- - Sunday, March 2, 2014

ANALYSIS/OPINION:

While Americans fawned over Hollywood stars on Oscar night, Vladimir Putin executed a bold plan to return Ukraine to Russia’s fold, defying President Obama, the U.S. and our enfeebled Western alliance.


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An “Iron Curtain” has descended in eastern portions of Ukraine, where stage-managed crowds have welcomed Russian forces. Meanwhile, families are fretting throughout western Ukraine, where Moscow’s influence is hardly a fond memory.

We are witnessing a geopolitical and human tragedy whose consequences for investors in fiat currencies such as the U.S. dollar, the euro and the Japanese yen could prove devastating.

The sinews of peace are stretched to the breaking point

Russia is subjecting 44.6 million Ukrainians to its dominion, a move that increases Russia’s population of 142.5 million by 31 percent.


SEE ALSO: U.S. tempers tough talk: Military force an unlikely option in Ukraine


In this naked aggression, Russia is following the dangerous precedent set by the U.S. in fomenting “regime change,” but it is using military force overtly.

Gone in less than one week are pretenses that Moscow respects the rights of sovereign nations to self-determination.

Gone as well may be the “Pax Americana” that broke out in 1991 with the demise of the Soviet Union.

Regarding Ukraine, Mr. Obama’s weak-kneed response has not stopped Russia and likely emboldens enemies and rivals in contested flashpoints worldwide.

As bad as the situation is in Ukraine, much larger threats loom should Russia decide to attack the overleveraged and poorly regulated Western financial system.

Exploiting the potential demise of U.S. dollar dominance

Mr. Putin must understand that the “Achilles heel” of the global financial system in 2014 is its reliance on the “cheap” money loaned by Western central banks at interest rates lower than the annual increases in consumer prices.

As Russia advanced into Georgia in 2008, Mr. Putin challenged Treasury Secretary Hank Paulson by encouraging China to join Russia in dumping dollar-denominated securities.

The U.S. is much worse off in 2014 than at the start of the 2008 financial crisis. Economic stimulants such as deficit spending and monetary easing have not restored the U.S. and Western allies to a robust growth track.

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