Monthly Archives: January 2025

Anglozionism

The Primary Cause of October 7 Was Donald Trump. Here’s the Proof

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by Mike Whitney via Unz Review

No one is more responsible for the attacks of October 7 than Donald Trump. It was Trump who initiated the Abraham Accords that were designed to “disappear” the Palestinian issue and drive a stake into the heart of the two-state solution. By seducing Arab leaders into bilateral agreements that shrugged off earlier commitments to the establishment of a sovereign Palestinian state, Trump moved to crush Palestinian aspirations and eliminate the issue forever. Facing deepening isolation and irrelevance, Hamas lashed out hoping that the international community would take notice and come to its aid. In short, the primary cause of October 7 was Trump’s Abraham Accords, the fake peace initiative that paved the way for genocide.

It’s worth noting, that Joe Biden confirmed much of this analysis when he opined on October 25:

“I’m convinced one of the reasons Hamas attacked when they did… is because of the progress we were making towards regional integration for Israel and regional integration overall… ”

By “regional integration”, Biden is referring to the Abraham Accords which were promoted as a way for Arab countries to “normalize” relations with Israel and “to advance the peace process in the Middle East”. But don’t be fooled by the hype. The Accords were merely Phase 2 of Trump’s lopsided giveaway to Israel. As some readers might recall, Phase 1 of Trump’s so called Middle East Peace Plan “provided for a unified Jerusalem as Israel’s capital and Israeli sovereignty over the Jordan Valley and the principal Jewish settlements in the West Bank, amounting to annexation of roughly 30% of the territory. The Palestinians were given some desert areas near the Egyptian border, limited sovereignty, and a non-contiguous state with numerous Israeli enclaves…. ”

So, with a wave of his hand, Trump broke with all of his presidential predecessors, all the applicable UN Resolutions, and with traditional US foreign policy dating back five decades. And this was just the beginning because—as we know now—the Abraham Accords set the dominoes in motion leading inexorably to the flattening of Gaza and the displacement of two million civilians. As author of the Accords, Trump is largely responsible for the unfolding catastrophe.

Keep in mind, the Accords really had nothing to do with peace or normalization. As senior fellow at the Arab Center Dana El Kurd said, “to frame the Abraham Accords as a “peace”(agreement) that increased stability between signatories is deliberately misleading….To be sure, Arab-Israeli normalization cannot be considered “peace,” but should rather be understood as authoritarian conflict management. Through this lens, it is possible to understand more clearly how the accords have changed the landscape of the region, and why pursuing such a policy makes for an unsustainable future…

“Authoritarian conflict management”?? What does that mean?

It means that the inducements for participation in the Accords had more to do with strengthening domestic repression than promoting regional peace. Here’s more:

For example, the UAE has expanded the scope of its engagement with Israeli companies specializing in repressive technologies and has invested in the Israeli defense industry. The Moroccan government has similarly taken advantage of normalization to acquire similar capacities. The impact was felt very directly in some cases, with journalists, activists, and intellectuals targeted and often imprisoned.This is a win-win for Israel and the signatory countries. Arab regimes can crack down on any remaining vestiges of dissent in the region and Israel can facilitate investment in its defense and cybersecurity industries while helping to minimize spaces critical of its role in the region and its ongoing oppression of the Palestinians.

To be clear…. Israel is not the only source of surveillance or other repressive technologies, and Arab governments have certainly sought out other sources. Nevertheless, Arab-Israeli normalization exacerbates these dynamics and increases the capacities of these regimes by diversifying their sources of support….Assessing the Abraham Accords, Three Years On, The Arab Center

So, the Abraham Accords are not an attempt to “advance the peace process in the Middle East” but a plan to reinforce the tyrannical dictatorships the US and Israel need to promote their regional agenda, which means that the only normalization that is going on, is the normalizing of the 75-year-long occupation and the ongoing slaughter of Palestinian women and children. Here’s more:

Labeling Arab-Israeli normalization as a form of “peace” is therefore inaccurate. Rather, it is a process that rejects genuine negotiations and deeper reflections on the reasons for conflict, instead using state-level coercion and power to achieve various aims. In other words, the Abraham Accords and everything that has followed since can only be seen as authoritarian conflict management….(because) any normalization of ties with Israel entails repression, as regimes begin to proactively crack down on those who would oppose this development… Assessing the Abraham Accords, Three Years On, The Arab Center

And who would oppose the normalization of relations with Israel?

Just about every Arab in the Middle East, that’s who.

And that brings us to our next point…

As everyone who has followed developments in the region knows, Israel never had any intention of implementing UN Resolution 242 or allowing the establishment of a Palestinian state. The Abraham Accords were conjured up by Trump’s son-in-law Jared Kushner, who wanted to sidestep UN resolutions while vanishing the Palestinian issue once and for all This was Trump’s basic strategy and it forced Hamas to take drastic action to disrupt the normalization process while refocusing attention on Palestine.

We’ve already mentioned that Trump’s cynically named “The Deal of the Century” convinced Hamas that the Palestinian people faced an existential crisis that could only be averted by launching a massive attack that would force other countries to get directly involved. That was the rationale that drove the October 7 attacks. Even so, few analysts have seen through the ruse and revealed the truth of what has actually transpired. Branko Marcetic is one such journalist who revealed the details of Trump’s fraud in a riveting article at Responsible Statecraft. Here’s an excerpt from his piece:

… the U.S. Department of Homeland Security under Donald Trump warned in October 2020 that terrorist violence was set to be imminently inflamed…. (DHS) pointed to the Abraham Accords: the U.S.-led effort to normalize relations between Israel and its Arab neighbors… The resulting Abraham Accords were, at least in the neoconservative world, considered a stroke of “genius.” Rather than finding a solution to the seemingly intractable question of Palestinian statehood, it simply sidelined it….

The signers dropped this long-standing precondition as they re-established diplomatic relations and deepened security and economic cooperation with Israel, while Trump lavished them with rewards, like an arms deal for the United Arab Emirates (UAE), and U.S. recognition of the annexation of West Sahara for Morocco. It effectively supplanted the Saudi government’s Arab Peace Initiative, which since its 2002 introduction had been the foundation of the Arab world’s program for resolving the conflict, placing the Palestinians front and center.

The new normalization agreements’ foundational and cynical assumption was that the plight of the Palestinians could and would be safely ignored and forgotten about by both the region’s governments and the broader international community… As Arab states began gradually deepening ties with Israel, they increasingly backed away from their historic positions…

the normalization process continued despite what would earlier have been viewed as an unacceptable provocation against both Palestinians and Islam itself was celebrated by the accords’ supporters, as proof that ongoing repression of Palestinians could indeed be safely ignored. But the Palestinian issue could not simply be wished away, and the signing of the pacts created a set of contradictions that fueled the tensions that erupted October 7.

Palestinians themselves, across opinion surveys, with both the Palestinian Authority and Hamas calling it a “betrayal,” a “treacherous stab,” and “grave harm.” Hamas also called for “an integrated plan to bring down normalization.” …….

while Hamas had reportedly planned this operation for two years, and claimed it was motivated by years of violence at Al-Aqsa, its attack also can’t be understood without the bipartisan push for Israeli-Arab normalization at the Palestinians’ expense, and the outrage, anger, and despair it has inspired.

