The Russians, when they started their invasion, the Americans hit them with all kinds of sanctions. And the Russians were prepared for it. What they weren't prepared for was for the Americans to steal 300 billion dollars that belongs to the Russians. They weren't prepared for that. And that's what the Americans did. And don't give me bullshit that it's legal and this and that. Na, na, they stole it. Ok? And in fact, the Russians view it as an American default. And actually, they technically are correct, and I'll explain why.
You see the Russians, part of their preparation for future sanctions, that they started in 2014, is that they started to build up huge foreign currency positions, ok. Because Russia, unlike most other economies in the world--the only other economy that does this is China--Russia sells more than it consumes. So they have extra. The only other countries that do this on the up and up are the Netherlands and Norway. All the other countries in the west, every single one, they all run deficits, ok. And sometimes pretty big deficits. You know, the American deficit is extraordinarily large. And that's just the federal deficit, when you start looking at the states, the municipal debt, and agency debt, you're like "Good God, I can't believe it", your eyes start to bleed, I'm not shitting you, it's horrifying. But that's for another video, another stream.
So the Americans, they hit the Russians with all these sanctions, right? And then they go and grab the Russian's money. Now, I have to say that sometimes the Russians are very, very clever, and sometimes for all their cynicism and sophistication and brains, they can be remarkably naive. They never thought the Americans would
steal their money. They never thought that the United States of America would take 300 billion dollars, roughly half their excess reserves that they had on deposit at the Federal reserve, and steal it. Which is basically what the Americans did. They stole it. And don't give me this shit that "Oh it's sanctions package", and like "oh we'll circle back on that and we'll have a little conversation..." Fuck that. They stole it. Plain and simple.
The Russians view it as a default, which is correct. See because a bank, what is it? When you deposit money in a bank, what are you doing? You're lending your money to the bank. That's what you're doing, right? If you're the bank, and I'm a customer, and I take my cash and I give it to you, and I put it on deposit with you, you have borrowed it from me, and you have to pay me interest. Right? And when I come calling, I say you give me my money back, you're like "sure, here you go". But if you don't give me my money back, well, you're in default. We always think of the customer going into default, but the bank can go into default too, if it doesn't return its deposit to its rightful owner. These 300 billion dollars, the rightful owner of that money is Russia. Like it or not. And that the Americans are keeping it, that's a default. That's theft. Because a default, as often as not, is when the person that owes the money doesn't have it because it's bankrupt. But when they have it, and they refuse to give it, that's theft, ok? So the Russians can claim it's a default, which it technically is, but I would characterize it as a theft. Because if you have the money to return and you refuse to return it, you're stealing that money. You can't look at it any other way, as far as I'm concerned.
This shocked the fuck out of the Russians! I mean they were like "What the FUCK?!?" Right? And the Americans were like "Tee-hee! Sanctions!" And the Russians are just incredibly pissed off about that. There must have been a lot of screaming over that shit, right? I mean that they didn't anticipate it and all the rest of it. And you know the poor head of the central bank, I forget the name of the women, she's a smart woman. But oh man, she must have caught hell for that. Because it's sort of like "you should have planned for this contingency", and yet at the same time it's such an outlandish contingency because it has never happened before in the history of finance.
Do you know that during the Second World War, the Nazis had money on deposit in the Federal Reserve and the Bank of England? Yeah, they did.
And the Federal Reserve and the Bank of England honored Nazi Germany's request for that money and paid off whoever had to be paid off from those funds. During the fucking Second World War! This is the first time in history that this has happened. That The Federal Reserve has absconded with the sovereign wealth funds of a sovereign nation. I mean holy fucking shit! It's understandable, it's one of those blind spots where you're like "this can never happen", and it fucking happened! The ultimate black swan event, financially speaking at any rate.