The Economic Nuclear Option

 

The  Economic Nuclear Option: Russia’s Threat To Dump Treasuries

Kerry gives Russia options to avoid sanctions

Summary

  • An advisor to President Putin suggested that if the US dares to impose sanctions on Russia for invading Crimea, Russia and its allies should retaliate by dumping US Treasury bonds.
  • Should US policy-makers take this threat seriously? Should investors factor this risk into their assessments of the US economy and US financial asset prices?
  • The answers to these questions are clear, although they will surprise many people.

Last week it was widely reported in the press that Sergei Glazyev, a man described as an “advisor” to President Putin, issued the following “threat” in response to the possibility of US sanctions on Russia:

“We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.”

 

World War Three is at our doorstep and it is just a matter of time before all hell breaks loose…starting with the US dollars collapse!

Putin has threatened that if the US imposes sanctions they will dump the dollar. Remember what happened a couple of days ago? Russia and China united. So even if Russia doesn’t affect the US that much—their partner—-China will!