What is clear — from Hamas’s extraordinary violence, the wider regional war it threatens to spark, as well as the major pro-Palestinian protests across Arab countries in response to Israel’s bombing campaign — is that almost every assumption that undergirded the Abraham Accords was disastrously wrong, not least the idea that dismissing the Palestinians would make for a more peaceful Middle East. Forget ‘peace,’ did Abraham Accords set stage for Israel-Gaza conflict?, Responsible Statecraft

Excellent summary, but let’s recap:

  1. Officials at the Department of Homeland Security warned Trump that trouble was brewing because the Abraham Accords were inciting “terrorist violence”. (So, October 7 was not unexpected. It was predicted.)
  2. Homeland Security expressed their concerns that instead of “finding a solution to the… question of Palestinian statehood, (the Accords) simply sidelined it…. (Once again, the proximate cause of October 7 was identified but ignored.)
  3. Instead of dealing with the Palestinian issue fairly and rationally, “Trump lavished the (Arab leaders) with rewards” with the clear intention of coercing their support. (Sounds like bribery)
  4. “As Arab states began gradually deepening ties with Israel, they increasingly backed away from their historic positions,” which refers to the Arab Peace Proposal of 2002 that required all Arab states to oppose normalization with Israel until Israel agrees to the establishment of a Palestinian state on land occupied since 1967.
  5. Hamas also called for “an integrated plan to bring down normalization.” (Very important.) Hamas identified “normalization” (The Abraham Accords) as an existential threat that had to be countered.
  6. Hamas’s “attack also can’t be understood without the bipartisan push for Israeli-Arab normalization at the Palestinians’ expense, and the outrage, anger, and despair it has inspired.” In short, the Abraham Accords precipitated the October 7 attacks.

One Last Thought:

There is another intriguing aspect of the October attacks that has been largely ignored by mainstream pundits, and it is linked to this one short question: What was the strategic objective of the October 7 attacks?

What was Hamas trying to achieve?

The media would like us to believe that Hamas had no strategic objective at all, that they simply wanted to “kill or capture Jews” to satisfy some deeply racist urge. But that’s nonsense. We’ve already shown that Trump had approved the seizure of more Palestinian land while—at the same time—he was actively sabotaging Palestinian relations with its Arab neighbors. What that proves is that it was Hamas’s ‘back that was against the wall’, not Israel’s. Palestinian statehood faced certain obliteration if steps were not taken to reverse the course of events and prevent the Palestinians from being further isolated, marginalized and “disappeared”.

But how could a small, poorly-armed militia do anything that could significantly change the outcome sought by both Israel and its superpower friend?

That was the conundrum Hamas faced, and that is why they settled on a desperate strategy that involved goading Israel into an overreaction that would allow the rest of the world to see the inhumanity and viciousness of the Zionist state. That was the goal, and we know it was the goal because the plan was presented in great detail by Hamas’s political and military leader, Yahya Sinwar, who released the following statement in a short video on Twitter. Here’s what he said:

“Within a limited period of months—which I estimate will not exceed one year—we will force the occupation to face two options: Either we force it to implement international law, respect international resolutions, withdraw from the West Bank and Jerusalem, dismantle the settlements, release the prisoners, and ensure the return of refugees, achieving the establishment of a Palestinian state on the lands occupied in 1967, including Jerusalem; or we place this occupation in a state of contradiction and collision with the entire international order, isolate it in an extreme and powerful manner, and end its integration in the region and the entire world, addressing the state of collapse that has occurred on all fronts of resistance over the past years.” SuppressedNews

The statement above lays out Sinwar’s strategy in lucid, unambiguous prose. October 7 was a clear provocation aimed at taking advantage of Israel’s insatiable appetite for violence and bloodshed. Sinwar not only knew that Israel would overreact; he was counting on it. He expected that they would do precisely what they have been doing for the last 15 months; destroying everything in their path, killing tens of thousands of civilians, and reducing the entire Gaza Strip to rubble. Israel’s overreaction was the only way that Hamas could breathe new life into the Palestinian cause, because it was the only way they could attract the sympathy and support of the international community. That was Sinwar’s strategy in a nutshell; provoke Israel and hope that other nations would feel a moral obligation to intervene and stop the slaughter. It was a risky gambit, but it was the only option available.

As it happens, Sinwar’s strategy has largely succeeded except for the fact that Washington has blocked all efforts by the international community to resolve the crisis, deploy peacekeepers, or implement the relevant UN Resolutions. Even so, Israel remains (as Sinwar predicted) “in a state of contradiction and collision with the entire international order, (and) isolated in an extreme and powerful manner.” Recent surveys indicate a significant decline in global support for Israel…. (A Morning Consult poll showed that favorable views of Israel decreased in 42 out of 43 countries polled since the war.) and the reputational damage (to Israel) gets worse by the day. If there is an attempt to “clean out” Gaza (as Trump put it), then Israel will be branded as a global pariah for decades to come, perhaps, forever. And while that designation may not bother Israelis today, eventually they will see how it undermines their broader interests and their collective sense of self-esteem. Eventually, Israel will either comply with international resolutions and humanitarian law or face a painful future of hardship, isolation and disgrace.

In any event, Sinwar clearly pursued the only strategy that had any chance of succeeding, in fact, he might have pulled it off had Washington withheld its voluminous provision of 2,000 lb. bombs and other lethal weaponry. But now that the US has become a party to the genocide, the struggle for statehood is bound to take longer. It will require the same grit and determination the Palestinian people have shown since the conflict began 76 years ago. Eventually, they will prevail.

geopolitical issues

The Master Plan – Turn Russia into WWII Leningrad

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by Claudiu Secara

In response to those who found Algora’s skepticism about Trump to be gross bias and a betrayal of their hero, when we questioned what they assert to be his single-handed revolution in the US against the power elites:

I cannot believe that someone deeply immersed in the shenanigans of New York City’s notorious real estate mafia, in conjunction with the Jewish underworld, such as Roger Cohen, etc., has transformed himself into a Robin Hood combined with Mother Teresa all at once.

Rather, I see a different explanation. And that has to do with the real concern of the top 0.001 percent of US elites that they might have miscalculated their strategy, on multiple levels. The Masters of the Universe hired the neocon Democrats with their uncooked idea of how to blow up the adversarial Russia and China as well as the plebeians at home. Their plan to provoke Russia in Ukraine, while simultaneously unleashing of the Covid bioweapon against both China and the home resistance, obviously backfired. Furthermore, the wide-scale promotion of Woke ideology, transsexual diversions and unrestrained illegal immigration threatened the very foundation of the rule and order of the Masters of the Universe. The last straw seems to have been the Israelis’ unrestrained pursuit of genocide in Gaza and their unashamed ethnic cleansing of the Palestinians from their homeland, in full view of the world.

Faced with a growing revolt across the domestic realm as well the obvious defeat in Ukraine, the Masters decided to turn to an alternative strategy and their alternative man, Mr. Trump, kept in reserve all this time.

Just like in the movies, so it is in real life. “Mr. Smith goes to Washington” has shifted from the cinema screens to live drama in the form of the Senate confirmation hearings. Trump is the new hope, all across the country and half of the world, and he can cast the evil characters out of the temple of Congress just about like Jesus is said to have done to the moneybags in Jerusalem 2,000 years ago.

Not only that, but with a motion of his magic wand, he stopped the carnage in Gaza and sucked as if by magic the entire Israeli army out of Gazan territory. We can see the strings attached to his arms and his neck as he still waffles between his true allegiance to the ethnic genocide (or at least ethnic cleansing) of the Palestinians, and following his Masters’ commands. His Zionist aim is to make a deal with whomever will agree to take in the Palestinians off that piece of real estate and collect a big reward from his friend, Netanyahu, by turning Gaza into a private Israeli sea resort with guess-who as the real estate mogul in the role of chief contractor.

But Trump has to follow the higher order of priorities, which demands that he needs to focus on Russia and on China. What we see on those two fronts is a very difficult situation for the Masters of the Universe. Ukraine has turned into a debacle for them, while China is literally eating America’s lunch. What are they going to do about those two?

Most probably, escalate. Taking the high road of faking peace, while re-arming Europe; removing the one or two mavericks, nuisances like Fico and Orban, and gearing up into a hybrid war of attrition against Russia. As far as China? Most probably no one has a formula as of yet. That could only be tackled seriously if and when the Russian resistance folds. Until then, China is only a distant target that may never be reached.

But will the Masters be able to crack the Russian defiance? The goal is to turn the whole of Russia into the WWII Leningrad* under the siege. Will they?

