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SIMPLICIUS THE THINKER: https://simplicius76.substack.com/p/sitrep-8523-projecting-the-intermediate

SITREP 8/5/23: Projecting the Intermediate Future

SIMPLICIUS THE THINKER

AUG 5, 2023

There aren’t a whole lot of significant battlefield updates just yet, so I wanted to take this time to project what the medium-term future will look like based on Ukraine and the West’s signaled plans for the next 6 months and more.

But first, let’s summarize roughly where things stand, particularly vis a vis the grand summer ‘offensive’ so that we’re all on the same page as to where the conflict currently stands narratively.

Early this year, Ukraine began to outfit two separate ‘army corps’ of maneuver brigades specifically for the coming ‘counter-offensive’. These were the 9th Corps and the 10th Corps. The 9th Corps was meant to be the—mostly—NATO-armed and trained one which was famously revealed in the Pentagon leaks. It consisted of the 9 named maneuver brigades, which were the 116th, 47th, 33rd, 21st, 32nd, 37th, 118th, 117th, and the 82nd air assault.

Out of these, the 47th was said to be the most elite, cobbled from all ‘volunteers’ who signed up specifically from other units and were trained in the UK and were armed with 99 x M2A2 Bradleys as well as American M109 Paladins for artillery.

The role of the two army corps was that the 9th was meant to be the breakthrough brigade which reached the first ‘main line of defense’, the notorious ones with dragon teeth that Russia spent months constructing. Upon reaching this line, the 10th Corps was meant to be the ‘breakthrough’ force which then took over for the 9th, pouring in another fresh 9-12 brigades through the gap to create an unstoppable opening.

💥💬💥Yaakov Kedmi on why Western instructors have taught the Ukrainian armed forces nothing:

“Neither the British nor the French, no one has ever trained and tried to break through echeloned defence systems. They don’t know how to do it, they’ve never done it. So it is unlikely that they can teach it. Yes, there are certain units in the American army – armoured units. But much more organised, with professional soldiers.

The American armoured division practised how to break through an echeloned defence line. But they’ve never done that in any war, not even in World War II. They fight differently. So there’s nothing to teach them.

To break through Russia’s echeloned defence, you have to throw at least one division into the breach and after a while replace it with another. Because it will be all destroyed in the first stages of the breakthrough, having advanced in just one or two lines. Further on it needs more and more! They can’t do it. Firstly, they don’t have that much force. Secondly, any attempt to concentrate large formations before attacking makes them an excellent target for artillery and air attacks.

Western armies are not ready for the kind of war, the kind of military actions that are being waged in Ukraine today and will be waged tomorrow. They are not ready for modern serious military operations by large army formations against the Russian army.”

The 9th experienced catastrophic losses from the start of the offensive on June 4th onward, as we all know. There are rumors that entire brigades were wiped out—for instance, this odd headline about the 32nd (one of the 9 from 9th Corps) which apparently was ‘mysteriously’ shipped out to a dead frontline:

Or this one, which details how several of the 9th Corps brigades seemed to be completely missing in action:

What was interesting is that, as per the 32nd brigade above, yesterday some new documents were leaked online which appeared to show that the 32nd was remanded due to mass desertion/mutiny and refusal to follow orders:

Furthermore, there were reports online from alleged loved ones and relations of the soldiers from the 32nd that an entire battalion was completely ‘destroyed’:

According to captured documents and confirmed by social media messages from distraught loved ones, an entire battalion of the 32nd Separate Rifle Brigade of the Ukrainian Army has been wiped out. 🪦🇺🇦

So the 9th Corps was not able to reach Russia’s first line of defense and the brigades had appeared to be too degraded to go on any further, many of them withdrawn to refit/reconstitute in the rear. The 10th Corps was then injected prematurely to take over, which is what this new ‘second phase’ has been all about since the end of July.

Keep in mind, no one actually knows for certain regarding the 10th Corps, but the above has been the main narrative not only of NYTimes reporters who first broke the story but Rob Lee and Kofman who’ve now certified this narrative of the 10th Corps’ take over.

Some context: Ukraine had, according to the Pentagon leaks, about 34 maneuver brigades, with another 27 TDF (Territorial Defense Forces) brigades likely capable of mostly holding trenches and without much heavy weaponry or armor, and 9 artillery brigades total left in the war. This is 61 total infantry/armor brigades which are meant to hold a frontline 1,300km long. This averages to 1300/61 = 21km per brigade. Note that in Soviet doctrine a brigade should hold something like no more than 2-3km at most and an entire division should hold 10km. Not to mention that Ukrainian brigades are at most 4000 men when they should be 5000, most are 3000 and apparently, even according to MSM articles covering them, some are 2000.

Some will ask, how is it possible that Russia is not overwhelming the AFU with such thin lines and battered brigades. Recall that Russia is only fighting this war with a percentage of its armed forces. The Russian army has classically had anywhere between 50-65% contract with 50-35% conscripts, and as you know, the MOD is not allowing conscripts to fight here. That means Russia is only using about ~60% of its total bayonet strength while Ukraine is using everyone—all Ukrainian troops are conscripts force-mobilized straight from the street.

Not to mention there are still hundreds of thousands (official number 340k) of ‘National Guard’ that Russia is not utilizing while Ukraine uses its full national guard, police force, and everything in between as frontline assault. Russia has typically only used small specialized Rosgvardia ‘special forces’ like FSVNG rather than the regular national guard itself. Thus, Russia is fighting this entire war as an exclusively contracted, professional military force while leaving hundreds of thousands of troops not committed. Ukraine on the other hand is committing everything imaginable.

This segues into the next section. For those who’ve followed my recent reports you’ll note I’ve been keeping track of Russia’s ongoing ‘stealth mobilization’. In June, Putin had the roundtable with reporters where he answered about a potential future mobilization—I’ll repost his response here again:

Vladimir Putin:

Is additional mobilization needed? I don’t follow this closely, but some public figures say that we urgently need to raise another million, two million. It depends on what we want. At the end of the Great Patriotic War, we had almost 5 million in the armed forces.

It depends on the purpose. Our troops were at Kiev. Do we need to go back or not? I am asking a rhetorical question, it is clear that you have no answer to it. I can only answer it myself. But depending on what goals we set for ourselves, we must decide on the issue of mobilization. Well, there is no such need today.

We have started work since January of this year – we have recruited over 150,000 contract servicemen. And together with volunteers – 156 thousand. And our mobilization was 300 thousand. Under these conditions, the Ministry of Defense reports that, of course, there is no need for mobilization today.

Firstly, note that he says at the moment there’s no need for mobilization, leaving the door open for the future. This is because Russia has been conducting the stealth mobilization which, a month later in July, Shoigu said saw 1,336 signups per day in Russia, which is just over 40k a month. Shoigu famously said “This is enough to complete a regiment per day.”

Shoigu had also previously stated:

“In fact, by the end of June, we will complete the formation of a reserve army and in the near future we will complete the formation of an army corps. Five regiments have also been formed by more than 60%. In this case, I am talking about personnel and equipment,” the head of the military department emphasized. .

Such data inspire confidence in the resilience of our defense in the NVO zone, especially against the backdrop of off-scale losses of the Armed Forces of Ukraine. In addition, the following phrase flashed in the minister’s speech: “Preparations are underway for further offensive actions … On our part as well.

The reason for refreshing your memory with the above, is to contextualize the new update below. Medvedev has now released a new video where he confirms that from January 1 to August 3, Russia has now recruited a total 231,000 contract servicemen. Watch the end of the video:

He further allegedly said that 400k by the end of the year is the goal. Now, keep in mind, Russia potentially lost 30-50k men with Wagner’s departure, not to mention Shoigu’s new reserve army and army corps, which could swallow as much as 120k of those men. In fact, I recall he specifically said last month—though I can’t find the quote at the moment—that out of the 160k+ recruited at the time, 40k would be sent to the front while the remaining would go to these reserve armies. This likely breaks down as ~30k for the new reserve corps of three divisions or so, with another 90k for the new field army of 3 army corps.

So, with the new 231k signups that Medvedev announced, how many men are the actual net positive? 30-50k lost from Wagner’s removal plus 120k for the reserves = 150-180k, subtract from 231k and we’re left with about 50-80k net troops for now. However, if Russia achieves the 400k figure by the end of the year, that will begin to turn into a game-changing amount.

But, here’s the wrinkle. In light of this, Ukraine plans to desperately try to match Russia as reports now claim the following:

In Ukraine, a large-scale mobilization may be announced in winter.

The “big mobilization” in Ukraine, which was announced by the deputy of the Rada Dubinsky, is, apparently, general raids on everyone who can still hold weapons, and no longer with campaigns in certain cities and districts, but on a large scale, everywhere and constantly.

Supplies of equipment from the West do not allow maintaining the required level of armament of existing units. If the number of these units increases, it will most likely mean the appearance of several dozen more TrO brigades, where for 3-4 thousand people in a brigade there will be a maximum of a tank company, a howitzer battery and a mortar division. Such brigades will not be capable of anything other than “meat assaults” or sitting in a blind defense.

A certain number of units with more or less normal equipment, of course, will remain — and will probably work as fire brigades.

The other side of the issue is the command of such units. You can recruit tens of thousands of conscripts aged 40-55. It is more difficult to understand who will control these troops on the battlefield. The shortage of junior and senior command staff began long before the start of the AFU offensive, and this problem has not yet been solved. (Older than the Edda)

This is supported by recent statements like from this Ukrainian veteran, who says that the entire male population of Ukraine should prepare for eventual mobilization. He foresees that 90% of males will eventually fight (and likely die, we can infer):

Recall that time is running out for the AFU this year. Many experts believe August and September to be the last real viable months before the second mini-Rasputitsa comes, with similar rain and mud conditions as in early spring. Zelensky fears losing the last vestige of support from the West and in fact, there are some rumors that certain key countries—namely Germany—have already curtailed their support in anticipation of a foregone conclusion. For instance, despite being the 2nd biggest overall supplier to Kiev, Germany has delayed certain critical shipments, like the new Leopard 1s, as well as many other promised items:

🚨Germany continues to delay promised weapons to Ukraine in the amount of 2.4 billion euros. So far, Kyiv has received practically none.

The list of planned deliveries includes 110 Leopard-1 tanks, 20 Marder infantry fighting vehicles, 18 Gepard tanks, 4 Iris-T anti-aircraft guns and 26,350 artillery ammunition.

Reconnaissance drones, radars, tankers and trucks were also promised.

But so far, neither Marder, nor Iris-T, nor trucks have been delivered to Ukraine. Kyiv received only 10 Leopard-1s, one air surveillance radar, 12 Gepards and 850 artillery rounds, as well as 8 ambulances.

Also Germany supplied 11,000 rations, three unmanned drone sensors and five metal bridges for the Beaver bridge-laying armored vehicle.

So now, Zelensky is escalating in order to draw Russia into over-reacting, which would re-engage NATO’s flagging interest. Not only has Kiev stepped up outright acts of terror, like hitting Moscow office buildings with drones:

And yesterday’s hit on a Russian civilian oil tanker by a Ukrainian naval drone.

But now, there are rumors Zelensky intends to escalate his terror war to new heights. It’s believed the Moscow drone strikes were just probing attacks to test Russian defenses, and that a large-scale raid is being planned within weeks:

⚡️Kiev is preparing a massive drone raid on Moscow⚡️

⚡️⚡️⚡️The Wall Street Journal warns of a large-scale attack by Ukrainian UAVs on the Russian capital.

The authors report that thanks to the latest attacks on Moscow, the APU probed the weaknesses of the capital’s air defense in order to send dozens of drones there in the future.⚡️⚡️⚡️

The publication is confident that the city will be attacked in several directions at once. The red date of possible sabotage is considered to be August 24 (the imaginary Independence Day of Ukraine), which is confirmed by the threatening cartoon that recently spread across social networks.⚡️⚡️😡

The goal of this would be obvious: to force Russia into somehow over-reacting with an uncharacteristically rash use of force which could highlight Russia’s “brutality” and wring sympathy and further support for Ukraine from Western nations. For instance, one of the goals would be to get Russia to respond in a ‘tit-for-tat’ attack on civilian buildings in Kiev which would be hyper-focused by Western MSM while completely sweeping under the rug Kiev’s own attacks on Russian civilian targets. This would then be used in a new PR campaign to drum up more weapons aid from the West, with Zelensky using it as an example of why Kiev needs tons of new Patriot missiles and things of that nature.

Obviously, this is pure desperation. It’s the reason that I hardly even cover the drone attacks on the ships, skyscrapers, etc.—because they are utterly irrelevant and barely worth mentioning, having no appreciable effect on the battlefield dynamics/developments whatsoever. They are merely signs of utmost desperation, the frenzied clawing of a dying animal as it foams at the mouth after having been run over.

There’s also a second dimension to it. It represents the unruly actions of a disobedient child thrashing out against their parents. Ukraine wants the grain deal back on as it’s losing huge amounts of money from the deal’s termination. Thus, by escalating past the West’s own delimited ‘red lines’—for instance, about striking Russian territory, etc.—Ukraine is ‘rebelling’ against their own masters in order to force them into action, ideally to coerce them into putting more pressure on Russia to get back to the table regarding the grain deal.

To summarize, here’s what the advisor to the former president of Ukraine had to say about Zelensky’s outlook:

💥💥💥Ukrainian President Volodymyr Zelenskyy faces civil war if he continues to illegally hold power in the country. A former adviser to Leonid Kuchma, Oleh Soskin, said this on YouTube.

“If martial law is not cancelled and elections are held, this power will be considered illegitimate. And since illegitimate, it is outlawed, and any Ukrainian within the framework of the fifth article of the constitution can destroy the rebels,” he said.

Earlier, Soskin said that the decision announced on 26 July to extend martial law shows Zelenskyy’s fear of losing the election.

The expert also noted that the failed policy of the Ukrainian president was the reason why many spheres of the state, including the economic and military ones, were almost completely destroyed.

“The Kiev regime has no popular support. As soon as the external supports fall away, everything will collapse at once,” the politician said.

In short, Ukraine faces flagging support from the West and is forced to resort to increasingly escalatory ‘gimmicks’ like mass terror drone attacks on Moscow in the same vein as the terminal phase of the Wehrmacht in WW2 vindictively launching V1/V2 rockets at London. This is nothing more than a dying animal, thrashing out its last gasps.

Meanwhile, Russia is on track for 400k new servicemen by the end of this year, with production of all kinds continually ramping up. By next spring, I believe what we’ll see is the slow envelopment of the AFU from every direction. It likely won’t be a massive big arrow campaign but a continual collapse on every single front where the AFU has completely exhausted all combat potential, particularly of the offensive variety, and is desperately trying to hold ground. The dam will slowly break in multiple directions and their positions will be overrun everywhere. Next year will likely look like early 1945 Germany.

Keep in mind, I’ve been on record before stating this conflict could likely go for 3-5 or even 10 years. But we’ve gotten a lot more new data over the last few months, and intelligent analysis requires constant honest re-appraisal in the face of new information. As it stands right now, barring some unforeseen circumstances, I see it happening as described above. The war could still last another year or two past that, but only with a dogged defense and constant retreating on the AFU’s behalf, for instance west of the Dnieper, which would cause Russia to have to take a long hiatus in re-orienting its troops, etc.—but essentially the result will have been decided by that point.

The major, insoluble problem for Kiev is particularly the fact that Russia’s drone production is set for an exponential explosion:

⚡️⚡️⚡️Rising militarist in the use of “Lancets” at the front:

According to Western data, the scale of the use of the “Lancet” stray ammunition is growing. The number of their launches reaches at least 20-25 units per day. For the first time, the use of “Lancets” against trenches, positions and groups of infantry is observed.

At least 50-60 FPV drones and 20-30 lancets are used every day, and dozens of helicopters with 40 or 60 mm bombs drop them into trenches and fixed targets, especially in Donbass and Kherson.

