Economic Sanctions: Who Holds the Real Power, the US or Russia?

Obama has sent out a strongly worded Tweet to Vlad Putin saying we will issue economic sanctions against you. Unfortunately, that is a meaningless threat as we have next to no trade with Russia, $38B in trade is nothing, and it is the European Union, EU, that has $500B in trade with Russia. What damage can we do economically to Russia? Nothing and that isn’t a strong message anyhow. Remember how deficits don’t matter? Well, here is why they do matter, Russia is tight with China and both countries hold significant US debt, Russia at $131 billion in US debt and China holds $1 trillion + in our debt.

History lesson from the not so distant past, during 2008 when we almost lost everything Russia called China and said they should both sell their US debt holdings. Anyone want to guess what would have happened if that actually did happen? You wouldn’t be reading this right now, I can assure you of that. The US is totally dependent upon issuing debt in order to fund our everyday spending, yes, it’s true. We, as a country, do not have any self funded program because in the great wisdom of some politician, in order to hide deficits, they mandated, in 1983, that all taxes and withholding’s from your paycheck go into the general fund.

Economic Sanctions: Who Holds the Real Power, the US or Russia?