Note:

* The Czech Senator Nemcova posted “As we remember the victims of the Holocaust and witness the genocide of the Ukrainian people, today Russia celebrates the anniversary of the liberation of Leningrad from the siege during World War II. Although they do not need to celebrate but to experience it again. – Sanctions should be even stricter. Fingers crossed!” she added.

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Abraham Did Not Exist – No, God Chose No Tribe

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Here is a compilation of several sources discussing the myths of the Old Testament and the New Testament. Even a short history shows that in fact it was known since 1550s that the whole Abrahamaic story was copied from . . . India. Even Voltaire knew that.*

It should be of no surprise that Abraham never existed, Abraham is a blatant ripoff of an earlier religion out of India, Brahma marries his sister Saraswati, that myth is written as Abraham marrying his sister Sara. Sara(h)s maidservant Hagar is the Ghaggar River in India. King David is a metaphor for the Dravidian speaking peoples of South India. Isaac is also a ripoff, Ishaak, the great friend of Shiva. Yet modern people believe those OT stories literally. They are not, they are rewritten mythologies, fake the first time and double fake in the second rehashing. This implies the entire OT is fake, not literal, not historical. Thus there are no descendents of Abraham because he did not exist. Plus, no god chose no tribe, that is just tribal propaganda meant to establish dominance of that tribe over the goy.

*

Brahma is father of All (RV7.97b), while Abraham is father of many nations (Gen 17:5)

Brahma’s wife is his sister Sarasvati (SV7.96.2), and she was a great beauty (AV19.17; KenU3), while Abraham’s wife, Sarah, is also his sister (Gen 20:12) and is beautiful (Gen 12:14).

Saraswati is known for being a goddess of water, the name means something like retains water. The River Saraswati (PraU1.6) has a tributary named Ghaggar, reflective of the name of Sarah’s maidservant, Hagar. Sarah from Hebrew (שרר sharar) means ruler and / or retains water.

Brahma and Sarasvati lived together for 100 years, then had their first son, while Abraham was 100 and Sarah was 90 when they had Isaac (Gen 21.5).

Brahma’s son (or grandson), Daksha, is killed as the offering sacrifice before all the gods, while Abraham almost offers his son Isaac. At the pleading of his father, Brihaspati (born from Brahma’s body, RV3.23.1) Daksha** is resurrected with the head of a ram, while Abraham finds a ram caught in a bush to sacrifice in place of his son Isaac (Gen 22:1-13). Brahma’s hidden offering (AV19.42.1-2), relates to Abraham’s offering of a ram caught in a bush.

There are many more overlaps. But it’s not just textual similarities. Aristotle*** says “Jews are derived from the Indian philosophers; they are named by the Indians Calami, and by the Syrians Judaei, and took their name from the country they inhabit, which is called Judea.” (Book I:22.) Further, Megasthenes, an ambassador of Seleucus I of Syria to India, in 288BC wrote in his book Indika that the Jews were an Indian tribe or sect called Kalani.

It is quite possible and often speculated that some Jewish ancestors were of the priestly class of Brahmans that headed west, bringing with them writing abilities.

*

Excavations have found no trace of a settled population around Judea and Jerusalem during the 10th century BC, when the Kingdom of David and Solomon was supposed to have flourished. A community that could have supported a kingdom did not form in Judea until at least a century later, Professor Thompson said. Jerusalem did not become a large and politically influential city until about 650 BC.

He added: ‘It is out of the question that Saul, David, and Solomon, as described as kings in the Bible, could have existed. I think the biblical accounts are wonderful stories, invented at the time when Jerusalem was part of the Persian Empire in the 5th Century BC.’

The Israelite nation, he believes, was a creation of the Persian Empire and was formed around 450 BC. But the people who were moved to Jerusalem at that time were not the descendants of those who had been deported from the city after the Bablyonian capture in 586 BC. They were descendants of Syrian, Philistine, Phoenician, Judean, and other peoples who had also been forcibly deported to Babylon.****

Notes:

* https://www.eoht.info/page/Abraham%20and%20Brahma

** The Daksha story is present in the Shiva and Vayu Purana. Daksha’s head wasn’t sacrificed, he was killed to break the sanctity of the yagna. He was killed by Veerbhadra, an ansh of Shiva for being responsible for the suicide of Daksha’s Daughter and Shiva’s wife, Sati. Plus it wasn’t Brihaspati who revived Daksha, it was Shiva who revived him on the pleading of Brahma.

*** The quote by Aristotle, it is actually a quote from Josephus, who attributes it to Clearchus, who is said to attribute it to Aristotle.

**** https://www.independent.co.uk/news/leading-archaeologist-says-old-testament-stories-are-fiction-1500431.html

Selected References:

https://www.eoht.info/page/Abraham%20and%20Brahma

https://www.reddit.com/r/religion/comments/z3g3pf/brahma_abraham_and_sarah_saraswati_how_related/

https://vridar.org/2020/02/08/interview-with-thomas-l-thompson-1/

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The War over Ukraine, the War among the Oligarchs?

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Boiling the Frog says:

I was sympathetic to this argument earlier in the war, but not any more. Putin’s ‘merciful’ conduct of the war is prolonging it and causing more death on both sides. Furthermore, his “red lines” have become a joke both in the West and inside Russia (Strelkov is in jail for saying so). Every time Putin draws one the enemy crosses it and nothing happens. This projects weakness almost as much as battlefield defeat would and it further encourages the enemy (NATO) to go further. Daily drone attacks on Russia’s critical energy infrastructure are now commonplace. Russians want to know why, in return, the Kremlin has not ordered the annihilation of Ukraine’s.

It seems inevitable that NATO forces will become involved directly in the war. My expectation, based on what has gone before, is that yet more Russian red lines will be drawn and then ignored. More importantly, NATO commanders are being encouraged to think this way by the precedent set so far. Ukraine will therefore likely end up flooded with NATO troops. At this point Russia is certain to lose the war according to the war aims Putin outlined almost 3 years ago. Putin has said that war with the whole of NATO would inevitably lead to the use of nuclear weapons, as Russia could not possibly win a conventional war. Why should NATO commanders not think this in not yet another meaningless red line?

Helmer’s latest piece seems an accurate description of the real decision-making structures in this war – one side’s oligarchs against the others’. The little people dying on both sides are irrelevant. Peace will come when the oligarchs decide among themselves that it should. The sad truth is Putin is not, as he is portrayed in the West, a nationalist leader who represents the interests of Russian patriots. He has always represented the oligarchs’ interests and short of a military coup, which seems an extremely remote possibility, the peace that comes will not be one that ordinary Russians will benefit from. Of course the same is true on the other side. An independent Ukraine was always an impossibility. BlackRock owns the country formerly known as Ukraine now.

Economics/Statistics

China’s DeepSeek Bombshell Rocks Trump’s $500B AI Boondoggle

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by Mike Whitney via Unz Review
Excerpt

The future of humanity is being decided as we speak. And it is not being decided on a battlefield in Eastern Europe, or the Middle East or the Taiwan Strait, but in the data centers and research facilities where technology experts create “the physical and virtual infrastructure to power the next generation of Artificial Intelligence.” This is a full-blown, scorched-earth free-for-all that has already racked up a number of casualties though you wouldn’t know it from reading the headlines which typically ignore recent ‘cataclysmic’ developments. But when President Trump announced the launching of a $500 billion AI infrastructure project (Stargate) on Tuesday just hours after China had released its DeepSeek R1—which “outperforms its rivals in advanced coding, math, and general knowledge capabilities”—it became painfully obvious that the battle for the future ‘is on’ in a big way. And this is not a battle that either side can afford to lose. Here’s how technology expert Adam Button summed it up:

Imagine we’re back in 2017 and the iPhone X was just released. It was selling $999 and Apple was crushing sales and building a wide moat around its ecosystem.

Now imagine, just days later, another company introduced a phone and platform that was equal in every way if not better and the price was just $30.