If infantry and sapper posts are also among the targets, then the number of Lancets sent to the front has increased, and the units have been given freedom of action in terms of their use.

If the new Lancet models come forward more actively, in the coming months we can see a rapid increase to 50 and possibly 100 launches per day as there is a dramatic increase in production and its usage could increase several times⚡️⚡️⚡️

Many sources are saying that in the next few months, Ukraine will drown in Lancets. And there are new models coming which have thermobaric warheads for taking out troops rather than HEAT-style anti-armor warheads now most often used. That means Lancets will soon be taking out trenches and troop deployments along the entire front. We’re certainly seeing a flood of daily videos showing almost nothing but successful Lancet hits. The bottleneck will likely soon be—if it isn’t already—the operators themselves.

On top of which, British intel claims a new Geran drone factory is nearing completion in Tatarstan and it will be pumping out massive numbers of drones. Ukraine will be drowning in drone swarm attacks on a daily basis.

According to British intelligence, Russia has finished a Geran 2 drone factory to 80%.

It’s capacity will allow the production of up to 5,000 suicide drones a year.

— Source ResidentUA

Recall earlier reports from Western MSM that Russia is already building and acquiring 45-50k smaller surveillance and FPV drones per month.

This hugely plays into something I’ve written about before, which is that Russia is primarily using its Geran drones to completely deplete the highly expensive Western air defense systems. Recall, I had stated that there is nothing of note to really hit in Kiev. It’s not like Ukraine stages troops there. Russia simply sends swarms of Gerans to make Ukrainian air defense expend itself so that they have to take AD missiles from other frontlines, thus completely depleting the AD where it matters most.

Ukrainians report that drones over Ukraine are once again using “strange” tactics. Ukrainian monitoring channels report oddities in the use of Geranj-2 drones.

Some of them are circling above the alleged duty zones of the air defense system of the Armed Forces of Ukraine, and the other part of the drones is at a considerable distance from the targets and waiting for AD to be activated.

Now, there’s been confirmation of this in the form of a very informative thread from this Western reporter who interviewed a Lt. Colonel in the Ukrainian air defense command. The shocking revelation he made was that the city of Kiev was very close to being entirely evacuated last December, due to the strength of Russia’s missile barrage—that’s all 2+ million people. The exchange is published in this article:

https://www.thetimes.co.uk/article/a601271e-32c8-11ee-b04c-88a034803f06

Ignore the fantasy about shooting down Kinzhal missiles, this is merely a fatuous lie meant to butter up Western officials into handing over more Patriots. The real telling information comes after:

“You can’t plan a war with an annual production of 150-160 Patriot missiles. We fired those in a month,” he said, sounding the alarm that his men were running out of ammunition. “If we wait until autumn, until mid-October, they will hit the energy infrastructure again. This is a certainty. This winter will be even more difficult than the previous one.”

What he correctly reveals is that the U.S.’s annual production capacity for Patriot missiles is a mere 150+. Kiev fires more than that in a single month. The U.S. is estimated to only have probably around 3000-5000 total Patriot missiles, in terms of the ammunition. That may sound high but around 2-3k of them are loaded into U.S.’s own 500-1000 active launchers.

Then came the bombshell:

He disclosed that in December Ukrainian authorities had been on the brink of ordering the complete evacuation of Kyiv due to the intensity of Russian airstrikes. “Not many people know this, but Kyiv was on the verge of evacuation,” he said. “There was one battle that, in my opinion, determined the fate of Kyiv and the Russian campaign to destroy our energy sector, when 49 cruise missiles were launched at Kyiv.”

In a desperate 15 minutes on December 16, Ukraine fired dozens of missiles from its Soviet-era S-300, American Nasams and German Iris-T systems to save the city from total blackout in freezing temperatures.

“If we had allowed this strike to succeed, Kyiv would have had to be evacuated. And it is very difficult to evacuate two and a half million people,” the colonel said.

The point of this is to illustrate that this coming winter will be particularly difficult for Ukraine as Russian missile and drone production has ramped up a lot since last year, not to mention the ensuing next year as well. If they were close to evacuating Kiev last December, what will the situation be this coming December?

This is all part of the slow collapse I outlined—as Russia gets stronger by the month. It will be a completely different ball game by next year and Ukraine will be hanging on by a thread, depleted to the bone not only in armored vehicles and artillery but the crucial AD system missiles.

And as of this writing, a massive new round of strikes is being carried out on Ukrainian targets, particularly the Starokonstantinov airfield in western Ukraine where the Storm Shadow-launching Su-24M planes are said to be housed. This is a particularly large strike with upwards of 15 Tu-95s airborne reported, as well as Kinzhal-carrying Mig-31Ks. In almost every strike now, Russian Kh-101 missiles are reported to take extremely circuitous routes, where they ‘cruise around’ the country, changing directions frequently and completely throwing off Ukrainian monitoring systems and defenses.

Starokonstantinov flew to the military airfield around 19:00. Explosions were heard about 8. Something is on fire.

Meanwhile, retired Ukrainian general Serhiy Krivonos believes Russia is on the verge of a major offensive in the next few months which could “take Kiev”:

Before Kiev in 12 hours“: the ex-general of the Armed Forces of Ukraine warns of the impending offensive of the Russian army “In the coming months, the Armed Forces of Ukraine are waiting for the “worst scenarios,” said Major General of the Armed Forces of Ukraine, retired Serhiy Krivonos. In his opinion, Kiev clearly underestimates the power of the Russian army, which will lead to terrible consequences, including the lightning capture of the capital. The ex-officer is confident that after the failure of the counteroffensive, the RF Armed Forces will strike at Ukraine and are capable of capturing Kiev in 12 hours. OstashkoNews

I don’t know where he got the 12 hours timeline, but many do believe that Russia is gearing up for its own offensive in the near future. For instance, analyst Yuri Podolyaka again voiced his opinion that Russia will launch an offensive before Rasputitsa. Personally, I don’t necessarily see that happening as, given the above longer term prospects for the AFU, I don’t see a big current urgency for Russia to have to ‘rush’ into a series of offensives this year.

It’s possible but only for opportunistic reasons. When you’re playing ‘active defense’, as Russia likes to employ, you have to always be prepared to exploit an enemy’s weaknesses in a given area. So if Russian commanders smell blood on a particular front, then it’s possible. But as of now, it seems most logical to wait out one more winter to allow the aerospace forces to degrade Ukraine economically, militarily, morale-wise, etc., before attacking a much weaker foe in a much more favorable light next year.

In the interim of this winter, though, I could see a lot of intrigues playing out in the void left by Ukraine’s exhausted combat potential. This will include the Poland-Belarus-Wagner vector.

Armed Forces of Ukraine cannot win, faced with intractable problems at the front near Artyomovsk, — Wall Street Journal

▪️Success in the Ukrainian counter-offensive is in doubt due to the fatigue of the soldiers of the Armed Forces of Ukraine in the Artyomovsk direction and serious losses.

▪️Currently, Russian troops use a lot more drones than before. In addition, the communication system has become more advanced, which prevents the APU from intercepting messages.

💬”There are fierce battles, we need more soldiers and weapons. We are tired,” says the Ukrainian doctor.

Earlier, I had mentioned possible ‘unforeseen circumstances’ potentially occurring. As others have stated, Poland is due for their own elections later this year and any major actions on their part are unlikely before then. In fact, several reports ago if you’ll recall, I said that a ‘big’ sudden action is unlikely at all. I explained that the framework for Polish takeover of west Ukraine would be more in line with a hybrid one, like that of Turkey in Idlib and north Syria, etc.

Putin has confirmed my thoughts in a new statement. Watch the end of the video where he explains how Polish units may be brought into western Ukraine under the guise of some ‘internal forces’ or national guard in relation to ‘ensuring security’:

Like I said in the earlier report, this would be akin to Russia’s own ‘little green men’ takeover of Crimea. And since Belarus has now upped the rhetoric and delivered its own threats to Poland in regard to this, it makes it even more likely that Poland would opt for the more subtle and hybrid-style eventual takeover. But I don’t see this option being activated until further down the line, perhaps next year at the earliest when the Kiev regime finally begins to crack to the point where Poland sees an opportunity to exploit a politically neutered and desperate administration.

Even Medvedev now blithely says that west Ukraine will ‘fall to Poland’ in the future:

Colonel MacGregor even has an interesting theory, which is that Poland may use the guise of creating an ‘enclave’ in Ukraine for the purpose of repatriating the Ukrainian refugees as a way to get in the door and effect exactly this type of ‘stealth’ take over I described above, and which Putin hinted at:

Now, that situation is developing as Polish officials have begun to use Wagner’s deployment on their border as an excuse to condition the public for potential future escalations.

🇵🇱🤡⚔️🏴 PMC “Wagner” has already tried to enter the territory of Poland from Belarus, said Deputy Minister of Internal Affairs of Poland Paweł Jabłoński on CNN.

According to him, “the threat from Belarus is very real” and Warsaw is considering various steps, including the complete closure of the border.

“We are considering any steps that will be necessary to protect our territory, protect our citizens, including the complete isolation of Belarus, the complete closure of the border. We expect new attacks on our border, possibly new attempts to violate our airspace,” stated Jabłoński.

Earlier, the Polish opposition accused the country’s authorities of inflating the threat from the “Wagnerites” for election purposes.

Days ago, a Belarusian helicopter was even claimed by Poland to have crossed the Polish border, sparking another round of alarmism and a new deployment of more Polish troops on the Belarusian border.

Meanwhile, Zelensky continues attempting to hatch desperate plans to drag Poland and thereby NATO into the conflict:

💥🤡💥Ukro media:

“The president’s office considers it possible to drag Warsaw into the war in Ukraine if there is a provocation or strikes by unknown UAVs against the Polish military.”

Looks like “unknown UAVs” are already on the launch pads….

💥🤡💥

The SBU even stated that they believe Russia is in fact using Wagner to secretly spur Belarus into the conflict by using Wagner agents to instigate a falseflag in the country which can be blamed on Ukraine. This could be the SBU’s own telegraphing of a planned provocation where they may attempt to attack Belarus in a bid to get them to enter the war, which itself would be a double bid to get Poland to respond to the ‘threat of Belarus’ and likewise enter the war.

Recall that Lukashenko issued a threat to Poland as their presence on Belarus’s southern border can be considered a national security threat. But likewise, we can infer that Poland could consider Belarus’s presence on its own southeastern border to be a similar threat. Thus, the SBU could perhaps be dreaming of coaxing Belarus into a trap in order to activate Poland, and then NATO.

Not that I believe the above scenario is likely, but just outlining the possibilities, given these new developments and rumors.

And as a last update to add to the growing list of problems, Ukraine’s F-16 wunderwaffe hopes have been dashed as well due to Ukraine’s lack of English-speaking pilots:

Politico writes: The weak level of English among Ukrainian pilots proved to be a stumbling block for the start of their training on F-16 fighters, as a result of which language courses to be held in the UK will begin earlier than the training program. At the moment, only 8 pilots are ready to train for the fighter.

In short, there’s nothing good or optimistic coming up in the slightest for the AFU. The Russian army only continues to grow stronger, larger, more advanced, more experienced while Ukraine grows in the opposite direction, with arms shipments declining and no more ‘wunderwaffe’ on the horizon to save them.

In almost every conceivable direction, Russia is solving problems on a daily basis and improving, increasing its sophistication; just as a quick mention of a few of the key ones:

  • Russian communications systems are said to be getting increasingly more advanced. The AFU complains that Russian forces on every front have been upgrading their comms equipment, including with better encryption which no longer allows the AFU to intercept much communications
  • New Russian anti-drone systems continue to be developed and spotted with increasing regularity on the frontlines and in trenches
  • New powerful ability to jam starlink stations on a broader front, which a prominent AFU commander ‘Magyar’ recently began complaining about last week: “the Russians have learned how to jam Starlink at “zero” — Ukrainian commander Magyar.“Now this technology is being tested and prepared for production on an industrial scale.” Starlink on the front allowed our military to coordinate and control the operational situation.At the beginning of the invasion, the Russian Federation had much stronger radio intelligence and communications suppression, but this changed after the arrival of Starlink”
  • This includes a new design for an FPV drone zapper being tested on tanks, which is a small unit placed on the back of tanks and armored vehicles which disables FPV drones in 4 channels and neutralizes them before they can make contact

🇷🇺Tank complex for suppression of FVP drones “Triton” from the PPSh Laboratory

According to the developer, the product is designed to suppress the control channels and data transmission of FPV drones in the 868\915\1300\2400 MHz bands (4 suppression bands)

Management is carried out by means of the portable panel for the maximum safety of the operator. Both autonomous operation from the built-in battery and power supply from the on-board network of the vehicle are possible.

Potentially, with the help of such systems it will be possible to protect armored vehicles from one the most deadly threats on the battlefield.

Not to mention the increasing use of Chinese jammers on Russian tanks for the same purpose:

By the way, the servicemen began to solve the problem with the vulnerability of armor to FPV drones on their own and at the grassroots level.

So, the enemy has already published a photo of one of the Chinese jammers, which some of our tank crews handicraftly install on their equipment.

Such systems allow you to create a dome of interference around the tank, which does not allow FPV drones to freely fly up to it. However, such jammers have holes in the zone of protection and are not fully integrated into the on-board network of the tank, so the army needs a serial industrial design installed on each tank directly from the factory.

Military Informant

This includes a new development for ‘hibernating drones’:

It’s said these FPV drones can be placed in forward positions and ‘hibernated’ for weeks at a time. Then when an enemy offensive begins, they can be raised instantaneously, greatly reducing flight time, to strike right at the area where the enemy armor is passing. This way there is very little forewarning or chance to react.

Kuzyakin explained that the hibernation tool minimizes the time to prepare the device for an attack. “Flying time is saved. A few seconds pass between turning on the drone and attacking, which leaves no chance of launching countermeasure systems. One FPV pilot can place, and then ‘wake up’ and sequentially use up to 15 ‘sleeping drones,’” he said.

The drone or drones are placed on “commanding heights and building rooftops or other high-rise structures as prepositions for drone attacks.” “When the time comes to launch the attack, the drone would not need to traverse the distance to the target, as it would already be positioned. This device enables reducing attack preparation time to the minimal amount possible – just a few seconds pass between drone reactivation and the attack, leaving the adversary no chance to launch anti-drone systems,” the report added. 

Not to mention that British intel complains that Russia continues to receive the newest batches of upgraded Ka-52Ms which can now fire the Izdel. 305 LMUR TV-guided missile.

This adds a huge ‘fire and forget’ capability to Russia’s attack choppers.

David Wu, ex-Wall Street and IMF strategist, Ph.D. in economics from Columbia University summarizes the coming situation very aptly:

Now, to move onto a few last disparate items.

One of the other biggest adjacently related developments is the brewing situation in Niger. I’ll summarize the developments quickly for now:

There is a claim that Nigerien ‘junta’ general Mody is requesting the immediate help and deployment of Wagner forces, via Mali backchannels:

Normally, this would perhaps be uncorroborated rumor, however today footage appeared to show a Russian military heavy transport plane landing in the Niger capital of Niamey, with claims that Wagner forces are arriving:

RT has also now covered it.

The Nigerian senate has vetoed the deployment of military against Niger, but I’m not sure how much this matters given that ECOWAS countries continue to take an aggressive posture and threaten a military intervention. More and more, the sides are taking shape. Senegal has now voiced full backing for military intervention while Algeria said that this would be a threat to its own national security and implied backing Niger militarily.

“Waving military intervention in Niger is a direct threat to Algeria, and we completely and categorically reject it,” the head of state stressed. “Problems should be solved peacefully,” he continued, speaking about the events taking place in Niger.

“There has been a coup [in Niger]. And we have confirmed that we stand for constitutional legality. And it is necessary to return to this legality. We are ready to help them,” Tebboune added.

