Sanctions Harm All Except Targeted Governments

The United States recently instituted economic sanctions on Russia due to its conflict with Ukraine over the Crimea and is urging other world powers to follow suit.

But do sanctions really work? History tells us they are a passive-aggressive measure, and in the end, they hurt ordinary people while leaving subject governments—composed of a fluid body of individuals—virtually unaffected.

No state (or group of states, in the case of the EU) nor NATO, the 28-member North Atlantic Treaty Organization, to which Ukraine has applied for membership, have been willing to risk an outright military confrontation with Russia. Earlier this week NATO member nations suspended cooperation with Russia because of the Ukraine conflict, and yesterday Russia recalled its ambassador to NATO, according to

Retired Texas congressman and former presidential candidate Ron Paul agreed, calling sanctions “acts of war.” He continued:

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Yellen Ain’t Yellin’ Whole Truth on Interest Rates

Janet Yellen, soon to be the head of the privately-owned Federal Reserve Bank (Fed), isn't revealing much on the truth about interest rates. But there was a thread to pull on.

This piece unravels multiple deceptions.

If you agree this information is stunning, and quite different than what is read commonly in the media, please share it with those you care for, and sign up for our weekly letter.

From Janet Yellen’s April 4 speech, 2013:

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Dearth of Good Money Assets Signal End Is Near

The European Commission, a group self-tasked with herding cats, has proclaimed the end of “austerity” in the Eurozone for governments, granted citizens will surely continue to feel quite austere. But what does this mean for Europeans and their economy moving forward?

Before we dive into it, we would add that absolutely no austerity was obtained in any EZ national budget, except perhaps where it was forced by plummeting tax receipts as a result of all-out economic collapse (Greece). See: What Austerity Measures?

Here were the Commission’s proclamations on deficits:

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Bitcoin Invades Mainstream Banking System

Digital Currency Exchange, Bitcoin-Central, has been authorized by the French government to conduct bank style operations. In an announcement last month on, Paymium, the organization behind Bitcoin-Central said this:

We’re announcing today that is getting, through a partnership with Aqoba, allowed to operate like a bank, (or more precisely like a PSP [Payment Service Provider], which is basically the same as a bank, just without the debt-money issuing part).

If you’ve been following the crypto-currency story, you will realize that this is a huge step forward. For the first time a crypto-currency exchange has been brought into the mainstream banking circle, allowing believers in the idea of free choice in currency the opportunity to transact business through traditional channels.

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2012 in Review Shows Recession Still Holds US Economy in Grip

As we close on the end of the year, it is time to look back at the big picture 2012 painted.

With 2012 culminating 32 years of rising bond prices, following decades during which U.S. investors had taken to calling bonds “certificates of confiscation,” many asked if the U.S. is turning Japanese. We at WealthCycles, of course, really think so…

WealthCycles wrote on Valentine’s Day 2012 that the U.S. was experiencing economic contraction—that is to say, the U.S. is producing less and less as time progresses, what we labeled then as a “double dip.”

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Tricking Children: Pyramid Scheme Puts Glass Ceiling Over Humanity

Gold and the dollar, stock markets a-flutter… Wondering what is next for prices?

It looks like Millfield High School determined monetary policy for end-2012 in her majesty’s kingdom.

In a regional heat of the 13th annual Target Two Point Zero – Bank of England and The Times Interest Rate Challenge held in Exeter on November 19, the high school team recommended price-fixing for interest rates at 0.5%, compared with the Bank of England’s official rate of 0.5% set by its Monetary Policy Committee (MPC). The Millfield team also recommended a total of £375 billion of asset purchases under the Asset Purchase Facility, compared with the £375 billion agreed by the MPC.

Groundbreaking conformism inspired the bankers to award the school as winner of the regional heat, one of 43 from all around England intended to help policy-makers gather input in a manner similar to the public discussion and commenting periods used in the States to review and shape new legislation.

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Fed’s New Indicator-Based Printing Policy Removes Limits

We finally last week got the first official confirmation from the Federal Reserve (Fed) that its quantitative easing (currency printing) program will ramp up to a cumulative $80 billion to $85 billion per month early next year. That level of currency expansion is necessary if the Fed is to offset the $10 billion per month contraction in the total “money” supply, which has persisted despite the $40 billion currently printed monthly. In other words, the breathtaking rate at which the Fed is decreasing the purchasing power of your existing dollars will nearly double within a few short weeks.

As cited by Bloomberg:

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Gold Repatriation Movement Reaches Ecuador

For years gold was belittled by government leaders, mainstream economists and traditional media as a derelict relic, of no real value and a risky investment prospect. But something funny happened a few years ago. Central banks worldwide, after decades of selling off their gold reserves, began buying it back. And for many months, even as far back as 2011, countries have quietly and not so quietly been working to repatriate their gold reserves. There is only one reason governments would ramp up efforts to accumulate gold: because those in power know the global fiat currency system is on its last legs. Ecuador’s recent move to bring its gold home is just one more nail in the coffin of the world’s reserve currency, the Federal Reserve's dollar.

In November 2011 Venezuelan President Hugo Chavez received the first shipment of gold from his request that 85% of the country’s gold reserves be returned to Venezuela’s central bank. As reported in a BBC story,

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Hedge Fund Managers Explain Unintended Consequences of Printing

Last Thursday we reported on the latest from hedge fund manager Hugh Hendry of Eclectica Asset Management where he shared his view on gold and much more at the recent Buttonwood Gathering. In the article linked above, just below the Buttonwood Gathering video, we posted a shorter clip of his “Greatest Hits,” revealing that Hendry argued years ago that the policies of central banks were specifically to achieve inflation, but nevertheless were, on net, very deflationary. This has proved to be both true and prescient.

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Truly Free Market Never Wrong

European Central Bank President Mario Draghi has been busy this week trying to convince grumpy German bankers that his program of buying up Eurozone nations’ debt is not simply tantamount to firing up the printing presses, will not lead to price inflation and does not represent a bailout of profligate nations at German taxpayer expense. His justification for undertaking the program, which is similar to the Federal Reserve’s quantitative easing programs, now in their sixth and apparently endless, iteration, is that “the market is wrong.”

As Wealth Cycles readers know, the market, when left to function free of government interference, contains a universe of information about supply and scarcity, input costs, prices and demand—far more information than any individual, institution or government can encompass. A properly functioning free market is not wrong.

However, given the continuous manipulation of the markets by central banks in recent decades, tremendously accelerated since 2008, Draghi, today, probably is correct: the market is wrong.

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