That’s what unfolded in the AI space today. China’s DeepSeek released an opensource model that works on par with OpenAI’s latest models but costs a tiny fraction to operate.Moreover, you can even download it and run it free (or the cost of your electricity) for yourself.

The product is a huge leap in terms of scaling and efficiency and may upend expectations of how much power and compute will be needed to manage the AI revolution. It also comes just hours before Trump is expected to unveil a $100 billion investment in US datacenters. The model shows there are different ways to train foundational AI models that offer up the same results with much less cost. It also opens up far more applications for AI that would have been too expensive to run previously, which should broaden the applications in the real economy. China’s DeepSeek may have just upended the economics of AI, forex live

Imagine the panic that is spreading across western tech capitals right now. AI was supposed to be the fast-track to absolute societal control and oligarchic rule into the next millennia, but now those pesky Chinese have overturned the applecart leaving western elites with a problem they might not be able to fix. (See—Unchecked AI will lead us to a police state, edri ) They expected that their microchip sanctions would sabotage China’s AI efforts for at least a decade-or-so but, instead, China has come roaring back with a system that has left the tech giants gasping for air.

Of course, China’s eye-popping strides in technological development are nothing new as editor Ron Unz pointed out in a recent article where he noted that “between 2003 and 2007, the US led in 60 of the 64 technologies.” Whereas, as of 2022, “China led in 52 of the 64 technologies.” That’s not a competition; that’s a beat-down in a parking lot. Here’s Unz:

China now leads the world in many of the most important future technologies. The success of its commercial companies in telecommunications (Huawei, Zongxin), EV (BYD, Geely, Great Wall, etc.), battery (CATL, BYD) and Photovoltaics (Tongwei Solar, JA, Aiko, etc.) are directly built on such R&D prowess.

Similarly, the Chinese military’s modernization is built on the massive technological development of the country’s scientific community and its industrial base…. With its lead in science and technology research, China is positioned to outcompete the US in both economic and military arenas in the coming years…. American Pravda: China vs. America, Ron Unz, Unz Review

None of this should come as a surprise, although the timing of DeepSeek’s release (preempting Trump’s Stargate announcement) shows that the Chinese don’t mind throwing a wrench in Washington’s global strategy if it serves their regional interests, which it undoubtedly does. Here’s a bit more background from an article by Benj Edwards at Ars Technica:

On Monday, Chinese AI lab DeepSeek released its new R1 model family under an open MIT license, with its largest version containing 671 billion parameters. The company claims the model performs at levels comparable to OpenAI’s o1 simulated reasoning (SR) model on several math and coding benchmarks….

The releases immediately caught the attention of the AI community because most existing open-weights models—have lagged behind proprietary models like OpenAI’s o1 in so-called reasoning benchmarks. …

The R1 model works differently from typical large language models ….They attempt to simulate a human-like chain of thought as the model works through a solution to the query. This class of what one might call “simulated reasoning” models, or SR models for short, emerged when OpenAI debuted its o1 model family in September 2024. …

DeepSeek reports that R1 outperformed OpenAI’s o1 on several benchmarks and tests, including AIME (a mathematical reasoning test), MATH-500 (a collection of word problems), and SWE-bench Verified (a programming assessment tool)….

TechCrunch reports that three Chinese labs—DeepSeek, Alibaba, and Moonshot AI’s Kimi—have now released models they say match OpenAI’s o1’s capabilities, with DeepSeek first previewing R1 in November. Cutting-edge Chinese “reasoning” model rivals OpenAI o1—and it’s free to download, ars technica

This is a very big deal. The United States intends to dominate the world in this critical technology and yet the upstart Chinese have not only produced a system that is every bit as good as America’s best, but have made it more affordable, more accessible and more transparent. What’s not to like?

(Creepy Larry Ellison predicts “citizens will be on their best behavior” with an AI police-state surveillance system.)

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Very Bleak Assessment of Russia’s Prospects by Igor Strelkov

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IGOR STRELKOV /letter fragment/ (machine translation)

Of course, I was extremely worried about the messages about the events of the first half of January, which were sent to me on the 15th-16th (before that there was no mail for over two weeks). On the one hand, nothing unexpected happened – all the actions of recent “partners” and “friends” were predicted in advance. On the other hand, it is one thing to talk about the inevitability of a “volcanic eruption”, and quite another to “get caught in it”… Analytical “foresight” is of little help here, if there are no means to correctly and promptly respond to the “elements” (and I have not had and do not have anything like that, unfortunately).

So, on to the main news:

— I consider the most important news to be that China has shown its readiness to comply with US sanctions against our tanker fleet (blocking 5 tankers with Russian oil in Chinese territorial waters). It has been clear to me for a long time that China is far from supporting Russia in the current NWO and (at best) was ready to “benevolently tolerate” all the inconveniences associated with it for some time. It has also been clear for a long time that “China’s patience” in connection with the said inconveniences is either running out or has expired completely: the SMO has lasted for almost three years, and Russia’s victory (and the end of the military conflict on terms that suit Moscow) is not even on the horizon. Accordingly, Beijing is demonstrating its irritation and “transparently hinting” to Moscow that “it’s time to end it on any terms, otherwise…” It is not clear to me how to “get out” of this wonderful situation (having only North Korea as an ally). Especially considering that society is not mobilized at all, and is already very tired of the war and does not feel any enthusiasm for its further continuation.

However, Moscow is somehow unable to leave the SMO “under any conditions” (as they already tried to do in 2022 during the so-called “Istanbul agreements”). – I think I wrote somewhere before that the situation is almost like the joke about the hunter who climbed into the bear’s den: – “Kum! I caught a bear here!” – “Then drag him here!” – “I can’t – he’s holding me!” Kyiv will not submit to “Russian conditions” (i.e., the separation from “Ukraine” of not only Crimea and Donbass, but also Zaporozhye and Kherson) now (while its front is generally strong). It is even doubtful that it will “agree to the loss” of Donbass and Crimea. But how – even if Zelensky (suddenly) agrees to “make a deal” – how to “foist” on the Russians the return to the so-called “Ukraine” of the Kherson and Zaporizhia regions, already constitutionally annexed to the Russian Federation – I can’t imagine. No, of course, with certain propaganda efforts, the majority of the populace (under the slogan “as long as there is no war”) will “swallow” this, too, but two problems remain: 1) How will the army react to this? 2) (This is most important) Who will guarantee that – having occupied the south of the said regions, the “Kyiv partners” will not immediately “spit” on these very guarantees? – Personally, I believe that this is the only way it will be, and, as they say, “further everywhere”. The worst thing for “conditional Moscow” is for the population not to understand (in the indicated scenario) that: a) we lost the war; b) the war, although lost, is not over, “not even for now”. And that, in all likelihood, is how it will be, if we do not radically change our own (I emphasize) attitude to this very SVO and the confrontation with NATO / USA / the West as a whole.

In general, sitting in the Penal Colony, it would be difficult for me to give any recommendations on how to “return the favor of the Celestial Empire” – to develop such recommendations, I need a deep and comprehensive immersion in the history and practice of interstate relations for about 15 years (and this is the “very minimum”). Unfortunately, no one will give me such an opportunity in the near future. And without further at least “friendly neutrality” of China, the continuation of large-scale military actions seems very problematic to me. Well, unless we undertake (suddenly – with a delay of 3 years) sharp, fast and (most importantly) successful “super-efforts”. Which the Kremlin categorically did not want to undertake for the past 10 years.