Meanwhile, the American permanent representative to the UN has reportedly stated that any Wagner involvement or attack in Niger would be “considered an attack by the Russian Federation.”

Clearly, this situation represents a new potential flashpoint which can erupt at any moment. Here’s a good new Grayzone/Klarenberg article on the corrupt Nigerian president, ECOWAS chairman, and U.S. toady who’s leading the push for military intervention in Niger.

No matter what happens, Africans are waking up and it’s the beginning of the end for Western colonialism and free-rides:

Next:

New techniques for estimating Ukrainian losses continue to be innovated. This one studies the expansion of new Ukrainian cemeteries from space:

There’s no telling how accurate it is so take it with a big grain of salt, but it’s an interesting addition to the mental calculus. Certainly, even the top pro-Ukrainian accounts have recently lamented the unprecedented losses, which have been so large over the past few months even they’re unable to sweep them under the rug with the usual techniques:

The other big news which really puts a stamp on all my outlooks for the future is that the new Worldbank estimates have come in, and Russia has now officially once again moved into #5th place in the world’s top economies per GDP PPP, supplanting Germany for the spot:

You can get the official figures here: https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD

The most startling thing is that Russia is only a hair behind Japan. Recall my article on this topic, where I outlined how Russia is the most sanctioned country on the planet and yet still manages to be close to edging out even Japan for the #4 spot. This latest news confirms my findings. I invite all to revisit this article:

The Truth About Russia’s Economic Power: Is It Really as Small and Weak as the West Claims?

SIMPLICIUS THE THINKER

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APR 2

The Truth About Russia's Economic Power: Is It Really as Small and Weak as the West Claims?

Preface: The following article is based on one I previously published on the Saker on this exact anniversary, which I believe bears increased importance in today’s climate. So I have decided to heavily revise and update it with the latest data, tripling its length in the process, to make it as contemporaneously pertinent as possible. I believe this is i…

Read full story

Imagine if the West played fair and Russia was not under the largest economic terrorism attack of any other country in the world? I said it in the article above and I’ll say it again, if that were the case, Russia would likely be the #3 economy on earth after China/U.S., and it will return to that position in the future. It will likely surpass Japan in the next 3-5 years on that list. The end of this war will shatter a lot of illusions and the West will come to respect and be in awe of the military and economic powerhouse that is Russia.

Next:

A Ukrainian post that highlights some of the major ongoing refusals in the military and how drastic it’s gotten:

❗️UKRAINIAN POST❗️

‼️ ABOUT THE COUNTER-OFFENSIVE ‼️

I wondered for a long time why our offensive was not getting anywhere. The main reason, of course, is that our leadership, who knows why, trumpeted about it in all directions. Strange, huh?! No wonder we received such a warm welcome.

But that is not the only problem. The trouble is that our defenders, and I’m not talking specifically about the 93rd separate motorized brigade, would much rather be chilling at home during the offensive.

Let me explain! 👇🏻

Ever since the ATO [Anti-Terrorist Operation] and JFO [Joint Forces Operation] kickbacks to commanders for not going into battle and staying home have become standard practice. The same story continues today, only in a more sophisticated form.

Today, for a tank to be disabled by the crew itself, you need to pay the commander $1,500 and he will turn a blind eye, and the combat vehicle, together with the crew, will go to the rear for repairs. How do you like that?!

I am not saying this out of nowhere. My friend at a repair base near Bakhmut told me that in just a few days of July, four tanks and six armored personnel carriers arrived for repairs. After analyzing the breakdowns, the lads found out that two tanks and one of the armored vehicles were put out of action on purpose. That is, the breakdown was intentional and it was obvious that the crew was responsible for it.

It all makes sense! The guys are simply afraid for their lives, especially when the command sends them into battle in under-equipped vehicles.

This is the next point of our “successful” counteroffensive.👇🏻

The truth is that incompetence, corruption and simply disregard for people lead to a considerable number of non-combat losses.

From the same source, I learned that at least 3 tanks burned out from the inside due to the fact that the fire extinguishing system lacked a special reagent, which we happen to have plenty of in our warehouses.

I honestly don’t know which of the above was the decisive factor, but I do know that we won’t win the war this way.

One more thing! 👇🏻

To all of the above, add more kickbacks for “bonuses” and “sick leaves”. It’s no surprise that such a large number of AWOL soldiers is due to these same schemes. The guys give half of their money allowance to the commanders, and get to sit it out at home. My hypothesis is confirmed by the fact that a very large percentage of AWOL reports are not sent by commanders to the DBR [State Bureau of Investigation] and other bodies. No wonder a whole AWOL commission paid a visit to our 93rd brigade.

UPD: While these fighters, experienced in terms of “dodging”, are sitting at home, the command is recruiting raw and inexperienced lads and sending them into battle. But I am sure that the 30 percent of them that remain after the first battle also become EXPERIENCED (. That’s some vicious circle.

@HolodniyYar

Next:

Both General Teplinsky and Seliverstov of the VDV have now appeared in new videos honoring the paratroopers during Paratroopers Day, which celebrates the August 2, 1930 founding of the Russian Airborne.

Here is Seliverstov:

And Teplinsky:

Recall that these are the two Generals said to have been “purged by Putin” by a bunch of cranks and amateurish 2D blogger-grifters to push some laughable narrative. Now, like every other ‘purged’ figure, they are seen still at their duty and commanding their forces. Consider that narrative fully debunked and dispelled.

And speaking of people said to have been purged, Shoigu has now visited the ‘Center Group’ frontline to meet with General Mordvichev—incidentally, also said to have been ‘killed’ and now miraculously resurrected. Shoigu not only awarded troops with special custom pistols (MP-443 Grach 9x19MM according to one source) but also inspected the captured Swedish CV-90 IFV and its uniquely huge 40mm Bofors rounds:

In the 2nd video above, he quips whether they caught any Leopards then says to the effect of, “Well the other guys are destroying so many of them you may not see any here.”

Meanwhile, the U.S.’s own recruitment is going so poorly that Military.com has urgently called for a new limited draft in order to replenish the armed forces:

Most amusing of all is, after making fun of Russia’s ‘dual’ conscript/contract system for so long, now they’re proposing it for the U.S.

But after two decades of war — both of which ended unsuccessfully — and low unemployment, many experts believe the all-volunteer force has reached a breaking point. And American confidence in its military is at a low.

The fastest and most effective way to resolve this recruiting crisis is to change how we recruit.

Instead of an “either an all-volunteer force or a fully conscripted force” model, I propose a both-and solution.

We should have our military recruiters sign up new troops for 11 months out of the year, and then have the Selective Service draft the delta between the military’s needs and the total number recruited.

Meanwhile, here’s what the latest class of U.S. Marine Corps recruits looks like:

Cue the laughter.

Russia is supposed to be afraid of that? Have you seen what Russian troops look like in the war?

Next:

As many have likely heard by now, it appears that Gonzalo Lira never made it across the Hungarian border, and was in fact stopped by Ukrainian services and has now ‘disappeared’, perhaps for good.

For those who continue to complain that Gonzalo messed up by posting videos while on the run—recall that he set the video on a timed delay for release 6 hours after recording it. By the time the video actually hit the web, he was supposed to have been long across the border. He wasn’t posting the video while still in Ukraine.

I’ll leave you with this aerial shot of the Kakhovka dam area to give an idea how the reservoir is looking these days, although keep in mind this is a bit upriver of the ZNPP plant:

And a closeup view of another of many destroyed M2 Bradleys:


US Downgrade

Wall Street on Parade: wallstreetonparade.com/2023/08/the-fitch-downgrade-of-u-s-debt-what-you-need-to-know/

The Fitch Downgrade of U.S. Debt: What You Need to Know

At 5:13 p.m. ET on Tuesday, after the stock market closed, Fitch downgraded the U.S. credit rating from AAA to AA+. Fitch is now the second of the three major credit rating agencies to have taken the historic step of removing the triple-A rating from the U.S. S&P made its first-ever downgrade to the U.S. credit rating on August 5, 2011, also from AAA to AA+, and has kept it there ever since. Moody’s is now the only member of the Big Three credit rating agencies that has maintained a triple-A rating on the U.S.

As the chart above indicates, the stock market responded negatively to this development yesterday, particularly over the fact that it came at a time when the U.S. Treasury is boosting the amount of debt it is issuing.

Yesterday, the U.S. Treasury announced its plans to increase its debt issuance, writing as follows:

“Based on projected intermediate- to long-term borrowing needs, Treasury intends to gradually increase coupon auction sizes beginning with the August to October 2023 quarter. While these changes will make substantial progress towards aligning auction sizes with intermediate- to long-term borrowing needs, further gradual increases will likely be necessary in future quarters….”

In line with that view, the Treasury boosted its auction set for next week from $96 billion to $103 billion, consisting of $42 billion in a 3-year Treasury note; $38 billion in a 10-year Treasury note; and $23 billion in a 30-year Treasury bond.

Yields on both the 10-year note and 30-yield bond saw increases in their yields yesterday, meaning their prices were declining. (Bond prices move inversely to their yields.) The yield on the 10-year was trading in the range of 4.05 percent in the early morning yesterday, then moved up to 4.12 by late afternoon. It has continued to move higher this morning, yielding 4.15 percent at 7 a.m. The yield on the 30-year bond was trading in the range of 4.10 early yesterday morning, then moved sharply up at the day progressed, reaching a yield of 4.20 by 11 a.m. This morning, at 7 a.m., the 30-year is yielding 4.25 percent.

When S&P downgraded the U.S. credit rating in 2011, it cited as one factor the growing U.S. debt as a percent of GDP. It said it anticipated U.S. debt reaching “an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% in 2021,” while noting that these ratios were “high in relation to those of peer credits….”

Those ratios look positively Goldilocks compared to today. One of the points made by Fitch in its ratings downgrade on Tuesday was this:

“Lower deficits and high nominal GDP growth reduced the debt-to-GDP ratio over the last two years from the pandemic high of 122.3% in 2020; however, at 112.9% this year it is still well above the pre-pandemic 2019 level of 100.1%. The GG [General Government] debt-to-GDP ratio is projected to rise over the forecast period, reaching 118.4% by 2025. The debt ratio is over two-and-a-half times higher than the ‘AAA’ median of 39.3% of GDP and ‘AA’ median of 44.7% of GDP. Fitch’s longer-term projections forecast additional debt/GDP rises, increasing the vulnerability of the U.S. fiscal position to future economic shocks.”

But what is causing the most discussion behind the scenes, both domestically and abroad, are the concerns Fitch enumerated on the ability of the U.S. to govern itself. Fitch raised the following governance issues:

“In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process….”

Debt-limit standoffs are, unfortunately, not the only political standoffs. It’s difficult for ratings agencies, or the rest of the world for that matter, to forget that it was just over 2-1/2 years ago that the seat of government, the U.S. Capitol, faced a bloody insurrection — by American citizens. Photographs of that out-of-control scene made the front pages of newspapers around the world, as we chronicled here.

One comment from Fitch on U.S. governance on Tuesday seemed far too generous. It said that according to the World Bank Governance Indicators (WBGI), the “U.S. has a high WBGI ranking at 79, reflecting its well-established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption.”

A “low level of corruption.” Let that sink in slowly for a few minutes. The immediate past president of the United States, Donald Trump, has now been indicted for the third time. The largest bank in the United States, JPMorgan Chase, (which has already been charged by the Justice Department with five criminal felony counts since 2014 and admitted to all of them), is in the midst of a federal lawsuit in Manhattan where the Attorney General of the U.S. Virgin Islands has produced hundreds of documents, internal emails, and transaction reports showing that the bank actively participated in the child sex trafficking operation of Jeffrey Epstein for more than a decade, with its tentacles reaching men in high places in the U.S. And the investigation of insider trading at the central bank of the United States, the worst scandal in the 110 year history of the Federal Reserve, is being stonewalled by the Fed’s Inspector General. The criminal division of the U.S. Department of Justice has yet to weigh in on either the JPMorgan case or the Fed’s trading scandal, despite both being of critical national importance.

There is a website where one can look at the front pages of newspapers across America on any given day to gauge the concerns of our fellow citizens. Yesterday, we checked small and medium size newspapers across the country to see if any newspaper reported the Fitch downgrade of the U.S. credit rating on its front page. Of the two dozen newspapers we sampled, we couldn’t find any mention of the credit downgrade.

The Star Ledger in Newark, New Jersey found room to mention on its front page that the New York Mets had traded Justin Verlander to the Houston Astros, but not a peep about the U.S. losing another AAA rating from a Big Three credit agency.

The Detroit News didn’t think its front page needed the Fitch news but it did make room to tell its readers that Michael Lorenzen was being traded by the Tigers to the Phillies.

What was making front page news across America yesterday was Trump’s indictment. The Atlanta Journal-Constitution ran a bold font, all-caps headline: “TRUMP FACES FOUR FELONY COUNTS.” Directly below that was a picture of carefree elementary school children heading into school for the first day of classes. (Schools open in August in some parts of the United States.)

PBS summarized the escalating corruption charges around Trump like this: “Special counsel Jack Smith, who indicted Trump in the election case, has also charged Trump in federal court with the illegal retention of top secret documents. In New York, Trump faces criminal charges in a hush money case and a civil trial over his business practices. And in Georgia, a county district attorney is expected to announce charging decisions in August over efforts by Trump and his allies to overturn his 2020 election loss in the state.”

It’s important to remember that Trump came to power because the two major political parties gave U.S. voters the following two choices in 2016: elect Hillary Clinton as President despite the fact that she had outsourced Top Secret documents during her time as Secretary of State, from the safety of government controls to a private server in the basement of her New York home that lacked any government protections. Or, voters could elect Donald Trump, who had taken his businesses into bankruptcy six times and had been charged with serial sexual assaults by women, while admitting on camera to grabbing them in their genital area and getting away with it.

But, hey, it’s good to know that the World Bank thinks the U.S. has “a low level of corruption.”

The End of Power Projection?

Trying to Understand the World: https://aurelien2022.substack.com/p/the-end-of-power-projection?nthPub=681

One of the benefits of military experience is your distate for military movies and politicians pitching the latest war.

I didn’t have to watch a John Mearsheimer video to know how the US Proxy War on Russia would play out.

We’re in it for the TV news soundbite and maybe some trashy moves thereafter. The Gulf Wars were ideal.

With Russia, our plan seemed to be we announce sanctions on Monday, oligarchs lose dough on Tuesday, and regime change happens in Moscow on Wednesday. Such was the plan

In contrart, Russia plays the long game. They hate their oligarchs – go ahead, make my day. They’re not in it for the land – they have plenty of that. They’re in it to remove the threat.

Rather than Hollywood shock and awe to effect regime change, the Х-47М2 Кинжал are intended to simply obliterate point targets. On the battlefield, it’s lots of light infantry, heavy artillery, armor when appropriate, drones. and time.

Shock and awe is for TV consumption, and as an air and sea power, something we can do quiite well. We don’t do land war except when overruning Tier 2 players while under the protection air superiority.

And in the current era, we only have enough sea power to protect the homeland.

Nothing wrong with that. Can be cheaper, too if we focus on that. Probably means a safer world too.

**********

The End of Power Projection?

We can’t get there from here, anymore.

AURELIEN

JUL 26, 2023

In a lot of history’s conflicts, the combatants come from adjacent countries, or even different parts of the same one, and they fight to settle ownership of territory, borders, access to strategic materials or communications, or even who will control some third political entity. But there is another kind of warfare, which we might call expeditionary warfare or power projection, which aims at preparing forces, projecting them some distance, having them perform a military operation, and extracting and recovering them, hopefully intact or largely so. It is, in fact, this latter model which has been common among western powers since 1945, and the norm for the last thirty years, and much of modern western weaponry, tactics and training have been designed around it. But there are several reasons to think that this type of warfare is rapidly becoming obsolete and impossible, with political ramifications that we have hardly begun to think about. Here’s why.

