- - Wednesday, December 24, 2014

The American economy surges, while stock market indices soar higher, and the U.S. dollar remains the currency of choice for global investors. All is finally well in the “best of all possible worlds” brought to us by President Obama after six long years.

Not so fast.

Mr. Obama and his naive, arrogant team are making a mistake with Russia that is worse in geopolitical terms than Jimmy Carter’s ousting Shah Mohammad Reza Pahlavi in Iran and worse in economic terms than imposition of the Smoot-Hawley tariff regime that deepened and extended America’s first Great Depression.

While we wind down to enjoy holidays and are especially vulnerable, Russia locks in place new moves that in 2015 could send America and our remaining foreign partners irretrievably into a tailspin, worse for us than what the Soviet Union suffered after President Reagan’s 1987 speech in long divided Berlin.

Hitting America and the West where it hurts most

Together with China and India, Russia rushes ahead with plans to create an alternative counter-weight to the U.S. dollar and Washington-dominated global financial system.

Pushing back suddenly and hard against the over-leveraged Japan, Western Europe and North America, Russia and its allies could succeed in dethroning the dollar as the primary reserve currency for the world, following which, all Americans would suffer in economic chaos.

Savers and investors understand brutal reality under the untenable status quo: No existing central bank can be trusted to behave responsibly when it comes to protecting the values of widely traded currencies. Since 1999, and especially after 2008, key benchmark borrowing rates have been suppressed to levels that remain well under annual rates of inflation

Moreover, no significant government understands it must live within its means by keeping annual spending close to annual revenues, or that debt obligations cannot rise endlessly as annual incomes stagnate and even fall.

Vladimir Putin long ago clearly and accurately warned of mounting existential dangers following policies which Mr. Obama nevertheless continues stubbornly to pursue.

Putin’s unheeded comments in January 2009

Opening the World Economic Forum at Davos, Mr. Putin warned citizens against letting national leaders concentrate too much power in the hands of the state. Somewhat ironically, Mr. Putin noted:

“Of course, the role of the state becomes more direct during crises – it is a natural response to the faults of the market. However, instead of improving market mechanisms there is always a temptation to enlarge the sphere of the immediate interference of the state in the economy.”

During the time of the Soviet Union, the role of the state in economy was made absolute, which eventually led to the total non-competitiveness of the economy. That lesson cost us dearly. I am sure nobody would want that history to repeat itself.”

Mr. Obama clearly disagrees. Since his first day in office, the president relentlessly has expanded the scope of the federal government.

As we close out 2014, the sad truth is that America long ago spent whatever “peace dividend” this nation once reaped. In fact, we have already borrowed against many years of such savings that increasingly seem illusory.

Since 2009, Mr. Obama has simultaneously reduced our military footprint, while dramatically increasing social welfare spending. Even so, total government spending remains well in excess of government revenues.

Can America truly afford prosecuting conflicts with Russia that likely will not be contained just in one territory, now that we have already piled up a gargantuan debt mountain?

Cold reality in December 2014

It remains difficult to tell truth from propaganda evaluating fast-moving developments in Ukraine and in relations with Russia.

Just as the Islamic State earlier this year was certainly not some “junior varsity team,” Russia is no mere “regional power.” Mr. Putin can do much to destabilize the geopolitical status quo to the detriment of the United States in our hemisphere, in Europe, throughout the Middle East, and across Asia.

Mr. Putin retains far stronger support inside Russia than Mr. Obama holds inside America — and Mr. Putin can hurt our European allies faster and harder than the United States can conceivably help.

What remains of America’s dwindling international credibility hangs by unraveling threads as the Obama administration ratchets up pressures against Russia.

Six long years down a damaged and corpse-laden path, Mr. Obama and his administration must challenge the wisdom of promoting regime change  anywhere while ignoring vexing problems inside our own nation.

Above all, Mr. Obama should remember that the next leader of Russia could prove even more hostile to America than Vladimir Putin.

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