Whether “crawling to Beijing on my knees and back” with the aim of “begging to wait a little longer” will produce any effect – I honestly don’t know – I’m not competent enough. Although I would probably “humble my pride and crawl – not for the sake of vanity, but for Russia.”
Very briefly – the situation at the front:

Our purely tactical successes (important only on the scale of Donbass, and not on the scale of the strategic goals of the SMO) are NO MORE THAN UNPLEASANT for the enemy: “Have they surrendered Kurakhovo and Toretsk? – so what… Will they surrender Pokrovsk / Krasnoarmeysk? – Also, as they say, “not a great loss.” – These are not even prerequisites for the Ukrainian Armed Forces to begin to fall apart and “open the front.” The enemy’s slow and organized retreat in the south of the DPR only shortens the front line, and is very “expensive” (for our troops). At this rate, we can “crawl” “to the Dnieper” for another 5-10 years. What am I getting at? – Because the enemy does not consider these territorial losses as something “irreparably important.” He continues to “trade territory for time” in Donbass, implementing the enemy strategy of “wearing down Russia”, drawn up for Kyiv from NATO headquarters. In the areas that are truly important to the enemy (Kharkov, Kursk, etc.), the Ukrainian Armed Forces are “hanging on by the skin of their teeth” and our offensive there is not even “crawling”, but frankly “stalling”. At the same time, we (with the persistence of clinical idiots) continue to “grind down in meat storms” those who are still (by the end of the 3rd year of the war!) still capable of moving forward in them and even winning at the cost of their lives (at least – health). But this is not an endless resource! Instead of “spending” it on a real breakthrough / breakthroughs of the enemy front with strategic goals – we generously “flood with blood” patches of land, “unknown heights”, forest belts and villages in areas that are purely secondary even for the enemy. And at the same time, he is accumulating his new strategic reserves for the spring…

I. V. Girkin
17.01.2025

Economics/Statistics

How To Stop The BRICS Nations From Abandoning The Dollar

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Authored by Patrick Barron via The Mises Institute,

The US government is aghast that there is a new grouping of nations that seeks to form an alternative to the US trade bloc and trade settlement system that uses the dollar. These nations have been driven to this extreme, time-consuming, and difficult project by clueless US leaders who have imposed sanctions on Russian assets (literally stealing them) and have denied Russia and other nations from using the SWIFT messaging system for trade settlement.

In this way, the US hopes to preserve the dollar’s premier status as the world’s reserve currency and its world leadership based upon the dollar and its military might.

I have a better, cheaper, and more peaceful way to accomplish these US goals (i.e., remove every incentive to leave). It’s as simple as that. At a minimum that means preserving the purchasing power of the dollar and ending the policy of confiscating the assets of other nations, even those with whom the US has serious disputes.

In other words, end coercion and begin real world leadership based on trust and fair dealing.

This will be a tall task, because what nation today would believe in America’s honesty, integrity, and commitment to international law? Nevertheless, it is the only way that the American-led West can find its place in a new world.

There is a new world coming and the US must be a part of it if it wishes to prosper well into the future and not just through the current election cycle.

Here’s a short list of actions that the US should consider adopting:

  1. Return all stolen assets to Russia and other nations.
  2. End blackballing Russia and other nations from using the SWIFT trade messaging system.
  3. Turn the ownership and running of SWIFT to neutral hands, perhaps the Swiss or some combination of nations that cannot be sanctioned by America.
  4. Stop inflating the dollar, which of course is the main cause of its loss of purchasing power, in order to balance an out-of-control budget.
  5. Return all gold held in American vaults (the New York Fed/Fort Knox) to its rightful owners as quickly as possible.
  6. Place the dollar on a true gold standard by shipping American gold to neutral hands where it can be exchanged on demand for dollars. In other words, make the dollar “as good as gold.” (This is the most difficult and contentious action, but it is the only way that the world will accept dollars in the future when there is an alternative through membership in BRICS.)

American attempts to preserve its leadership status in the world will fail unless it enacts reforms such as these, which really are nothing more than behaving in a legal and honorable way.

What American would not desire this? But who will believe that America will honor its commitments for the long term?

That is why the SWIFT messaging system and its gold reserve must be placed in neutral hands abroad.

We have destroyed our reputation and this is the price we must pay.

Otherwise, we will watch one former ally after another slip away to join BRICS, which is certain to adopt protective measures for its participants so that no one nation, no matter how large and powerful, can game the system for its own unearned advantage.

Real leadership is bestowed upon leaders by willing followers, not taken or preserved at the point of a gun.

Military Affairs

Thoughts on what would be good not to come true (as of 2025)

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Igor Strelkov (machine translated)

Thoughts on what would be good not to come true (as of 2025)

So, the situation for the Russian Federation is characterized negatively: by the end of the third year of the war, none of the tasks previously declared as “goals of the SVO” have been accomplished or are close to being accomplished:

1) The “Zelensky regime” has not been overthrown, but is holding on stronger than in 2022. “Under the war”, the “derussification” of Ukraine continued at an accelerated pace, the UOC of the Moscow Patriarchate was reformed, Nazi propaganda “brainwashed” the population, hatred of Russia not only did not decrease, but also increased many times over.

2) No “demilitarization of Ukraine” was achieved. On the contrary, there is a huge (several hundred thousand) group in front of our front, armed perhaps better than before the start of the Special Military Operation, well organized, experienced, resilient and (despite war fatigue) showing no signs of imminent disintegration. Part of this group is conducting military operations on the territory of the “old regions” of the Russian Federation – in the Kursk region, from where our troops have not been able to dislodge the enemy for more than 4 months. The Armed Forces of Ukraine are increasing missile and drone attacks on the deep rear of our troops, reaching the Volga and further, hitting industrial and infrastructure facilities on a scale that is increasing month by month.

3) The territories of the “new regions” (except for the Luhansk People’s Republic) have not been liberated from the enemy: the enemy continues to firmly hold the capital and the right-bank part of the Kherson region, the capital and a significant part of the Zaporizhzhya region, significant territories of the DPR. Our successes in the Kharkov region are insignificant and have not gone beyond the purely tactical. There is no chance that all the “constitutional” territories of the Russian Federation can be liberated by military means in the near future.

To sum it up – the SVO, in the form in which it began, failed (did not achieve the set goals).

At one time, one general, looking at the field of an already lost battle, said to Napoleon: “The battle is lost, but we still have time to win the second one.” (This was in the battle of Marengo, which ended with the defeat of the seemingly victorious Austrian army). The fact is that General Desaix brought reserves with him and they completely changed the course of the battle.

Do we and the enemy have reserves?

In the first case, the answer is ambiguous. Theoretically, “yes!” There are, and very significant ones. Our country is still not at war, only the army is. The mobilization of the armed forces and industry (rear, the entire economy, etc.) has not been carried out, except for individual (non-comprehensive) measures of a “one-off” nature. As a result, we still have a significant mobilization potential, which, theoretically, could be used.

But “in practice” we have a completely opposite and depressing picture: the army, which did not receive timely and sufficient means to achieve a decisive victory, is exhausted and bled dry. Its forces are still sufficient to hold the front and even in places (“at a snail’s pace”) to move forward with difficulty, achieving purely tactical (but very “costly”) successes. But the prospects for achieving a strategic victory – to defeat the opposing enemy forces and force him (at least!) to sign peace “on our terms” are more than doubtful. Simply put – our troops can “drag out time in the hope of a lucky break” for quite a long time, but not to win. At least in their current form.

Will general mobilization help us now (I emphasize!)? – But I find it difficult to answer this question unequivocally. On the one hand, Napoleon (as in the battle of Marengo) would have been able to masterfully use all the reserves that had arrived. On the other hand, we don’t seem to have any “Napoleons” here.

The country, the army and the population are already very tired of the three-year bloody and, to put it mildly, not very successful military campaign. The industry is acutely feeling the lack of technical resources, and the reserves of military equipment, in all likelihood, are close to exhaustion (“thanks” to the “Syrian adventure”, “sales” for free/on credit from Rosoboronexport, “gifts” to “our African friends”, etc., etc.). I am not sure (I do not have the information, but I have doubts): can the Ministry of Defense now arm, clothe, shoe, train, organize, feed, form into units and formations, and then introduce into battle at least another half a million fighters? And for a strategic victory over just “Ukraine” (I emphasize!) no less is needed (and certainly not one and a half to two times more), and these half a million need to be “delivered to the front” not “by bringing water in glasses,” but immediately or (in extreme cases) in two or three stages.