Fighting requires contact with the enemy, either directly or, more frequently these days, remotely. Historically, armies did not always have to move very far to make contact, and when they did, it was generally on foot. Whilst the fighting could extend over considerable distances (Napoleon’s campaign in Russia, for example) and armies could move back and forth over large areas, fundamentally, each had a national capital and a logistic capacity and lines of communication to fall back on. Even the herculean struggle between Germany and the Soviet Union between 1941 and 1945 was fought continuously from the centre of Poland as far as Moscow, and then back to Berlin.

But there have also been occasions, and even entire campaigns, that have been fought at a distance. Here, some technology is used to move troops and equipment a long way from home, in order to attack forces you were not originally in contact with. Sometimes, entire wars are in effect expeditionary: the Crimean and Boer Wars, for example, or more recently the wars in Korea, Vietnam and Iraq.

Traditional wars of conquest were not generally expeditionary, because the soldiers set out from a secure base, and in most cases just marched or rode in one direction until they met an enemy to fight, or a city to sack, and, if successful, continued on to the next. Alexander the Great’s soldiers simply marched as far as India. The Arab conquests mostly involved light cavalry and infantry sweeping progressively through the Middle East and Africa as far as the Maghreb. Even then, there were exceptions: the disastrous attempted expedition to Sicily by the Athenians in 415-13 BC is one early example of expeditionary warfare. On the other hand, some expeditions were both large-scale and successful: the First Crusade involved the movement of perhaps 100,000 people, including non-combatants, by land and sea across the whole width of Europe, followed by battles which (temporarily) expelled the Arab invaders from the Holy Land.

These last two examples demonstrate the most fundamental requirement for expeditionary warfare: technologies for transporting combatants to where you want them, and then sustaining them while they are there. The earliest and most obvious technology is, of course, the horse, which enabled longer-distance expeditions to be mounted from early on, though not usually at large scale. But the most important early technology for power projection, especially to meet threats on the borders, was actually the humble paved road. Both the Achaemenid (Persian) and the Roman Empires emphasised the building of good roads, which enabled them quickly to move forces to where they  were needed, and return them quickly when the fighting was over. Even today, as we have seen in Ukraine, control of metalled roads is critical for forces to be moved around quickly. Subsequently, railway systems were constructed to facilitate not only deployment of troops around the country itself but, as with Prussia, quickly positioning them for offensive strikes into enemy countries. (Even today, the vast majority of military transport on land is by rail.)

But true expeditionary warfare, from the Athenians onwards, requires the ability to cross long distances, through areas which you do not necessarily control in peacetime. The classic method of doing this has always been by ship. This could be done on a massive scale: some 350,000 British troops served in the Boer War, virtually all transported by ships, that also kept them supplied with logistics. In the Second World War, millions of troops were deployed around the world that way. As late as the Gulf Wars, whilst personnel often deployed by air, anything heavy had to go by ship as well. In such a situation, control of the medium you are passing through is obviously essential. The attempted Spanish invasion of England in 1588, for example, was unsuccessful, because the Armada, sent from Spain could not defeat the English fleet, control the Channel and so permit the transport of Spanish troops from the Low Countries. The Germans faced the same problem in 1940 with the added complication of the need to have air superiority.

One reason why the Persians and the Romans built good roads was to improve communications. Your ability to react to threats on the frontier, or take advantage of opportunities, largely depended on the speed with which information could be passed to the capital. Likewise, it was important to know what your forces were doing, and what success they were having, in case it was necessary to send reinforcements to rescue the situation or take advantage of an opportunity. By contrast, expeditionary forces sent by sea were effectively out of contact with their national capitals for weeks or months, so Nelson, for example, would have departed with only very general instructions.The position was revolutionised with the laying of submarine cables from the 1850s, and British expeditionary operations became much easier with the completion of the network linking all its major colonies before the First World War. These days, commanders and political leaders can micro-manage individual operations from the comfort of their offices: you may recall the photographs of Hilary Clinton watching live the killing of Osama Bin Laden, a rictus of glee and excitement on her face.

And finally, of course, the force you send has to be capable of doing its job, and armed with suitable weapons to defeat the enemy. With the galloping increase in the importance of military technology over the last 150 years, this element has become critical: in the two Gulf Wars, massive and complex heavy armoured forces had to be transported across long distances, and aircraft and their logistics moved to forward air bases.

In theory, western armies after 1945 were equipped and trained for an anticipated titanic armoured clash with the Warsaw Pact in central Europe. Although there would have been flanking operations by both sides, the assumption was that the main event would be an apocalyptic armoured confrontation between forces which had been in position for decades, and which had substantial  and reliable logistic backup. The reality was somewhat different. Where western militaries were actually engaged in active operations, it tended to be at a distance: everything from colonial wars to UN operations to counter-insurgency, to expeditionary wars such as Vietnam. Mass armoured warfare was theoretically taught in most countries, but it was not practiced: now, it is not even taught because the West has no large armoured formations above Brigade level to deploy. And since the end of the Cold War, the West (and its entire modern generation of military leaders) have grown up with the experience, and the permanent assumption, of a permissive environment into which to operate, adequate communications and logistics, and overwhelming superiority in combat power.

It is true that reality has not always matched this rosy picture. Both Gulf Wars revealed logistic problems, and the second showed that the reliance on civilian contractors, increasing all the time, could be dangerous unless complete security could be assured. Afghanistan was also tricky in places: there was no sea-coast, and the main airport in Kabul could not take large aircraft. The Coca Cola for US troops came by lorry across the frontiers from Pakistan, and ironically the drivers often had to pay the Taliban for permission to pass through check-points. Not all weapons performed as advertised, and in many cases highly-sophisticated and expensive weapons were used in place of simpler and cheaper ones, because it was all that was available.

Nonetheless, after the Libyan adventure of 2011, western leaders came to take for granted the ability to intervene effectively anywhere in the world, without casualties or repercussions, against ascriptive enemies who in practice could not resist seriously. The Russian involvement in Syria after 2015 did, in fact, bring a little more realism to this attitude, but in general western technology and western militaries were simply assumed to be superior to anything that might be encountered anywhere in the world. Two things happened (or to be more precise became known) in recent years, that put this cosy judgement in question.

First, projecting power requires platforms, in the sense that defending against projected power doesn’t, necessarily. This may sound obvious, but in fact a lot of western writing has confused the picture by assuming that western weapons (combat aircraft, aircraft carriers) would be engaged in a series of duels with the equivalent equipment of the other side, and the western equipment would win. But of course attack and defence don’t necessarily work like that. More normally, two sides use asymmetric tactics, because they have different objectives. In Kosovo in 1999 for example, the West’s objective was to force Serbia to hand over control of Kosovo, and thus bring down the current Serbian government. They tried to do that through air and missile bombardment, because a land campaign would have been too difficult and costly. But the Serbs, as well as using air defence missiles, put into action plans honed over forty years to hide and protect their equipment and command and control: most of the targets struck by western aircraft and missiles were dummies, and it was only Russian political pressure on Serbia that eventually saved NATO.

But the projecting power (the aggressor if you will) always needs platforms to launch weapons. Now a platform can be many things, from a soldier on horseback to an aircraft carrier, but usually a platform is employed to put some distance been the aggressor and possible retaliation. The defender, on the other hand, has simply to survive the weapons and, if possible destroy the platforms. In addition, because the attacker is often less motivated than the defender, it is not necessary to defeat all the platforms: just enough damage needs to be done, or threatened, to make aggression unattractive and for the aggressor to return home. The current classic example of this is North Korea. When did you last hear even the most hawkish neoconservative talk about attacking North Korea? Probably never, because, whilst the country’s conventional forces are largely obsolescent, they do include thousands of well-protected long-range artillery pieces and rockets, most of which would survive an attack by the West, and could be then used to wipe out the major cities of Korea and Japan. Quite what the status of the nuclear weapon programme is, I doubt if more than a handful of people know, but there is enough uncertainty about it to make the West think twice about aggression. There is thus no need for North Korea to invest in sophisticated modern weapons and platforms, even if it had the resources, in order to ensure its security.

All this creates conceptual problems for the West in its force projection plans. Western procurement policy over the last fifty years has steadily moved in the direction of smaller and smaller numbers of increasingly powerful systems, costing much more than their predecessors, produced much more slowly, and expected to be in service for a very long time. The original basis for this was the Cold War, where any fighting was expected to be short and brutal, probably finishing with the use of nuclear weapons. Not able to match the numbers of Warsaw Pact platforms, the West instead went for quality, on the assumption that it would lose all or most of its weapons, but would nonetheless “prevail.”

Even in those days, though, this logic was questionable. Soviet doctrine then, like Russian doctrine now, emphasised quantity over quality: it was better to have very large numbers of “good enough” weapons than a small number of complex and sophisticated ones. (Indeed, as good Marxists, the Red Army considered that an increase in quantity could actually have a qualitative effect.) At the end of the day, reasoned the Soviets, if you have a thousand obsolescent tanks left, but your opponent has no tanks left at all, you have won. In any event, it was simply not feasible for western democracies to run a wartime economy in peacetime for forty years as the Soviet Union did, even had the desire been there. So in practice, from the 1970s onwards, the West produced smaller and smaller numbers of more and more sophisticated weapons, and expected them to be more and more versatile and capable of different missions. Combat aircraft were the classic example: the Tornado aircraft of the 1980s was produced in two quite different variants (Air Defence and Interdiction/Strike) using the same airframe. And significantly, it was a tri-national collaborative project, in an attempt to spread the cost.

Nobody really spent much time thinking about what the aftermath of a war with the Warsaw Pact would actually be like, and certainly not its military aspects. Even assuming a NATO victory, or at least anything less than a WP victory, there would be other things to worry about. A stock of equipment and armaments all destroyed and used up would be one of the less pressing problems after a nuclear war. Of course, countries that once embraced this logic cannot easily escape from it. It is a logic which leads to smaller and smaller forces, fewer and fewer installations, more and more sophisticated equipment and, in turn, less and less flexibility across your forces. This is fair enough if you are planning for a single, apocalyptic battle, but less obvious if you are planning for decades of small operations around the world. What the West has, and has had for some time now, is a single-shot military. One serious campaign, whether finally won or lost, would disarm the West for a decade.

So far, this has not mattered, because equipment losses in operations around the world have been very limited. For the most part, the targets have not been able to shoot back effectively. But for reasons we will go into in a moment, this may be about to change.

As well as the fragility of western forces and the difficulty of replacing them, the second complicating factor is the consequences of the assumptions against which they were designed. Now here, we have to bear in mind timescales. The West is currently using a generation of tanks originally designed in the 1980s for the above-mentioned apocalyptic battle with the Warsaw Pact, although upgrades and new variants have been produced since. Now it’s fair enough to criticise, but at least that generation—Leopard 2s, Challenger 2s, M-1s— was produced according to a coherent military requirement of some kind. The basic principles of high firepower, relatively low mobility and as much protection as possible were logical enough for tanks that were fighting a defensive battle and falling back on their lines of supply. But after the end of the Cold War, there was literally no military logic to guide the upgrade and development of existing tanks, and still less the production of new ones. Who were we going to fight? Where and for what purpose? How were we going to get there? So in practice, given the inertia of defence programmes and the length of time for which equipment is intended to stay in service, things have continued as they were, with new variants and upgrades of tanks essentially designed for a short vicious war in Europe, except in much smaller numbers and with much less sustainability. And over there, the Russians have all the time continued to plan and prepare for the kind of war which is happening now, which explains why NATO is scared to death to fight them.

The situation with combat aircraft is actually worse, because the aircraft currently in service with western air forces were designed at the end of the Cold War, (and in some cases even earlier) against a level of threat that was anticipated to develop perhaps 10-15 years in the future. The sheer cost and sophistication of such aircraft has meant that they can only be produced in small numbers, but also that, when military missions arrive, these aircraft have to be used because there is nothing else. Thus, in conflicts such as those in Afghanistan and Mali, enormously sophisticated and complex aircraft, requiring hours of maintenance between flights at modern airbases, were used at long range to drop bombs on militia groups armed with automatic weapons. But at least the militia groups couldn’t shoot back.

And of course naval forces have followed the same logic: countries around the world have invested in aircraft carriers, because they are the basic tool of force-projection. A carrier is not just a floating airfield, it’s also a floating command and control centre, a floating barracks, a floating helicopter park, and many other things. Yet carriers are immensely costly, and getting costlier,  and even the richest nations can only afford to buy small numbers of them. That said, any projection of your forces outside home waters, and outside the range of shore-based aircraft, absolutely requires some form of carrier capability, even if only for humanitarian evacuations, as in Lebanon in 2006.

We also need to understand the assumptions behind the high specification of much military equipment still in use today. In particular, much of it was designed on the assumption that it would need to be better than the equivalent Soviet equipment expected to be fielded in ten or twenty years’ time. So Main Battle Tanks were designed to defeat their expected Soviet equivalents, aircraft were designed to shoot down their Soviet equivalents in air superiority contests, and so forth. Of course, obvious changes in the threat, such as the profusion of man-portable anti-air and anti-tank missiles had to be taken into account to some extent, but western equipment was overwhelmingly designed using its Soviet equivalents as a reference, thus implicitly assuming that the Soviet Union would fight much as we would.

There are always exceptions of course; Britain and France developed light, portable equipment for operations out of area or counter-insurgency, and more recently the US has followed. But precisely because these equipments are light and portable, they are not suited to any serious conflict, let alone a conflict with a peer enemy, or to one armed with modern weapons. For the last thirty, years the dominance of western air power has been such that when western light forces encounter opposition, they have been able to call on aircraft to blow it away. But this is in the process of changing.

Nonetheless, most serious western weaponry traces its origin to assumptions about what Soviet equipment in the 2010s would look like, and how to defeat it. This could have some curious results. The most obvious example is the manned fighter aircraft, which has been a cult object in western air forces for a century or more. Fighter aircraft were popularly visualised as engaging each other in one-on-one duels like knights of old. Actually, this didn’t make sense, although it goes back to the use of primitive fighters in “patrols” in World War I, which sounded good but achieved nothing except dead pilots. In theory, these patrols established “air superiority,” but in practice this was never achievable and, had it been possible, technology at the time was too primitive to take advantage of it. Roll forward to the next war, and we realise that the images of Spitfires and Hurricanes tangling with Messerschmitts in 1940 is misleading: the British were not after the fighter escorts, they were trying to shoot down the bombers. But the image of the high-technology “knight in the sky” is an extremely persistent one.

In the Cold War, even air defence using manned aircraft was questionable. It was assumed, rightly or wrongly, that in the early days of a conventional war the Soviet Union would try to attack targets in Europe with manned bombers, and that western aircraft would try to penetrate the fighter screen around them and destroy them. But what was clear, even if it was seldom articulated, was that there could be no question of the West having air superiority over the battlefield itself, not because of aircraft but because of missiles. It’s worth backing up here a second. Control of air space is only an enabler: by itself it doesn’t win battles. In Normandy in 1944, the Allies had undisputed command of the air, and they used it to provide massive support to their ground forces, which nonetheless still took months to break through the German defences. Without getting into the technical vocabulary, air superiority means that you can be sure that you can conduct air operations against an enemy, albeit with the possibility of losses, whereas the enemy is largely inhibited from conducting operations against you. This is what the Russians have had in Ukraine for some time, but note that this superiority does not always have to be the result of duels in the sky. For the German in France in 1940, it had much more to do with command and control and with the deployment of light anti-aircraft systems well forward. Individually, French aircraft were at least as good as those of the Luftwaffe.

