollar, and can also help other nations that wish to do the same. As a result, there are fewer countries to which Washington can export its inflation, which increases inflationary pressures in the United States. In order to maintain the status of the US dollar as the world's reserve currency, which is necessary to finance its ever-growing deficits, Washington has no choice but to try to contain Russia. The U.S. government has chosen Ukraine as its target for this proxy war, because it is on this mechanism that all its power rests. If you understand this fact, you will also be able to understand why the United States will never risk defaulting on the national debt and will raise the debt ceiling.

A default on the US national debt would immediately wipe out all of Washington's unprecedented efforts in Ukraine to contain Russia. A U.S. default would destroy the U.S. dollar, whose adoption has already declined sharply over the past decade, and especially since the U.S. began using it as a weapon against Russia and other nations. The U.S. dollar would crash overnight, causing the financial markets to sink into the abyss. Such an event would not only destroy the mechanism by which Washington has achieved the artificial, inorganic growth that the United States has been able to achieve since its departure from the gold standard in 1971, but it would also pull the rug out from under the feet of the artificial society built on the basis of this mechanism. The consequences would be catastrophic for Washington and its power would be broken almost overnight. The world as we know it would change drastically.

Politicians in Washington are crazy about the artificial power that the dollar mechanism brings. The right thing to do would be to massively cut U.S. federal spending starting today and put in place a plan to progressively and significantly reduce the U.S. national debt over the next generation. However, this is no longer possible because the society that has grown under the current mechanism is too incapable of implementing such a long-term solution. Since this mechanism has relieved society of its responsibility, total incompetence is the only logical result.

So Washington's solution is to simply increase its own credit card limit and print money to make the payments possible. This is the way out of drug addicts, which will ultimately lead to the complete destruction of the US dollar anyway. The U.S. is well on its way there, and has been for decades. They are now rapidly approaching the end of their ability to expand on the basis of the hegemony of the US dollar. Once Pandora's box is opened, i.e. the financing of government deficits by printing money on the basis of its status as the world's reserve currency, there is virtually no reverse. Basically, society is decaying from within.

Ultimately, politicians in Washington are dependent on the artificially created power that the status of the US dollar brings. They value him more than the society they are destroying, more than the lives of US citizens and Ukrainians. That is why they will do everything they can to preserve it. So all the drama and populist statements from Washington can be ignored. The U.S. debt ceiling will be raised, come what may, it will happen. If not, then the United States and Western Europe as we know them are finished.

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