In addition to the “technical issues”, a second question arises: how will the country/people react to this very general mobilization now – after “three years of bloody drudgery”? Will we not receive, instead of the long-awaited large reserves for the front, “fuel” for a revolt of the mobilized? Similar to what happened in Petrograd in February 1917? But the prerequisites for this exist, as there are (I am more than sure of this) forces ready to initiate such a revolt in the so-called “elite”, the discontent of the “liberal-Western” part of which is hardly a secret for the country’s leadership and the special services. It seems that such negative options come to my mind not only … They are possibly taken into account when determining the already openly declared (I just heard it spoken by the patriarch today) “course towards a speedy peaceful settlement”: “Peace, you say? – Well, as is well known. “A bad peace is better than a good war.”

But will Moscow live to see this “bad peace”? – I personally doubt it… And to demonstrate the validity of my doubts, I will move on to characterizing the situation (according to my estimates, of course) in the enemy camp. And I will state: while waging a total war, the Ukrainian Armed Forces have reserves. They have them now and in the near future. According to various data (that have reached me), from 150 to 300 thousand newly mobilized servicemen are undergoing combat training in EU countries. Plus, some of the military are training in the so-called “Ukraine” itself. Let’s subtract (for the sake of accuracy) 100 thousand deserters, “draft dodgers”, etc. – and still “at the end” we will get another 200 thousand enemy soldiers at the front by the spring of 2025. Let’s assume that half of them will go to replenish the broken and battered units and formations. But even 100 thousand soldiers are, in fact, 3-4 full-fledged corps (or two armies). Which the enemy is preparing (receiving equipment from the USA and Europe, which are the “inviolable rear” of the Ukrainian Armed Forces) not at all for a “truce”, but, of course, for its new offensive. And until it “burns” these (and newly created) reserves in a new attempt to break through our front – the so-called “Ukraine” will not agree to any truce. Even if it is suddenly “cut off” from the supply of weapons and equipment from the USA (from Britain, France and Germany, supplies will continue this year with a probability of 99%).

That is, there will definitely be no ceasefire in the next 4-6 months, and what happens next depends solely on how successfully and effectively our Armed Forces will repel another “attack” by a strong, experienced and well-armed enemy. I would like to believe that we will be able to repel the “offensive” as successfully as in the summer of 2023, but even when this becomes a fact rather than an assumption, the question of “what to do next?” will remain on the agenda. Since today “Ukraine” is the only one fighting against us, and who might join it tomorrow is an unclear question. But there are “candidates” – “limited participation” of NATO troops is already being discussed and has even been put on the agenda at the highest level in the EU countries. Romania’s participation in the liquidation of unfortunate Transnistria is very likely, and it is somehow even awkward to talk about the “reliability of the Turkish friend” after the events in Syria…

In order for the vultures to be afraid of “flying down on the corpse of their prey” – we must be able to show that we are “still very much alive”. And for this, again, real successes at the front are needed. And they cannot be achieved unless large and well-trained (and also controlled!) reserves are prepared.

“Our song is good – start over…”. Perhaps these words can be put in the title of this letter. If it reaches you, of course.

Igor Strelkov
07.01.2025

Economics/Statistics

Cost of Potatoes, Cost of Blood – When Inflation is Lethal  

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This image has an empty alt attribute; its file name is twee-3-1024x831.pngby John Helmer, Moscow
@bears_with

No government can survive when it fails to control the cost in blood on the battlefield and the cost of potatoes, butter and bread on the home front. The combination at the same time is politically lethal.

US President Lyndon Johnson learned this between 1965 and 1968, when the rate of domestic inflation was quadrupling and the Killed in Action (KIA) numbers in the Vietnam War jumped ninefold. On March 31, 1968, Johnson announced he was withdrawing from the presidential election later that year.*

President Vladimir Putin has managed the KIA half of the lethal equation by fighting a limited expeditionary campaign in the Ukraine, restricting the General Staff’s resources, plans, targets and operations; attacking with standoff, mostly airborne weapons; shifting the casualty burden of ground fighting to socially marginal groups; and keeping the majority of voters out of the line of fire. His success is in high and stable voter support.

For the time being, the president has escaped public blame for the inflationary surge in food prices over 2024. According to one report, beets were up by 71%; potatoes by 65.4%; eggs by 48.5%; garlic by 41%; salt by 27%; vegetable oil by 24%; butter by 22%. According to the AB Centre calculation, the price of potatoes jumped 65.2%; olive oil, 35.5%; butter, 35.2%; garlic, 24.7%; beets, 22.7%.

The state statistics agency Rosstat claims that the overall, official inflation rate for the country was 8.6% for 2024, while retail food price inflation, according to Rosstat was 9.5%. No one believes this, according to consumer polling and expert analyses. Consumer anticipation and expert forecasts are for the surge in food prices to continue this year at rates, depending on the food item, of between 50% and 100%.

Sergei Glazyev, a well-known public economist, presidential candidate in 2004, and a senior official of the Eurasian Economic Commission, is blunt on his attack. “Rising prices are hitting everyone’s pockets and making everyone poorer. Both citizens and businesses. Only banks are swollen with money.

“The Bank of Russia’s policy is driving the economy into a stagflationary trap, in which falling production, devaluation of the ruble and rising inflation are mutually reinforcing: an increase in the key rate [21%] compresses production lending, which leads to lower volumes and higher production costs, the technical level and production efficiency decline, the competitiveness of the economy decreases, which is offset by the devaluation of the ruble. That then causes a new surge of inflation, which the Bank of Russia is trying to pay off with another increase in the key rate. After ten years of ineffectual targeting of inflation, it is clear that the continuation of this insane policy has no prospects.” https://t.me/glazieview/6705

Mikhail Delyagin, deputy chairman of the State Duma Committee on Economic Policy, is just as scathing. He says the official rate of inflation for 2024 was not 8.5%, as the government insists, but closer to 19%; he warns it may reach 29% this year. The Central Bank interest rate of 21% is to blame: “this, in my opinion, is more destructive than the use of tactical nuclear weapons. But there is some good news. If tactical nuclear weapons are suddenly used against us, it will certainly be a severe shock and many people will die, but for the economy as a whole it will not be a greater shock than the policy of Elvira Sakhipzadovna Nabiullina. And [Finance Minister] Anton Germanovich Siluanov, who should also not be forgotten.”

“However, as we know, at the December 20 [2024] meeting, the Central Bank did not raise the key rate to 23 percent once again, as many, including me, expected. This is probably a good signal, because by raising the key rate in conditions of a shortage of money supply, the Bank of Russia thereby accelerates inflation. So far, Elvira Sakhipzadovna has refused to further accelerate inflation, but there is no guarantee that she will not return to this practice at the beginning of next year.”

So serious has been the failure of Central Bank Governor Nabiullina to halt inflation, and so widespread is public suspicion of her competence and intentions, on January 13 the Central Bank issued a public release denying that Nabiullina is planning a freeze on Russian individual savings by blocking withdrawals from bank accounts. “It is quite obvious that in any market economy, of which bank lending is an integral part, such a step is unthinkable,” the Central Bank has announced on Telegram. “Firstly, it will immediately undermine confidence in the banking system and put an end to lending to the economy. Secondly, freezing deposits will not help reduce inflation. People will rush to invest money not in deposits, but in goods and real estate with the corresponding sad consequences for rising prices.”

National polling of public attitudes towards leading officials has never identified Nabiullina positively. In open-ended questioning of those whom voters trust, Nabiullina’s name has not come up. Instead, she appears fifteenth on the countrywide list of officials and politicians who are distrusted – she ranks equal to the Kremlin spokesman, Dmitry Peskov; State Duma Speaker Vyacheslav Volodin, and the Mayor of Moscow, Sergei Sobyanin.