In Ukraine, the Russians are making use of their traditional skills with artillery to achieve air superiority through missiles and radars. This would probably have been true even in the Cold War, since there was no sign that the Soviet Union was anticipating fighter duels over the battlefield, or anywhere much else. But it’s important to understand what this means today: highly expensive and sophisticated fighter aircraft looking vainly for a target to fight, while being vulnerable to long range missile attack. Much military technology resembles the children’s’ game of scissors-stone-paper: no individual weapon or technology is dominant under all circumstances. If the enemy does not want to play air combat between aircraft, your shiny new fighter is just a target for missiles: you thought it was the scissors that would cut the paper but in practice it’s the scissors that are blunted by the stone. (Much the same was true of main battle tanks. Throughout the Cold War, there was a fixation with tank-on-tank action, and whether western tanks were “better” than Soviet ones, although in any real conflict the situation would have been much more complicated than that.)

This is a very fundamental point, but I see no sign that it has been grasped. Its most important consequence is that the primary method of air control, and by extension dominance of the ground battle, is by missiles and drones, as we see today in Ukraine. This makes the side which is conducting defence at the tactical/operational level dominant, and makes an attacker vulnerable. It isn’t just a question of relative technologies, it’s also a question of costs and numbers. Even very sophisticated missiles are in absolute terms relatively cheap, and relatively quick to build. Moreover, any aircraft is in the end nothing more than a platform for weapons and sensors, and it is the weapons that do the damage. Thus, a new generation aircraft capable of launching two long range missiles would have to survive perhaps thirty to fifty missions before it had launched enough missiles to justify its unit cost as a platform. This is, to put it mildly, not typical of modern air warfare, and it’s likely that aircraft and pilot would be gone at the end of two to three missions, with no guarantee that the missiles would even strike their target. Moreover, new aircraft take months to build and new pilots take years to train, whereas missiles take only a few days. What this suggests is that we are now seeing the development of a new type of warfare, in which missiles and drones will both provide a cheap method of precision strike, and also be able to control large areas of terrain.

But it isn’t just a question of numbers, either, it’s also a question of politics. Back in the Cold War, as I have pointed out, war games assumed a single, apocalyptic battle, after which there would be nothing left of anything. Equipment would have been destroyed and forces annihilated, but it was hoped that nonetheless, the West would have “won.” But significant losses of major platforms in expeditionary wars of choice are simply not feasible politically. Forty years ago, UK public opinion, perhaps more robust than it is now, was still shaken by the loss of a number of frigates, destroyers and aircraft in the Falklands War.

Most western societies have come to believe  in recent years that their armed forces are all-powerful and effectively invulnerable, except for attacks by mines and bombs. The loss of even a squadron or two of high-performance aircraft in a hypothetical small clash with Russia or China would be a political shock that the average western government would probably not survive, unless a population could somehow be convinced that the very survival of the nation was at stake, which seems unlikely. And of course the financial and industrial consequences would be severe as well, not to mention the strategic cost of having lost part of an air force. Major air warfare against either of these nations is unthinkable politically, especially since the western aircraft involved would perish at the hands of missile operators, not as a result of knightly combat in the sky. Even the United States would effectively be disarmed after a significant clash with either nation, and would take between a decade and a generation to reconstitute its forces, assuming that were indeed possible. No nation today can afford such an outcome.

Which brings us to the last point: surface combatants, and especially aircraft carriers. Carriers are often dismissed as outdated and vulnerable, which makes it all the more curious that  so many nations are investing in them. The real point about carriers, though, is power projection: there is no other way in which a nation can project any kind of serious power beyond shore-based air cover, and to give up carriers is to publicly give up any ambition to do so. Military forces serve many political purposes in addition to their combat functions, of course, and one of those is demonstrating that you are a serious player in the strategic area. That is why nations newly acquiring  blue-water navies, like South Africa and South Korea, made a point of arranging ship deployments and port visits, to heighten their political profile. The capacity to take part in anti-piracy or embargo operations can have political benefits as well.

The problem comes when these deployments are into a hostile environment. We still tend to think of the carrier battles of the Second World War as the norm: fleets that never saw each other fighting largely with aircraft, targeting each others’ carriers. But not only has technology changed, with a preponderance now of long-range anti-shipping missiles, there is also no reason to suppose that a putative naval enemy (presumably China) would agree to fight that way. To take the well-worn example of an invasion or a blockade of Taiwan, the Chinese Navy would almost certainly wait in home waters for the West to come to it, and seek to win largely with missiles. Thus, whilst naval experts may well be right that the US would “win” a fleet to fleet contest on the high seas, there is no reason to suppose that the Chinese would oblige them with such a scenario. And “winning” is extremely relative as a concept. For example, it is hard to see the American public being prepared to tolerate the loss of a single aircraft carrier to “defend” Taiwan, let alone two or three. History suggests that bring prepared to go to war is one thing, but a willingness to tolerate significant casualties is quite another. A large part of today’s collective western political ego anyway comes from a sense of impunity and invulnerability. But such feelings are brittle (not to mention unrealistic anyway) and the political consequences of the end of such a delusion are likely to be profound.

So we may be at a turning point not simply in the technical aspects of warfare, but more importantly in the politics of the use of force abroad. For more than a generation now, western policy has assumed that such use would be essentially casualty-free, and especially that major platforms would not be at risk. After all, would NATO have attacked Libya in 2011 if in the news every day there had been reports of another aircraft shot down? I rather think not. The spread of relatively cheap and simple but effective air defence systems around the world, which seems virtually certain now, will change the power projection equation fundamentally, as will the wider use of anti-shipping missiles and missiles for attacking ground targets, like the Iskander. How would the air war in Yemen have gone, for example, if a Russian anti-aircraft destroyer had just happened to be on a deployment in the region?

Now of course war games will continue to show that a western attack on small counties will “succeed”, and that copious use of air power will eventually establish air superiority and enable other weapon systems to be hunted down and destroyed. But that’s not really the point: western public opinion may accept punishment beatings of small countries, but not actual wars where western forces suffer significant losses. The consequences of this are wide-ranging enough to need a separate essay, but I think we can already see a future in which the West decides it’s more prudent to stay at home, and let the locals sort out their own problems. Not everybody will feel that’s a bad thing.

Putin’s Warning

Transcript, A Son of the American Revolution: https://sonar21.com/putin-issues-stark-warning-to-poland-and-nato/

Putin held a video conference on Thursday with members of Russia’s Security Council. I hope folks in the West pay attention to what he said, which is why I’m presenting the entirety of his remarks following a presentation by the Director of the Foreign Intelligence Service. Based on public source information and Russia collected intelligence, Russia believes that Poland is planning to seize Ukrainian territory west of the Dnieper River as Ukraine’s much ballyhooed counter offensive collapses.

Let me give you Putin’s bottomline up front:

Regarding the policy of the Ukrainian regime, it is none of our business. If they want to relinquish or sell off something in order to pay their bosses, as traitors usually do, that’s their business. We will not interfere.

But Belarus is part of the Union State, and launching an aggression against Belarus would mean launching an aggression against the Russian Federation. We will respond to that with all the resources available to us.

Vladimir Putin is not a weak, spineless creature like Barack Obama or Joe Biden. He does not make idle threats and does not succumb to emotion.

So let us start with the briefing by Sergei Naryshkin, Russia’s Intelligence Chief:

Director of the Foreign Intelligence Service Sergei Naryshkin: Mr President, colleagues.

According to information provided to the service by several sources, officials in Warsaw are gradually coming to an understanding that no kind of Western assistance to Kiev can support Ukraine in reaching the goals of this assistance. Moreover, they are beginning to understand that Ukraine will be defeated in only the matter of time.

In this regard, the Polish authorities are getting more intent on taking the western parts of Ukraine under control by deploying their troops there. There are plans to present this measure as the fulfillment of allied obligations within the Polish-Lithuanian-Ukrainian security initiative, the so-called Lublin Triangle.

We see that plans also call for significantly increasing the number of personnel of the combined Lithuanian-Polish-Ukrainian brigade, which operates under the auspices of this so-called Lublin Triangle.

If Russia sees Poland starting to mass troops on Ukraine’s border (and do not forget that the United States has deployed at least two armored brigades in Poland), this certainly will capture the attention of the Kremlin leadership. Putin responded at length to Naryshkin’s briefing. This does not read like prepared remarks. He appears to be speaking extemporaneously and draw some very bright red lines for NATO.

Vladimir Putin: Yes. We should elaborate on what Mr Naryshkin has just said. This information has already appeared in the European media, in particular, the French.

I believe it would be suitable in this context to also remind everyone about several history lessons from the 20th century.

It is clear today that the Western curators of the Kiev regime are certainly disappointed with the results of the counteroffensive that the current Ukrainian authorities announced in previous months. There are no results, at least for now. The colossal resources that were pumped into the Kiev regime, the supply of Western weapons, such as tanks, artillery, armoured vehicles and missiles, and the deployment of thousands of foreign mercenaries and advisers, who were most actively used in attempts to break through the front of our army, are not helping.

Meanwhile, the commanders of the special military operation are acting professionally. Our soldiers, officers and units are fulfilling their duty to the Motherland courageously, steadfastly and heroically. At the same time, the whole world sees that the vaunted Western, supposedly invulnerable, military equipment is on fire, and is often even inferior to some of the Soviet-made weapons in terms of its tactical and technical characteristics.

Yes, of course, more Western weapons can be supplied and thrown into battle. This, of course, causes us some damage and prolongs the conflict. But, firstly, NATO arsenals and stockpiles of old Soviet weapons in some countries are already largely depleted. And secondly, the West does not have the production capacities to quickly replenish the consumption of reserves of equipment and ammunition. Additional, large resources and time are needed.

The main thing is that formations of the Armed Forces of Ukraine suffered huge losses as a result of self-destructive attacks: tens of thousands of people.

And, despite the constant raids and the incessant waves of total mobilisation in Ukrainian cities and villages, it is increasingly difficult for the current regime to send new soldiers to the front. The country’s mobilisation resource is being depleted.

People in Ukraine are asking a legitimate question more often: for what, for the sake of whose selfish interests, are their relatives and friends dying. Gradually, slowly, but clarity comes.

We can see the public opinion changing in Europe, too. Both the Europeans and European elites see that support for Ukraine is, in fact, a dead end, an empty, endless waste of money and effort, and in fact, serving someone else’s interests, which are far from European: the interests of the overseas global hegemon, which benefits from the weakening of Europe. The endless prolongation of the Ukrainian conflict is also beneficial to it.

Judging by the actual state of affairs, this is exactly what today’s US ruling elites are doing. Anyways, this is the logic they follow. It is largely questionable whether such a policy is in line with the American people’s true, vital interests; this is a rhetorical question, and it is up to them to decide.

However, massive efforts are being taken to stoke the fire of war – including by exploiting the ambitions of certain East European leaders, who have long turned their hatred for Russia and Russophobia into their key export commodity and a tool of their domestic policy. And now they want to capitalise on the Ukrainian tragedy.

In this regard, I cannot refrain from commenting on what has just been said and on media reports that have come out about plans to establish some sort of the so-called Polish-Lithuanian-Ukrainian unit. This is not about a group of mercenaries – there are plenty of them there and they are being destroyed – but about a well-organised, equipped regular military unit to be used for operations in Ukraine, including to allegedly ensure the security of today’s Western Ukraine – actually, to call things by their true name, for the subsequent occupation of these territories. The outlook is clear: in the event Polish forces enter, say, Lvov or other Ukrainian territories, they will stay there, and they will stay there for good.

And we will actually see nothing new. Just to remind you, following WWI, after the defeat of Germany and its allies, Polish units occupied Lvov and adjacent territories that had been part of Austria-Hungary.

With its actions incited by the West, Poland took advantage of the tragedy of the Civil War in Russia and annexed certain historical Russian provinces. In dire straits, our country had to sign the Treaty of Riga in 1921 and recognise the annexation of its territories.

Even earlier, back in 1920, Poland captured part of Lithuania – the Vilnius region, a territory surrounding the present-day Vilnius. So they claimed that they fought together with the Lithuanians against so-called Russian imperialism, but then immediately snatched a piece of land from their neighbour as soon as the opportunity presented itself.

As is well known, Poland also took part in the partition of Czechoslovakia following the Munich Agreement with Adolf Hitler in 1938, by fully occupying Cieszyn Silesia.

In the 1920-1930s, Poland’s Eastern Borderlands (Kresy) – a territory that comprises present-day Western Ukraine, Western Belarus and part of Lithuania – witnessed a tough policy of Polonisation and assimilation of local residents, with efforts to suppress local culture and Orthodoxy.

I would also like to remind you what Poland’s aggressive policy led to. It led to the national tragedy of 1939, when Poland’s Western allies threw it to the German wolf, the German miliary machine. Poland actually lost its independence and statehood, which were only restored thanks in a large measure to the Soviet Union. It was also thanks to the Soviet Union and thanks to Stalin’s position that Poland acquired substantial territory in the west, German territory. It is a fact that Poland’s western lands are a gift from Stalin.

Have our Warsaw friends forgotten this? We will remind them.

Today we see that the regime in Kiev is ready to go to any length to save its treacherous hide and to prolong its existence. They do not care for the people of Ukraine or Ukrainian sovereignty or national interests.

They are ready to sell anything, including people and land, just like their ideological forefathers led by Petlyura, who signed the so-called secret conventions with Poland in 1920 under which they ceded Galicia and Western Volhynia to Poland in return for military support. Traitors like them are ready now to open the gate to their foreign handlers and to sell Ukraine again.

As for the Polish leaders, they probably hope to form a coalition under the NATO umbrella in order to directly intervene in the conflict in Ukraine and to bite off as much as possible, to “regain,” as they see it, their historical territories, that is, modern-day Western Ukraine. It is also common knowledge that they dream about Belarusian land.

Regarding the policy of the Ukrainian regime, it is none of our business. If they want to relinquish or sell off something in order to pay their bosses, as traitors usually do, that’s their business. We will not interfere.

But Belarus is part of the Union State, and launching an aggression against Belarus would mean launching an aggression against the Russian Federation. We will respond to that with all the resources available to us.

The Polish authorities, who are nurturing their revanchist ambitions, hide the truth from their people. The truth is that the Ukrainian cannon fodder is no longer enough for the West. That is why it is planning to use other expendables – Poles, Lithuanians and everyone else they do not care about.

I can tell you that this is an extremely dangerous game, and the authors of such plans should think about the consequences.

NATO may be playing a dangerous game, but Russia ain’t playing. Putin is not engaged in rhetorical hyperbole when he states, “We will respond to that with all the resources available to us.” The potential for the war in Ukraine to escalate dramatically remains high. It does not appear that there is any leader of the NATO members who can talk some sense to Poland’s President Duda. Are the people of Poland ready for World War III?

The Bell Tolls for Fiat

Alasdair Macleod: https://www.goldmoney.com/research/the-bell-tolls-for-fiat

The importance of Russia’s announcement that a new gold-backed trade currency is on the BRICS meeting agenda for August 22—24 in Johannesburg seems to have gone completely over everyone’s heads, with mainstream media not even reporting it. 

This is a mistake. China and Russia know that if they are to succeed in removing the dollar from their sphere of influence, they have to come up with a better alternative. They also know they have to consolidate their trade partners into a formidable bloc, so plans are afoot to consolidate BRICS, the Shanghai Cooperation Organisation, and the Eurasian Economic Union along with those nations who wish to join in. It will be a super-group embracing most of Asia (including the Middle East), Africa, and Latin America.

The groundwork for the new currency has been laid by Sergei Glazyev and is considerably more advanced than generally realised.

This article explains why Russia and China are now prepared to fully back Glazyev’s expanded project. For Russia, it is also now imperative to destabilise the dollar as a deliberate escalation of the financial war against America and NATO. China’s priority is no longer to protect her export trade, but to ensure that her African and Latin American suppliers are not destabilised by higher dollar interest rates. [Emphasis added]

Introduction

“The BRICS’s introduction of a gold-backed currency, which is supported by 41 countries with large and influential economies, will weaken the dollar and the euro and will benefit countries such as Iran, while Iranians in possession of gold will experience a wealth increase,” Mousavi added [the head of the South Asia Department at Iran’s Foreign Ministry]. The Russian government confirmed a day earlier that Brazil, Russia, India, China, and South Africa would introduce a new trading currency backed by gold. 