No critic of the domestic inflation and Central Bank policy mentions President Putin. He is understood, however, to be Nabiullina’s protector against her domestic critics. In the past month, however, he has been pressed to qualify this.

At his press conference on December 19, the day before the Central Bank met to decide whether to raise the interest rate to 23%, Putin said: “Only yesterday, while preparing for today’s event, I talked to the Central Bank Governor, and Elvira Nabiullina told me that the inflation rate has already reached about 9.2–9.3 percent year-to-date. That said, salaries have increased by 9 percent, and I am talking about an increase in real terms, minus inflation. In addition, disposable incomes have also increased. So, the overall situation is stable and, let me reiterate, solid.”

The Kremlin record claims there has been no official meeting between Putin and Nabiullina since September 2019.

At his December press conference, Putin acknowledged “there are certain challenges with inflation and with the economy heating up. Therefore, the Government and the Central Bank have been seeking to ensure a soft landing.” Asked by a reporter what the interest rate decision would be, Putin added: “she does not tell me what the rate will be. Perhaps she does not know this yet, because they discuss it at the board meeting, their Komsomol cell, and make the final decision in the course of the discussion. I hope that it will be balanced and will meet today’s requirements.”

“Balance” is Putin’s term for satisfying each of his oligarch, military, and voter constituencies at the same time as they contradict and oppose each other.

For timely release of data on Russian inflation with accurate analysis, follow the Sovereign Economy Telegram platform:

Source: https://t.me/suverenka/12754

Source: https://t.me/suverenka/12974
The top chart illustrates runaway food price inflation which the Central Bank has been unable to control. The bottom chart shows the impact of the Central Bank’s key interest rate depressing new credit for all categories of borrowing except car loans.

The gap between the government’s inflation target and the year-end outcome is obvious. So too is the gap between the impact of the Central Bank’s 21% interest rate and food price inflation which is not responding to credit controls. The vigorous domestic debate on what and who is to blame, and what is to be done, has not been suppressed.

President Donald Trump tried to exploit this by announcing this week: “Russia is kinda in big trouble. You take a look at their economy, you take a look at their inflation in Russia. I got along with [Putin] great, I would hope he wants to make a deal.”

Nabiullina (right) has blamed the rise of Russian incomes for stimulating demand faster than producers can supply their products. Her critics, including liberal market think tanks like the Gaidar Institute, point out that the food price explosion is responsible for about 40% of the rising inflation rate. For that reason, the Gaidarites acknowledge that consumer inflation is at least 40% impervious to the measures of the Central Bank because the latter aim at reducing credit-fuelled demand, when food is purchased from salary, not on credit from banks.

According to the data reported by RANEPA, a government economic policy think tank, “after utility tariffs were indexed by 9.9% in July, their contribution to annual inflation began to exceed the contribution of non-food products. Although if we consider the situation as a whole for 2024, the weight of non–food products in the consumer basket is still higher (34%) than services, about 28%. But both fall short of eating.”

Nabiullina was opposed to the Special Military Operation (SVO) from the beginning. Reportedly, she tried to resign in protest in March 2022 as the deadline for her retirement or reappointment approached. Putin then “balanced” her third-term reappointment with restrictions on the General Staff’s operations in the Ukraine.

Since 2022 Nabiullina and her supporters have blamed the war for the demand push on prices. This has turned the domestic policy debate on inflation into a fight over defence spending and the objectives of the war. In this fight, US warfighters in Washington view Nabiullina as a useful advocate of the end-of-war terms which Trump is proposing to Putin – she is one of the reasons for Washington’s confidence Trump will succeed.

Source: https://www.chathamhouse.org/

A paper published on January 10 by Chatham House, the British warfighter, advises Trump to exploit the Nabiullina opportunity. “The consequence of such high interest rates is that the economy will slow, perhaps very sharply. Putin therefore faces an acute dilemma: to back the central bank’s effort to keep inflation low at the risk of a recession; or to keep the economy on fire and let inflation rip. It is this dilemma that gives leverage to the incoming Trump administration. By acting to restrict Russia’s access to foreign exchange, the US can heap more pressure on the rouble and make Putin’s choice a more painful one.”

At the State Duma, Nabiullina’s line that the war is the cause of inflation is repudiated by Delyagin. “The share of residents with incomes of 150-200 thousand rubles increased by only 1.1%, and with earnings over Rb200,000, by no more than 0.5%. At the same time, to the contrary, the number of the group which receives Rb100,000-Rb150,000 monthly decreased by 1.8%. At the same time, the majority of our compatriots — 66% of them — earn up to 40,000 rubles a month.”

“Generally speaking, people who participate in the Special Military Operation, as we are told, receive more than 150,000 rubles a month. With a small caveat. They use this money to buy the necessary equipment for themselves — let’s say it’s politically correct. In some cases, at least… In other words, many of them have significantly increased their expenses. Therefore, the increase in welfare in their case may not be so noticeable. These words are confirmed by many soldiers who are on the line of contact today: ‘We mainly buy generators, gasoline, tools, building materials, uniforms (it doesn’t always) happen — we burned out in position, literally and figuratively; we buy more food, cigarettes; we discount for battery needs every month. There are no canteens at the front, we get canned food and each squad cooks for itself…They probably tell you beautiful things on TV, but there’s not much that’s beautiful here,’ says one of the combat commanders.”

In Delyagin’s analysis, “in general, at least two-thirds of the country’s population does not have significant savings, and therefore they are completely defenceless against any negative development. And, of course, there will be more and more of them in the conditions of military operations. 5% of Russians are poor: they don’t even have enough money for food…16% is enough for food…even buying clothes is a problem. 40% have money for food and clothes, but face difficulties when buying durable goods. Both of these categories live in poverty: its level is 56%. Such data come from two years ago. And it seems that they are most likely still relevant. If the situation hasn’t worsened.”

A month ago, Delyagin escalated his attack on Nabiullina. “It is impossible to slow down the car by stepping on the gas. Similarly, it is impossible to stop inflation by actions which only accelerate it. Nabiullina herself admits that inflation is caused by non-monetary reasons which have nothing to do with the key interest rate. And raising the key interest rate to combat inflation today is the same as giving one person a pill to make another person’s headache go away. She herself admits the absurdity of her policy.”

“One of the government agencies has reported that a reduction in inflation to [the Central Bank target of] 4% was possible with a key rate of 52%. But then, then, of course, they denied all that. But this fully characterizes the Central Bank’s policy…it’s clearly about slowing down the economy, not inflation. The fact is that an increase in the interest rate in conditions of a shortage of money accelerates inflation, rather than slows it down. When the rate rises, inflation accelerates, which is statistically well confirmed. It is very difficult to slow down the car by accelerating it at the same time.”

“In order to really limit the growth of inflation, it is necessary to ensure the growth of business activity so that goods are produced in Russia, and not in China. To do this, we need to lower the interest rate by making credit available, as well as limit financial speculation.”

Left: Mikhail Delyagin; right, Sergei Glazyev.

Glazyev, who led and lost the fight to replace Nabiullina at the Central Bank in March 2022, has retained his post as the minister-level commissioner for integration and macronomies at the Eurasian Economic Commission. That too is a Putin appointment; it keeps Glazyev out of direct involvement in Russian economic policymaking.

Notwithstanding, Glazyev continues in speeches, papers, and social media appearances to target Nabiullina and exploit Putin’s worry at the rise of voter hostility. There have been multiple failures of state regulation and not only at the Central Bank, Glazyev has argued. Accordingly, he advocates much more state action than he knows Putin is willing to accept. Full mobilization of the war economy, in fact.

“The main factors of inflation,” Glazyev has written, “ranking them by their contribution, are:
1. Cost inflation due to faster growth of transport and energy tariffs (the area of responsibility of the Federal Antimonopoly Service of the Russian Federation) amounts to at least 60% of the growth in the consumer price index (CPI). Thus, the increase in the cost of freight transportation in 2022-2024 is more than 20% per year, the increase in the cost of fuel and electricity exceeds 12% per annum.
2. The devaluation of the ruble in 2024 is responsible for 30% of the CPI growth, as technological and consumer imports account for up to 40% of the turnover. It is estimated that a 10 ruble depreciation to the dollar leads to a 2% increase in inflation.
3. An increase in the key rate of the Central Bank of the Russian Federation by 1% leads to an increase in cost inflation (forced price and tariff increases) by 0.24%, reducing demand-side inflation by only 0.2%, that is, the net effect of a further increase in the key rate is negative. The increase in the rate from 7.5% to 21% led to an additional increase in prices of at least 0.6%.
The contribution of the consolidated budget deficit, which is within the generally accepted norm, is much less than these three factors.”

FIVE-YEAR TRAJECTORY OF THE CENTRAL BANK’S KEY INTEREST RATE, 2020-25

Source: https://tradingeconomics.com/russia/interest-rate

Glazyev’s analysis of the causes of rouble devaluation accuse Nabiullina of encouraging currency speculation and the drain of Russian capital offshore. “The main factors of devaluation (ranking by contribution):
1. The refusal of the Central Bank of the Russian Federation to protect the stability of the ruble, prescribed by Article 75 of the Constitution of the Russian Federation. The Bank of Russia has placed the ruble’s exchange rate in the hands of speculators, both our banks and Western players (Forex market). The manipulative nature of trading is proved by the difference between the Forex and interbank market rates, which reached 6 rubles (5%) on November 27, 2024.
The contribution of this factor is 60%.
2. Export of private capital (absence of currency control), first of all, reduction of external corporate debt (by $200 billion over three years). Reduction of the standard for the mandatory sale of foreign currency earnings. The contribution of the factor is 30%.
3. Valuing the savings of businesses and the public. The contribution of the factor is 10%.”

FIVE-YEAR TRAJECTORY OF THE ROUBLE-USD EXCHANGE RATE, 2020-25

Source: https://tradingeconomics.com/russia/currency

Glazyev and Delyagin both advocate the state takeover of commercial banking by a new scheme of regulation and state bank operations: “To get out of the stagflationary trap, it is necessary to stabilize the ruble exchange rate and deploy targeted lending channels for the manufacturing sector, as well as suppress non-monetary causes of inflation by immediately taking the following measures:
1. Fix the currency position of commercial banks by blocking their speculative game against the ruble.
2. Restore the mandatory rule for 80% sale of foreign exchange earnings by exporters.
3. Cancel insurance of foreign currency deposits by the Deposit Insurance Agency, switching from the population’s demand for foreign currency to its sale.
4. Stop quoting the dollar and the euro by the Bank of Russia and the Moscow Stock Exchange, nationalize it, cracking down on speculative hype and manipulation of the ruble exchange rate.
5. To introduce a direct quotation of the ruble to the yuan and the currencies of other major partners, and to set the limits of fluctuations in the ruble exchange rate by the decision of the Central Bank. Create a distributed foreign exchange reserve in quoted currencies.
6. Resume the currency and credit swap between the central banks of Russia and China, and agree on the same with India.
7. Complete the transition to national currencies in foreign trade.
8. Include a special instrument for refinancing banks in order to lend exports at a rate of no more than 5%.
9. Block the channels of capital outflow for non-trading operations, including capital withdrawal in the interest of non-residents from unfriendly countries in accordance with the decrees of the President of Russia on the protection of the country’s financial system.
10. Fill the NWF [National Wealth Fund] with gold and other inflation-proof assets.”

“The launch of a refinancing mechanism for the manufacturing sector requires:
1. Deployment of special bank refinancing tools for lending purposes: investments provided for by national projects and state programs; expenses incurred by enterprises in order to fulfill government orders; expenses of the Russian Government for the purchase of goods of domestic production in the State Reserve; working capital of enterprises for the purchase of domestic equipment; leasing of machinery and equipment of domestic production; mortgages and housing construction; investments in the creation of import-substituting industries; investments in deepening the processing of raw materials; investments in infrastructure development;
investments under the SPIC and other investment agreements with the participation of the state;
innovative projects; investments in the creation of new technological industries; state development institutions.”

“The rate for final borrowers on these refinancing instruments should not exceed 2%, and for banks – from 0.5% to 1.5% – the administration by banks should apply the intended use of loans. Participating banks should be fully responsible for the targeted use of allocated loans and monitor their spending by borrowers.
2. The introduction of the digital ruble for foreign trade and credit transactions, including those carried out through the above-mentioned special refinancing instruments in order to automatically monitor the targeted use of loans.
3. Termination of the Central Bank’s deposit operations and issuance of bonds, which suck money out of the economy and cut off bank credit from the manufacturing sector.”

The Communist Party (KPRF), which currently holds most of the opposition seats (57) in the State Duma, has been more reluctant than Delyagin and Glazyev to attack Nabiullina directly, and also less capable of producing for voters an alternative plan for state action to cover the entire economy. Compared to the non-communist opposition, the KPRF is more timorous as nationalizers and state planners. In November, for example, Sergei Obukhov called for state price regulation for “essential products, such as bread, milk, sugar, and baby food.”

Left, source: https://kprf.ru/activity/prices/230255.html ;
right, KPRF deputy Dr Sergei Obukhov. He is Deputy Chairman of the State Duma Committee on the Development of Civil Society, and Secretary of the Central Committee of the KPRF.

Obukhov has echoed Delyagin and Glazyev in attacking monopoly manipulation of the retail prices for foodstuffs, but he has directed his remedy at urging the government to intensify the efforts of the Federal Antimonopoly Service (FAS) to combat cartel pricing.

“A gentleman’s agreement has been concluded with the heads of the retail chains not to raise retail prices for bread too much. It would seem that the problem has been solved? Unfortunately not…Based on the same answer, it follows, literally, that ‘… the food retail markets are generally competitive with a large number of participants.’ In other words, in order not to be defeated in a tough competition, companies which have concluded such ‘gentlemen’s agreements’ can break them at any time. This is the macroeconomic landscape we currently have. Everything is more or less fine in it, except for inflation, which is a catastrophic situation.”

“Why the president considers the fight against inflation a priority and why he gave the regulator full carte blanche is understandable,” Obukhov says. “We don’t want to end up like in Turkey. Recall that after an unsuccessful experiment with low rates and high inflation, they have been keeping the rate at 50% for almost a year and have so far only been able to reduce inflation from 70% to 50% in annual terms. So Turkey still has a long period of extremely tough PrEP ahead of it.”

“It is also appropriate to recall the price that had to be paid for stopping inflation in the United States in the early 1980s. Inflation there was comparable to ours in terms of level, but it lasted longer, so high inflation expectations managed to gain a foothold (this has not happened in our country yet, but it is about to happen if inflation is not stopped soon)… It is clear that we certainly do not need to bring our inflation to the state of the USA in the 1970s or of modern Turkey: we do not want a 50% rate for years or a recession with 10% unemployment. The longer the decisive fight against inflation is delayed, the more costly it will be. But it’s not just that. Right now, the president has other reasons for resolutely fighting inflation, including political ones.”

“After all, in the near future – in the autumn of 2026 – we will have elections to the State Duma, and with such inflation, it will be very problematic for the ruling party to successfully participate in these elections. People feel inflation in their refrigerator, and economic growth figures, even if they are very impressive, are still a feature from the TV. No slowdown in economic growth or even a recession will worry the population if it is not accompanied by mass unemployment, but this certainly does not threaten us in the foreseeable future. So the authorities may well go to the polls with a high key rate and low economic growth rates, but not with such inflation as it is now. After all, in the end the refrigerator always wins over the TV in shaping public opinion.”

[*] The lead image is a cartoon by John Fischetti in the Chicago Daily News, September 9, 1969. Richard Nixon had won the election of November 1968, but a year into his term he was facing the same lethal combination as President Johnson the year before of mounting war casualties and rising consumer inflation.