Iran’s MEHR News Agency[i]

The quote above encapsulates why a new gold-backed currency is desired: it will undermine fiat currencies which have been no friends to oil producers and benefit individuals who own gold making it popular on the streets. RT, the Russian government-financed English broadcasting service had confirmed on last Friday the intention to introduce a new gold-backed currency for BRICS members. The announcement was completely missed by mainstream media, partly because RT and other Russian news sources are censored in many countries in Europe including the UK, and any news out of Russia is disbelieved anyway.  [Emphasis added]

Reactions from those who saw it, even among gold bugs, vary from the opinion that neither China nor Russia could make a gold backed currency stick, to it taking years in the planning and implementation so is irrelevant to today’s markets. But there are good reasons to believe that this complacency will turn out to be wrong, and that events are likely to evolve considerably more rapidly than expected. 

The problem for capital markets is that they are dominated by Keynesians, automatically programmed to believe gold is bad and fiat is good. As a stockbroker in London, when President Nixon suspended the Bretton Woods Agreement, I recall there was a similar level of confusion over those implications. And now, 52 years after putting the world on a fiat dollar standard, the majority of the world has had enough of dollar hegemony, has found safety in numbers, and is going back onto a gold standard. Like all life, the pure fiat era is ephemeral after all, defined by its birth and death. Macroeconomics will have to be rewritten.

The move away from fiat has been evolving for a considerable time, with de-dollarisation the ultimate objective of the Asian hegemons. Those tracking developments in gold bullion markets in recent decades have noted the drift of bullion from west to east, and the rise in gold mine output in China and more recently in Russia. Central banks, predominantly in Asia, have been accumulating bullion reserves and adding to declared and undeclared state funds in record quantities. Ultimately, this activity can only be to use gold to secure currency values as the dollar dies or is done away with. 

A sudden turn of events occurred when the western alliance imposed sanctions against Russia following her attack on Ukraine. They set off a train of actions that has unified Asia and many of its supplier nations into a rebellion against American hegemony, stoked up by Putin and led by Saudi Arabia and the Gulf Cooperation Council. And since the western alliance turned its back on fossil fuels, the low-cost producers throughout Asia have banded together representing nearly half global oil output, and a third of natural gas. As a cartel, OPEC is now just an appendix to the Asian mega-energy producers. 

The new cartel is dominated by President Putin, whose degree from Leningrad University was in energy economics and well qualified to be energy ringmaster. Not only has he demonstrated an understanding of the importance of controlling global energy supplies, but he also has a clear understanding of the importance of monetary gold. 

Since the western alliance’s sanctions, the signals coming out of Moscow have been clear: Sergei Glazyev, who is Putin’s point-man for macroeconomic policy has been waving the gold flag since then in plain sight. As a board member of the Eurasian Economic Union Commission (EAEU) since 2019, he was tasked by Putin to design a trade settlement currency for the EAEU. The initial statement through a news agency in Bishkek in early March 2022 reported that it was to be based on the currencies of the member states and a basket of undefined commodities. According to Glazyev, his brief was to create a Eurasian monetary and financial system to the exclusion of foreign currencies, particularly the dollar and euro. 

The intention was also to remove exchange controls for cross- border settlements within the Eurasian membership, replacing the dollar as the commonly used settlement medium between them. A week later, in an article for Goldmoney[ii] I concluded that as stated the new currency would not work, and the only logical solution was to do away with the currency basket proposal and use gold backing solely to represent commodities. That way, it would be easy for other nations in the Shanghai Cooperation Organisation (SCO) to join in, which was the ultimate objective from the outset.

In July 2022, Glazyev was behind a move to beef up the Moscow gold exchange, the official line being that having been sanctioned from the London market Russian miners needed a more effective local market. But working in conjunction with the Shanghai Gold Exchange this was an important signal about the way Galzyev’s monetary thinking was developing. Confirmation came on 27 December last year, when he wrote an article for Vedomosti, a Moscow business paper, describing why the rouble needed to return to a gold standard. That article was co-written by his deputy on the EAEU committee designing the new trade currency and was a thinly veiled indication of the committee’s view. [Emphasis added]

Therefore, you did not have to be particularly astute to discern the trail of clues presented to us. We could assume with justification that gold was intended to be the sheet-anchor for this new currency probably from the outset, but some political hoops had to be jumped through to convince the EAEU member states that it was the solution. 

The impracticality of basing a new trade currency on anything else other than gold had been established. It now turns out that this project is almost certainly a Trojan horse for something far larger. It was obvious that other members of the Shanghai Cooperation Organisation should be able to join in, and now it turns out that the invitation is being extended to members of the BRICS club as well. But that’s not all. The entire membership of the SCO, its dialog partners, and associate members will be attending the BRICS conference in Johannesburg on 22—24 August. I am assuming that the original list of 36 nations, which according to most recent reports has expanded to 41, includes the members of the EAEU who were not on the original list — at the time of writing this is yet to be confirmed.

That being the case, the BRICS currency project is not a cold start and not something to be planned for a distant future. The groundwork has already been prepared by Glazyev and the structure can be rapidly assembled once the necessary resolution is adopted. It is even possible that the necessary institution(s) exist waiting to be deployed.

It is also beginning to look like there will be another proposal on the Johannesburg agenda, to merge the SCO, the EAEU and BRICS into a supersized trading block. In terms of both combined population and GDP on a purchasing power parity basis, it is already in excess of half the world, dwarfing the western alliance which kowtows to America.

The US Treasury would almost certainly have known about the BRIC proposals when the agenda was first circulated, which probably explains why at short notice Janet Yellen, US Treasury Secretary flew to Beijing. From her department’s point of view, if the new currency proposal was to be adopted its financing of the budget deficit would be adversely affected, not to mention the threat to the dollar’s hegemony. The principal card up her sleeve was to threaten greater sanctions against China’s exports, not just to America, but to her allies as well, but we don’t know if it was actually discussed in these terms.

The Chinese view

For too long and too often China has been threatened over access to markets by the Americans. We can be sure that ahead of the BRICS currency proposal the Chinese have gamed this possible threat being acted upon and come up with their own conclusions about its economic consequences. Russia’s experience, which harmed the sanctioning countries considerably more than the sanctioned, will have been fed into these calculations. One suspects that other than signalling to the Chinese and Russians that there is an increasing level of alarm in Washington, Yellen’s mission will have achieved little. And an important factor for the Chinese attitude is their experience of the US’s attempts to destabilise Hong Kong, which led to it being taken directly under Beijing’s control. It is therefore important to understand China’s analysis of America’s objectives and methods in order to define her own position.

In April 2015, Qiao Liang, the People’s Liberation Army Major-General in charge of intelligence strategy gave a speech at a book study forum of the Chinese Communist Party’s Central Committee.[iii] Qiao commenced by stating the obvious, that the U.S. enforces the dollar as the global currency to preserve its hegemony over the world. And he concluded that the U.S. would try everything, including war, to maintain the dollar’s dominance in global trading. But what he then went on to say is extremely relevant to the current situation. He described US’s actions with respect to foreign national debts. 

Qiao made the case that both the Latin American crisis in 1978—1982, and the Asian crisis in 1996—1998 were engineered by America. By reducing dollar interest rates to below their natural level they would weaken the dollar and encourage an investment boom in the targeted jurisdictions, funded by dollar credit. They then increased interest rates and strengthened the dollar to create a financial crisis. These events did, indeed, happen, but perhaps driven by the cycle of bank credit, as much as by foreign policy. [Emphasis added]

The relevance of Qiao’s analysis is that today, the same conditions appear to be targeted not against China, which does not borrow dollars, but at the dollar indebted nations around the world with which China trades — the BRICS nations. Informed by Qiao’s analysis, it must appear to China that America’s persistent strategy is to continue to raise interest rates even after the inflation dragon is slain, and by bankrupting them the US will attempt to bring the nations seeking to join BRICS back under her control. [Emphasis added]

That being the case, China will have weighed up the consequences for her export trade against the likely sanctions America and her allies could threaten and decided that the real threat is against the emerging economies in Africa, Latin America, and elsewhere which have received substantial Chinese investment. In financial terms, it is therefore imperative that this threat be addressed in a pre-emptive attack on the dollar, which can only be achieved by exposing the dollar’s weakness as a fiat currency. At least since the Lehman crisis, China and more recently Russia have had the power to do this.

Furthermore, the New Development Bank, which is headquartered in Shanghai, will be able to provide credit either in yuan or the new BRICS currency at lower interest rates to offset the undoubted strains imposed on BRICS members as a result of rising US interest rates. Therefore, China is fully prepared to counter what General Qiao Liang described as the American strategy of “harvesting” assets in foreign countries. [Emphasis added]

It is important to understand what China believes and motivates her, not whether Qiao is right or wrong. But given that his view is inculcated in the Chinese government, China is ready with Russia to mount an attack on America’s fiat currency by returning to a gold standard for trade, and ultimately for their own currencies.

The Russian view

It should be clear that the current plans for a trade currency originated in Russia, and not China. Indeed, until now China will have been reluctant to destabilise the currencies of the western alliance, because of her export interests. But not only has the relationship with America deteriorated over Taiwan, not only is it clear (in China’s view) that America plans to bankrupt the BRICS members and all those seeking to migrate away from the dollar’s hegemony by raising interest rates, but it is now also clear that neither Russia nor America can back down over Ukraine. Consequently, unless China and Russia together take the initiative, shortly Russia will be directly at war with America and her NATO allies and China will almost certainly be dragged into the conflict over Taiwan. World War 3 must be forestalled.

It is clear that NATO, under the thumb of America, is determined to defeat Russia, remove Putin, and gain control of its massive natural resources. The proxy war being fought in the Ukraine appears to be failing with Zelensky’s summer offensive having ground to a halt. And following the Wagner debacle, Russia is now in a strong position to counterattack. This has led to President Biden being prepared to send the Ukrainians cluster bombs, increasing the urgency for a Russian counter-offensive.

Furthermore, with Ukraine’s summer offensive failing, NATO’s theatre of operational strategy is moving to Poland and the Baltics (Biden was in Vilnius this week for a NATO summit), with Poland particularly becoming a client state of America through NATO. The build-up of military personnel and missiles in Poland will become increasingly obvious in the coming weeks and is already anticipated by Moscow. We await Putin’s reaction, but he is unlikely to just sit on his hands and let NATO build its forces in Poland and the Baltics. [Emphasis added]

Compromise is out of the question, because it is plain to Putin that America cannot back down. Imagine the consequences for Biden, who started his presidency with the withdrawal from Afghanistan if he ends it with a withdrawal from Eastern Europe. Furthermore, the neo-cons are firmly in charge of policy, determined to defeat Putin, add Russian territory to their sphere of influence, and leave China isolated. 

Putin’s terms for peace would be unacceptable to America because he insists on protecting Russia’s borders, which means that all missiles and American bases be removed from Eastern and Central Europe. For Moscow, this raises the question as to whether Russia should simply secure its current position or take Ukraine, which can then be set up as a buffer state. A Russian attack is bound to drive up energy, cereal, and fertiliser prices, worsening price inflation in western alliance countries and causing division with America and Britain, but to the benefit of Russia’s finances which are coming under pressure. Additionally, a successful attack on their currencies’ credibility would undermine the alliance’s military capability, so the dollar should be attacked financially as well.

No one can be sure whether destroying the dollar would avert a nuclear war, but there is little doubt that so long as America can finance its aggression that events are drifting in that direction. From Putin’s viewpoint, undermining the dollar must now be a priority, perhaps combining it with taking Kiev now that Zelensky’s summer thrust has failed.

An advantage of a financial war is that it need not be declared, therefore there is no official victor, and no need for a post-war reconciliation.

Designing a gold-backed trade currency

A new trade currency has the advantage that it will not ever be used as a means of funding government deficits. And given that its role is limited to cross-border trade settlement and and dealing in physical commodities it has to be institutionally acceptable and does not have to appeal to public confidence. Much of the credit will be self-extinguishing. It is additional to national currencies, leaving individual nations to manage their own currency policies, which is why such a currency can enjoy widespread support. It is not to be used as a medium for capital investment.

As the groundwork appears to have been already established by Sergei Glazyev, it could be ready to use as soon as it is approved in August. Besides a strict and simple set of rules, all it needs are two things: the establishment of an issuing entity, and physical gold. The first can be done in a flash, if it is not already established, and the gold will be allocated from the reserves of participating central banks. This is almost certainly why central banks of many of the putative membership of BRICS have been adding bullion to their reserves. They must be extremely thankful for actors in the western financial establishment who trade paper gold in ignorance of this outcome. [Emphasis added]

The bulleted list that follows is a brief outline of how a new trade settlement currency based on gold can be quickly established to replace the fiat dollar in all transactions between member nations, updated from an earlier Goldmoney article on this topic.[iv] It will be interesting to see how its elements compare with Glazyev’s proposition.

It is designed to be politically acceptable to all involved, as well as a long-term practical solution to facilitate the Russian Chinese axis’s ambitions for an Asian industrial revolution, encompassing Africa and Latin America, free from interference by America and her allies. The essential elements are as follows:

  • The announcement of the creation of a new issuing central bank (NICB, not to be confused with the existing New Central Bank in Shanghai, whole purpose is to fund investment in the BRICS members) and a new gold-based currency on the lines below is the first step. 
  • The NICB is established with the sole function of issuing a new digital currency backed by physical gold. It will be designed to be a fully trusted gold substitute, independent of existing fiat currency values.
  • The new currency will only be redeemable for gold between the NICB and participating central banks. They will be free also to add to their NICB currency reserves by submitting additional gold to the NICB at any time.
  • The NICB’s eligible participants will be the central banks of participating nations, broadly limited to member nations, associates, and dialog partners of the EAEU, SCO, and BRICS, and additionally nations applying for membership of any of these organisations on an approved list. 
  • The NICB’s currency is issued to approved national central banks against their provision of a minimum 40% gold backing for it. For example, currency representing one million gold grammes secures an allocation of 2,500,000 currency units denominated in gold grammes. The gold does not have to be delivered to a central storage point but can be earmarked[v] from within a central bank’s gold reserves, on condition that it is securely stored in vaults on a list approved by the NICB. This list is likely to exclude gold stored at central banks of the western alliance and must not be leased or swapped. 
  • A participating central bank records the new currency units allocated to it as an asset on its balance sheet, balanced by an increase in its liabilities as equity. A participating central bank’s balance sheet is thereby strengthened.
  • A participating central bank can offer credit and take in deposits tied to the new currency’s value, to and from the commercial banks in in its national network. Note that the new currency is available exclusively to participating central banks, upon which they can base their own credit dealings with commercial banks.
  • Commercial banks trading in member nations and elsewhere will be free to create and deal in credit denominated in the NICB’s new currency. They will have no credit relationship with the NICB, but their regulating central bank will. 
  • Commercial banks whose central bank does not have access to the NICB currency can clear through wholesale credit markets and will be always free to acquire physical gold in the markets, should they wish to back credit created in the new currency with gold itself. 
  • All taxes and restrictions on gold ownership must be fully rescinded by participating nations, recognising its historic and legal status as money.
  • An efficient central clearing system for commercial banks dealing in credit based on the new currency will be established.
  • Asian commodity exchanges in the expanded BRICS will price all products in the new NICB currency as well as in dollars. Intra-BRIC imports and exports will similarly be priced. This will ensure that physical markets and their derivatives are insulated from a fiat currency collapse, a likely consequence of gold’s return to its true monetary status.

The purpose of the new currency is to provide the basis for trade finance and other cross border financial settlements on a sound money basis. The expansion of credit based upon it will grow strictly in line with economic activity and therefore will not be inflationary, undermining its purchasing power. Last week, in an article for Goldmoney I explained why when tied convincingly to gold, commercial bank credit grows on a non-inflationary basis when distortions from the lending cycle are removed. This is the key to understanding why a new trade currency constructed on these lines will endure.[vi]

It is also likely to lead to participating nations placing a greater emphasis on their own currencies’ stability while providing a safe haven from the consequences for the dollar following its introduction. Once the new currency is established, it will be in Russia’s interests to put the rouble back on its own gold standard, and China may follow with the renminbi.

All empirical evidence informs us that when gold becomes the means by which credit is valued, credit’s own value becomes tied to that of gold and is not dependent on stability in the quantity of credit. Operating as a gold substitute imparts pricing certainty to trade and investment and leads to stable, low interest rates giving the necessary conditions for maximising economic development in emerging economies.

Constructed on the lines above, it should be simple and quick to establish. It must be free from attack by members of the western alliance trying to preserve their own fiat currency systems. And the 40% gold backing rhymes with the basic requirement for a metallic monetary standard set by Sir Isaac Newton, when he was Master of the Royal Mint. 

For participating central banks, the replacement of gold in their reserves for allocations of the new currency would represent a significant increase in their balance sheet equity. As confidence in the scheme builds, it could be argued that only minimal gold reserves need to be retained by participating central banks, with the balance swapped for the new currency. For example, the Reserve Bank of India officially possesses 787.4 tonnes of gold. Converted into the new gold currency, its value in reserves is uplifted to 1,968.5 tonnes equivalent, added to its equity capital. 

The impact on gold

Throughout history, money has been gold, and the rest credit. When you detach credit from gold, there are consequences. Pricing goods and services in credit diverges from pricing them in gold. It is really that simple.

It is widely assumed that fluctuations in prices have nothing to do with the medium of exchange, and for individual transactions it is certainly true that both buyer and seller will share this view. But over time, with official policies aiming for a 2% fall in purchasing power for the dollar and other major currencies it is not true that price fluctuations are entirely due to changes in the demand/supply balance for commodities and other manufacturing inputs. In fact, since the end of Bretton Woods, measured in real money which is gold, the loss of purchasing power has been considerably in excess of the 2% annual target. The chart below puts it directly in a gold versus fiat context.

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Since the suspension of Bretton Woods, the dollar has lost 98% of its value relative to gold. The other major fiat currencies have been similarly impoverishing for their users and savers, and only now is the final act in their destruction looming due to the introduction of a new BRICS gold-backed currency. 

Through the medium of gold, participating central banks will exchange their reserve dollars for the new NICB currency. Immediately, this rejection of the dollar by a large number of central banks will devalue it further, followed by foreign non-government entities seeking to reduce their exposure. Initially, this will be seen as a run on the dollar into gold, similar to that which followed the suspension of Bretton Woods on 15 August 1971. The market was similarly nonplussed then as it appears to be today, with the London morning fix on Monday 17 August at $43, slightly down on the previous week. It wasn’t until 19 November that the morning fix exceeded $43 again for the first time. It took two whole months for the implications to sink in. But when they did, the price rose to $197.50 on 27 December 1974.

The lesson for us in this Keynesian world is that two months of static prices following the suspension of Bretton Woods is proof that gold was poorly understood in financial markets, and still is today. Derivative markets, particularly the London forward market and Comex futures for the last forty years have lost sight of gold being money and assumed it is a trading counter which plays on irrational fears of instability of the modern currency system. But with the return of gold as the anchor for credit values for the Asian hegemons and their sphere of influence, those fears will suddenly become rational.

The wider consequences of a BRICS currency gold standard

We can assume that the consequences of Asian trade settlements backed with gold will have been carefully considered by the Asian superpowers, particularly by the Russians who have faced weaponised dollars.

Besides bringing stability to export values there are other advantages to reintroducing gold into currency systems. Interest rate stability at lower rates is an obvious benefit. Currently, the Bank of Russia’s key interest rate is 7.5% and price inflation has collapsed to 2.3% (April). The yield on Russia’s 10-year OFZ bond is still 11.3%. If the rouble becomes a credible gold substitute, price inflation, interest rates, and bond yields can be expected to decline and maintain levels that reflect gold’s long-term stability, particularly in more normal times when the Russian government runs decent budget surpluses. And assuming that credit expansion by Russia’s commercial banks is not cyclically excessive, there is no reason to expect otherwise than that financial stability for the currency and the Russian economy would continue in the long-term. Coupled with low taxes (Russia’s income tax is a flat 13%) this stability can be expected foster genuine economic progress and the accumulation of personal wealth for the Russian people. It would be a far better outcome than the current situation and it would secure Putin’s legacy.

However, a move towards gold backing for their currencies by the Asian hegemons can be expected to undermine the purchasing power of western fiat currencies. International capital will abandon ephemeral fiat currencies for real values in commodities, with nations rebuilding stockpiles of energy, metals, and other raw materials instead of accumulating fiat paper. Precious metals, specifically gold, will be sought and its price can be expected to reflect the demise of fiat currencies.

The consequences for wholesale and consumer prices in the western nations would rapidly become obvious, with central banks forced to revise their expectations for price inflation sharply higher. Bond yields can be expected to rise further, undermining all financial and property values. As this negative outlook clarifies, measured against gold fiat currencies will likely enter a substantial relative decline. [Emphasis added]

The consequences of the emergence of gold backing for currencies in Asia on the currencies and economies of the western alliance are bound to differ in their detail for the currencies in the western alliance.

The reliance on inward foreign investment has protected the dollar from continual trade deficits and played a key role in funding US Government debt since the end of Bretton Woods. It has allowed the US Government to run budget deficits more or less continually. The ending of the fifty-two years of a fiat regime changes all that. The US Government will face significant funding hurdles against foreign liquidation of Treasuries. Bond yields and funding costs for the government are bound to rise significantly.

The consequences for the EU and the eurozone would be both politically and economically divisive. If it were not for political constraints, Germany would naturally drift towards cooperation with the sound money regimes emerging to her east, particularly as the finances of the Mediterranean club deteriorate. With rising bond yields, the entire euro system comprised of the ECB and its national central banks would need to be recapitalised, being already deeply in negative equity. The eurozone’s global systemically important banks (G-SIBs) are extremely highly leveraged and unlikely to survive the combination of falling asset values and bad debts that would be the certain consequences of the euro’s declining purchasing power. Having been assembled at the behest of a political committee and now managed by a political cabal, the euro is at risk of losing all market credibility.

The consequences for the UK pound will also be significant. In a similar debt trap to that of the US Government, the British have the further disadvantage of an economy suffering under increasing taxes. Furthermore, with London being the international financial centre, the UK will be at the epicentre of a fiat currency crisis. For the size of her economy, the UK has little in the way of gold reserves, hampering any future escape from the fiat currency trap.

The major governments aligned both economically and intellectually with the fiat dollar will be left at a comparative disadvantage by a BRICS gold-backed currency, possibly followed by Russia and China adopting gold standards. Interest rates, which are escaping from central bank control, will rise due to two factors: there is the credit crunch from the turn of the bank credit cycle, and the deteriorating outlook for fiat currency purchasing powers. It is the worst of both worlds. Furthermore, economists in governments and central banks would be reluctant to abandon their embedded economic and monetary policies. And will be slow to react.

The only salvation will be for western governments to jettison Keynesian macroeconomics entirely and revert to classical economic theories. The false assumptions that have built up over the fiat currency era will have to be overturned. Crises of this sort nearly always emanate in the foreign exchanges because it is foreign holders of currencies who are the first to recognise a currency’s weakness. Usually, it involves a specific currency. But this time, it will affect all the major currencies in the western alliance.


[i] Official Iranian news release. See https://en.mehrnews.com/news/203015/BRICS-currency-to-benefit-Iran-undermine-US-dollar-euro

[ii] See https://www.goldmoney.com/research/designing-a-new-currency-is-impractical

[iii] See http://chinascope.org/archives/6458

[iv] See https://www.goldmoney.com/research/cbd-cs-the-good-the-bad-the-ugly under the sub-heading, The Good.

[v] Earmarking is the technical term whereby one central bank acts as custodian for another central bank’s bullion.

[vi] See https://www.goldmoney.com/research/the-real-determinants-of-currency-value

Deposit Bleedout

Shouldn’t be a surprise we’ve seen this kind of deposit bleedout continue as the FFR rose.

Interesting is the spillover into credit balances. Higher interest rates have driven down decline loan applications.

Check out the net interet margins – tracking the trend.

Which gets us to my favorite graph

All of this by way of introduction to Wall Street on Parade: https://wallstreetonparade.com/2023/07/jpmorgan-chase-has-bled-230-6-billion-in-deposits-since-q1-2022-with-declines-in-5-of-the-last-6-quarters/

JPMorgan Chase Has Bled $230.6 Billion in Deposits Since Q1 2022, With Declines in 5 of the Last 6 Quarters

JPMorgan Chase Deposits -- Q1 2022 through Q1 2023

By Pam Martens and Russ Martens: July 20, 2023 ~

The data in the chart above comes directly from what the biggest bank in the United States, JPMorgan Chase, reported on its 10-Q filing with the Securities and Exchange Commission (SEC) for the quarter ending March 31, 2023. Despite all those mainstream media headlines and news stories about the biggest banks in the U.S. being the deposit beneficiaries of the banking panic earlier this year, the cold, hard facts on the ground are the following: at the end of the first quarter of this year, JPMorgan Chase had seen deposit outflows in four out of the past five quarters. Mainstream media conveniently forgot to mention that.

The only quarter in which JPMorgan Chase saw an inflow of deposits was the first quarter of this year, when three banks blew up: Silvergate Bank, Silicon Valley Bank and Signature Bank. That increase was a mere pittance compared to the huge outflows of deposits it had already suffered in 2022.

Now we are getting an even clearer picture of the downward trend in deposits at JPMorgan Chase thanks to the 8-K filing that the bank made with the SEC on July 14. Had it not been for that sweetheart deal that the FDIC cooked up with JPMorgan Chase in the second quarter of this year, allowing it to buy the good stuff it wanted from the failed First Republic Bank, while regulators ate the bulk of the bad stuff, JPMorgan Chase would have had another decline in deposits in the second quarter.

According to the 8-K filing, First Republic added $68.351 billion to JPMorgan’s deposits for the period ending June 30, 2023. Without those deposits, JPMorgan Chase’s deposits would have stood at $2.33 trillion as of June 30, representing a quarter-over-quarter decline in deposits of $46.64 billion. That would have brought the outflow of deposits since the end of the first quarter of 2022 to a whopping $230.6 billion, and showing that the bank lost deposits in five of the last six quarters.

The bank’s so-called fortress balance sheet is starting to look like there are termites gnawing at the timbers. (See also: JPMorgan Chase Transferred $347 Billion in Debt Securities Over the Last 3 Years to Inflate Its Capital Using a Controversial Maneuver.)

JPMorgan Chase getting the greenlight from federal regulators to purchase the failed First Republic Bank was a demonstration of regulatory capture at its worst. Despite JPMorgan Chase having admitted to five felony counts brought by the U.S. Department of Justice since 2014; despite it having an organized crime style rap sheet; and despite it being currently scandalized around the globe for functioning as the cash conduit for Jeffrey Epstein’s sex-trafficking of school-age girls for more than a decade, this is the sweetheart deal the bank got from the FDIC to take over First Republic: the FDIC would eat 80 percent of any losses on single-family residential mortgages for 7 years and 80 percent of any losses on commercial loans, including commercial real estate, for five years. The FDIC also provided JPMorgan Chase with a $50 billion, five-year fixed-rate loan at an undisclosed interest rate.

The Lvov Target

Soviet 3rd Guards Army assaulting Lvov, 13 July – 29 August 1944

John Helmer provides some interesting perspectives from the Russian point of view.

Putin’s War ran from February 2022 into March 2022. Putin’s invasion was about to end when the US-UK doubled down.

This is now Biden’s War. Russia will soon finish it on its own terms

Having crushed the Ukrainian assaults over the last month, and with Ukraine all but out of manpower, ammunition and equipment, the war is entering a voltile stage: Russia claims its inevitable victory.

Will the US-UK go all-in by design or impulse to double-down?

DC is certainly on auto-pilot to a confrontation. And if it comes to such a confrontation, one should assume Russia’s gloves come off in space, Europe and major US staging areas elsewhere.

Russia has been clear about is final red line: F-16s (flown by anyone) — and any other nuclear-capable delivery platform. With radar contacts on inbound F-16s, Russia won’t wait to see what the payload is. If the radar bogey is nuclear-capable and in the air, it’s a nuclear threat and there is no sanctuary from which aircraft may operate.

The US is incapable of covering that bet.

We shipped our ammos stocks to Ukraine.

40% of our fast attack submarines are queued up for deferred maintenance — twice the normal fraction.

Carrier strike groups cannot enter the Black Sea, and would be destroyed if one tried.

The ground troops of the Immediate Response Force is built around a Brigade Combat Team of the 82nd Airborne Division — a single battalion to be airborne deployed on 18 hours notice followed by additional battalions within a period of days.

Maybe enough to hold Lvov with Polish armor. But not a pretty picture to contemplate.

Here’s Helmer to share a Российская перспектива

John Helmer: https://johnhelmer.net/the-nato-ultimatum-to-ukraine-invitation-to-win-by-winter-or-die/#more-88341

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For all its public talk, NATO has agreed on a secret six-month plan for Ukraine. It’s a case of do or die by December. [Emphasis added]

Either the Ukrainian forces, firing everything the NATO allies can give them — from US cluster munitions to Franco-English Storm Shadow missiles and German Leopard tanks — will gain territory and advantage over the Russians; or else the Kiev regime will be destroyed and must fall back on Lvov while NATO beats its own retreat westward from the Polish and Romanian borders — its military capabilities defeated but its Article Five intact.

This is hardly a secret. “Whatever is achieved by the end of this year will be the baseline for negotiation”, the Czech President Petr Pavel, former Czech and NATO army general, announced on the first day of the summit meetings in Vilnius.  There is no more than a six-month window of opportunity, Pavel added, which will “more or less close by the end of this year”. After that, “we will see another decline of willingness to massively support Ukraine with more weapons.”

The difference between the Czech’s “more or less” was explained to Ukrainian President Vladimir Zelensky by Henry  Kissinger on the telephone. But the telephone was rigged, and Kissinger was talking instead to the Stavka in Moscow, in the guise of the pranksters Vovan and Lexus.

After justifying himself at length for initially opposing NATO membership of the Ukraine, and then mispronouncing the word “anomalous”, Kissinger acknowledged there is a problem for the Biden Administration to combat European government opposition to NATO membership for the Ukraine. The Ukrainians must fight against that, too, he implied. So long as the US is backing Zelensky,  it is necessary for the Ukrainian offensive to demonstrate small territorial advantages; abandon more ambitious ones (like Crimea); and only then agree to ceasefire talks.  Although Kissinger told Zelensky he had been speaking with US “military people”, he gave no hint that they had warned him the Ukrainians are facing defeat on the battlefield, and the loss of both territory and European support.  

The Russian General Staff calculation is different.

At the current rate of battlefield casualties – announced by the Defense Ministry counting conservatively — by December 31 the Ukrainian army will lose between 75,000 and 100,000 dead, and up to 300,000 wounded and out of combat. In parallel, the destruction of NATO weapons will accelerate faster than the NATO states can resupply and deliver them, or replacement parts to keep the surviving stock going at the front. By the time Russia’s General Winter takes control of the battlefield, there will be too few Ukrainian fighting men left, and insufficient weapons and ammunition, to resist the start of the Russian offensive. A demilitarized zone of mines and cluster bomblets will have taken shape over several hundred kilometres west of the surrendering Odessa, Nikolaev, and Kharkov; they will abandon Kiev when Kiev abandons them. [Emphasis added]

The Russian target then will be to drive what remains of the Ukrainian regime, its flags, tattoos, money, and stay-behind terrorism plans, into an enclave around Lvov. The NATO window, as General Pavel called it, will have been opened, but then will be closed to keep NATO itself from catching cold. [Emphasis added]

One of the unreported outcomes of the  Wagner mutiny, and of the June 29 meeting in Moscow between President Vladimir Putin and Yevgeny Prigozhin, is Putin’s commitment to fight for nothing short of the Ukraine’s rout to Lvov, and the NATO retreat westward in the footsteps of the Grande Armée and the Wehrmacht. This too is incomprehensible at NATO headquarters. [Emphasis added]

The text of the 22-page, 90-paragraph agreement by the NATO allies declares at the penultimate, 89th paragraph that “NATO remains the strongest Alliance in history. As in the past, we will stand the test of time in safeguarding the freedom and security of our Allies and contributing to peace and security.”  To make this point less than wishful thinking, the earlier paragraphs keep the Ukraine out of the NATO alliance but with a verbal promise which makes the indefinite future tense appear to be the present tense.

“Ukraine’s future is in NATO. We reaffirm the commitment we made at the 2008 Summit in Bucharest  that Ukraine will become a member of NATO, and today we recognise that Ukraine’s path to full Euro-Atlantic integration has moved beyond the need for the Membership Action Plan.”

To get from the present to the future, the communiqué promises interoperability with NATO weapons management, and joint command-and-control for warfighting against Russia (China too). “Allies will continue to support and review Ukraine’s progress on interoperability as well as additional democratic and security sector reforms that are required. NATO Foreign Ministers will regularly assess progress through the adapted Annual National Programme. The Alliance will support Ukraine in making these reforms on its path towards future membership.”

“We have decided to establish the NATO-Ukraine Council, a new joint body where Allies and Ukraine sit as equal members to advance political dialogue, engagement, cooperation, and Ukraine’s Euro-Atlantic aspirations for membership in NATO. It will provide for joint consultations, decision-making, and activities [sic], and will also serve as a crisis consultation mechanism between NATO and Ukraine.”

The impact is pushing the NATO allies to withdraw back over the Vistula and Oder Rivers  towards Berlin and Paris with this admission: “We will be in a position to extend an invitation to Ukraine to join the Alliance when Allies agree and conditions are met.” They don’t agree now. The conditions will not be met, cannot be met, if and when – after the coming winter — the capitulation of the Ukrainian armed forces will have been conceded, and the retreat to Lvov begun, leaving the demilitarized zone (DMZ) and Novorossiya to the east.

French General Staff officers have been conceding this retreat by camouflaging it as “not a French war, perhaps an American one”.  According to another retired French general, Jean-Bernard Pinatel, “I absolutely do not believe in the success of the Ukrainian counteroffensive…the biggest disadvantage Ukraine faces is [not] so much the amount of military equipment, which by the way is not always of high quality, because the West supplies Kiev with outdated equipment. Ukraine’s greatest vulnerability is its people, or rather a lack of them. Its best fighters have long been dead.”   [Emphasis added]

Retired German generals have been saying in public the same things on behalf of active service general staff officers in Berlin who remain under the gag of German government. Read them – retired Major General Harald Kujat here;   Vice Admiral Kai-Achim Schonbach;   and retired Brigadier General Erich Vad.  In order to make war on Russia, French President Emmanuel Macron and German Chancellor Olaf Scholtz are not only gagging their military leaders but also avoiding accountability and voting by the Assemblée National and the Bundestag.  

On the front, the current daily casualty rate for Ukrainian forces, men and weapons, since July 1 looks like this:

UKRAINIAN LOSSES OF MEN AND ARMS IN THE FIRST WEEK OF JULY

Source: http://smoothiex12.blogspot.com/

If the daily loss of men averages 500 per day, and the rate of Ukrainian offensive operations continues, then by December 31, the Ukrainian losses will have totalled another 75,000 men. If the rate of attacks is escalated, and the number of killed in action (KIA) averages 715, as it did in the first week of this month, the total losses will reach 107,000. At that point the strategic reserves of men will have been exhausted. [Emphasis added]

The losses of tanks, other armoured vehicles, artillery and rocket launchers are also increasing at a faster rate than NATO can repair or replace. The new summit communiqué promises “to further step up political and practical support to Ukraine as it continues to defend its independence, sovereignty, and territorial integrity within its internationally recognised borders, and will continue our support for as long as it takes.” For as long as it takes is short because the time is running out for the Kiev regime; and its replacement in Lvov will have neither the space, the range, nor the manpower to recover the territory it has lost. [Emphasis added]

STRATEGIC RESERVES OF UKRAINE’S WEAPONS & NATO REPLENISHMENT,

KEY: magenta=available at the beginning of the Special Military Operation, February 24, 2022; light blue=delivered since then by NATO and other western states; blue=promised for delivery by NATO and other states.
Source https://t.me/readovkanews/62281  -- July 10, 2023

The Russian assessment, openly published this week,   is that “by the end of the year, Kiev will not have a strategic armoured reserve — the volume of foreign supplies to Ukraine is on the decline. It’s no secret that the combat capability of the Armed Forces of Ukraine [AFU] is based on the supply of shells and equipment from abroad. We have already analysed the schedule of what has been received, the costs and the losses of these operations, and we can see the culmination of these efforts [on the battlefield].  Enemy losses are heavy, and there is nothing to replace them with because deliveries cannot be made instantly.” [Emphasis added]

“About four to five months elapse between the period of active announcements of deliveries and the actual fact of the transfer of weapons to Kiev. Right now we are destroying tank columns whose armoured vehicles were promised for transfer at the very beginning of 2023. The nuance is that no additional deliveries were announced in the second quarter. Perhaps something will be announced at the NATO summit in Vilnius, but the arrival of tanks and infantry fighting vehicles will not happen before the beginning of 2024. In the event of failure of the Ukrainian counteroffensive, the Russian army will have an additional head-start.”

“If at least the 471 tanks promised by the West have already arrived in Ukraine, then only 286 are additionally expected, some of which will arrive no earlier than 2024. The situation is similar with infantry fighting vehicles and howitzers — more than two-thirds of the total planned deliveries have already been implemented, so there are practically no reserves left. Despite the fact that both what has already been delivered and what is expected to be delivered are inferior in quantity to the old Soviet equipment in service with Ukraine (we have not even taken into account the vehicles which can be cannibalized for parts or upgraded). The prospects are obvious — on the horizon of the next six months, the AFU will have no sources with which to replenish the thinned-out units. The balance of forces at the front may significantly shift in our favour.” [Emphasis]

An American veteran with NATO service in Afghanistan adds:  “Given NATO’s inability to make up for the Ukrainian materiel losses at the front, the bottom-of-the-barrel conscript base, and increasing Russian military proficiency across the board, we could very well see the  move to establish a DMZ before the Fall is out.”

“From the volume of reports I read regarding Russian strikes on Ukrainian logistics hubs, storage and marshalling areas, I am amazed by how they are managing to maintain the current tempo of operations. This being said, the Ukrainians and their handlers seem to be doing a good job of keeping much information regarding shortages or disruptions quiet for public consumption.  Yes, we get the word about the need for more of this or that weapons system, or ammunition, but reading reports from both sides, the shells, missiles, rockets,  etc.,  continue to fly from the Ukrainian side at the Russian defence line with regularity – also with walking-dead lack of quality that seems to be limitless.”

“A clue to the effectiveness of Russian interdiction is the inability of the Ukrainians to concentrate powerful forces at any point to achieve a breakthrough. The concentration at Artemovsk [Bakhmut] provides some clues. There are more than sixty thousand Ukrainians and foreign legionnaires concentrated on that front. The composition is heavily mechanised and well-supported by artillery. They are constantly in action, constantly on the attack. And yet despite their being very menacing and able to bleed outnumbered Russian defenders, they’ve not achieved much while expending huge resources.”

“Looking at other sectors of the line, such as Zaporozhye and South Donbass, it appears that the attacks, while violent, don’t have the same level of strength or stamina. The Russians are confident enough to give ground, shell their abandoned trenches, force the Ukrainians to retreat or face slaughter, and repeat the process time and time again. The Ukrainians just don’t have the resources to suppress the Russians, press the attack, and make real gains. There are several reasons to explain this.  Ammunition, fuel, spares, even food, may all be in shorter supply than anyone is reporting. Logistic routes and transportation may be compromised to the point where only segments of the front can be adequately supplied at any one time – a large part of this situation may be due to the lingering effects of the electric war. Russian strikes on the NATO command-and-control centres may be undermining the Ukrainian/NATO capacity to coordinate supply trains. This is a very under-reported aspect of the war.”

From New York the century-old Henry Kissinger has confirmed to the fake Zelensky that the  Biden Administration wants the Ukrainian forces to demonstrate enough gains against the Russians to retain European country support, and not to risk ceasefire talks until the battlefield gains are in place; otherwise the Europeans will stop their support, and refuse to allow Ukraine’s admission into NATO.

Left: Vovan & Lexus: Right, Henry Kissinger displaying  pictures of Eleanor Roosevelt (rear left), Richard Nixon (centre),   and Nelson Rockefeller (right).  

“Europe”, said Kissinger, “has organised itself to defeat Russia and it would be anamalous [sic] if Finland and Sweden go into NATO but Ukraine, which has sacrificed so much, is not admitted into NATO… Ukraine will be a major country after the war, and after it is rebuilt, it should be in NATO…. We had a Bilderberg meeting…and it was very strange that the European countries that are fighting [Russia] — technically they are supporting you –at that meeting were not in favour of [Ukraine] going into NATO. I was… It will be difficult to engineer membership in NATO.”    

Between ceasefire negotiations and final peace negotiations, Kissinger said , “you [Zelensky] understand that after a ceasefire it will be very difficult to start the war again with total allied support… I believe the trend in America now is towards a ceasefire… I believe you will be able to conduct your current offensive with full support. I believe our people believe that you will not have total success, that you will regain some territory but not everything. That’s what I was told by military people.

Bank Bleed-out

Wall Street On Parade: https://wallstreetonparade.com/2023/07/large-banks-have-bled-921-billion-in-deposits-since-april-2022-the-fastest-pace-in-40-years-and-a-much-larger-decline-than-small-banks/

Large Banks Have Bled $921 Billion in Deposits Since April 2022 — the Fastest Pace in 40 Years — and a Much Larger Decline than Small Banks

You may recall reading a burst of headlines during the banking crisis in March of this year about depositors fleeing small banks for the perceived comfort of the largest banks. Unfortunately, those headlines were never put in context or updated to reflect a broader picture.

In fact, using deposit data that is updated weekly from the Federal Reserve’s own H.8 releases, it becomes crystal clear that the large banks are bleeding deposits at the fastest pace in 40 years.

As the Federal Reserve data in the chart above indicates, deposits at the largest 25 commercial banks in the U.S. peaked at $11,679,758,700,000 on April 13, 2022. The most recent H.8 release shows that the deposits of the 25 largest banks as of June 21 stood at $10,758,977,000,000. That’s a percentage decline of 7.88 percent or $920,781,700.

The Fed’s H.8 data defines small domestically-chartered banks as all other commercial banks outside of the 25 largest. As of March 31, that would be 4,071 “small” banks, although more than two dozen of those had between $40 billion to $150 billion in consolidated assets as of March 31.

Deposits at the smaller banks didn’t peak until December 14, 2022, reaching $5,413,667,700,000. The most current reading on June 21 was $5,170,296,000,000, a decline of 4.5 percent from the peak versus the 7.88 percent decline at the 25 largest banks. In actual dollar terms, those 4,071 banks shed just $243.37 billion versus the $920.78 billion at the 25 largest banks.

It should be noted that the Fed’s initial H.8 weekly releases are static. That data is not updated at the H.8 web page, whereas the St. Louis Fed’s FRED H.8 data is updated for charting purposes. We used non-seasonally adjusted numbers, which we feel are more reliable given the unprecedented nature of this year’s banking crisis where three of the four largest banking failures in U.S. history have occurred.

To make your own charts, you will find the Fed’s updated large commercial bank deposit data here and the small commercial bank deposit data here. (Place your cursor on the various points of the chart for a date and dollar level reading.)

One of the most striking examples of distorted reporting on deposits by the financial press came on April 28 when a Bloomberg column by John Authers was syndicated to the Washington Post. Authers included this misleading narrative about the four largest U.S. banks: JPMorgan Chase, Bank of America, Wells Fargo and Citigroup’s Citibank.

“This summary from the Canadian firm Palos Management explains neatly why the bigger banks are still OK:

“The first quarter’s performance of the big four was consistent with a broad consensus that the big banks have capitalized on massive depositor inflows, clearly related to the well-documented liquidity stresses facing their smaller, regionally based brethren. This should come as no surprise. The panic-fueled depositor exodus from the smaller banks to the larger ‘too big to fail’ banks is simply a rational decision. Protection of capital rules.”

As we reported on May 8, the actual reality is this: Deposits at JPMorgan Chase, Bank of America and Wells Fargo Shrank by $465 Billion Y-O-Y; More than Twice the Total of 4,000 Small Banks. Using deposit data from the banks’ own regulatory filings, we reported as follows:

“The deposit losses at JPMorgan Chase, Bank of America and Wells Fargo are more than twice what the 4,000 small banks lost in total during the same period. Their combined loss in deposits was just $210 billion…

“Bank of America and Wells Fargo not only lost those large deposit sums on a year-over-year basis, but both banks saw deposits fall during the past five quarters, including the quarter ending March 31, 2023 when headlines were declaring that they were seeing big inflows of deposits as a result of the banking crisis. JPMorgan Chase lost deposits in each of the quarters in 2022 and then saw a small increase in deposits in the first quarter of this year – likely from all of those misleading headlines. (This information is easily obtained from the financial statements the firms file publicly with the SEC.)”

On May 21, the Wall Street Journal ran a big article (paywall) on how the banking crisis has “only made JPMorgan stronger.” Reporter David Benoit writes as follows about JPMorgan Chase’s purchase of the collapsed bank, First Republic:

“Yet JPMorgan’s show of strength, for many, exposed a weakness in the U.S. financial system. The bank and its largest rivals have become so big, their reach so extensive, that the government would almost surely step in to prevent their failure. That implicit guarantee encourages people and businesses to move their money to them in times of stress creating a feedback loop that makes big banks bigger at the expense of their smaller peers.”

JPMorgan Chase’s purchase of the failed First Republic was not a “show of strength,” but a revolting demonstration of regulatory capture at its worst. Despite JPMorgan Chase having admitted to five felony counts brought by the U.S. Department of Justice since 2014; despite it signing a non-prosecution agreement and three deferred prosecution agreements over the same time span with the Justice Department; and despite it being currently scandalized around the globe for functioning as the cash conduit for Jeffrey Epstein’s sex-trafficking of school-age girls for more than a decade, this is the sweetheart deal the bank got from the FDIC to take over First Republic: the FDIC would eat 80 percent of any losses on single-family residential mortgages for 7 years and 80 percent of any losses on commercial loans, including commercial real estate, for five years. The FDIC also provided JPMorgan Chase with a $50 billion, five-year fixed-rate loan at an undisclosed interest rate.

Declaration of Independence

Declaration of Independence: https://www.archives.gov/founding-docs/declaration-transcript

“The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

  • He has refused his Assent to Laws, the most wholesome and necessary for the public good.
  • He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
  • He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
  • ….
  • He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
  • He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
  • He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
  • He has affected to render the Military independent of and superior to the Civil power.
  • He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
    • For Quartering large bodies of armed troops among us:
    • For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:
    • For cutting off our Trade with all parts of the world:
    • For imposing Taxes on us without our Consent:
    • For depriving us in many cases, of the benefits of Trial by Jury:
    • For transporting us beyond Seas to be tried for pretended offences
    • For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:
    • For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:
    • For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
  • He has abdicated Government here, by declaring us out of his Protection and waging War against us.
  • He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.
  • He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
  • He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
  • He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

“In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.”