A Gold Bloc For Iran, Russia And Turkey…Oh My!

A Gold Bloc For Iran, Russia And Turkey…Oh My! by Steven H. Hanke – Gold-Eagle

How will Iran, Russia, and Turkey react to the plethora of financial sanctions being placed on them by the United States?  Well, they will do what anyone being beaten with a stick would do: they will try to escape.

An escape is always available. That is one reason why sanctions are weapons used only by losers. Indeed, the escape has been dubbed, by my good friend, mentor, and Nobelist Robert “Bob” Mundell, as the “Afghan Effect.”  Following the Soviet Invasion of Afghanistan, the United States imposed a grain embargo on the Soviets in January 1980. With that, American farmers were prohibited from selling grain to the Soviets who had a huge grain deficit. President Jimmy Carter, on the ill-conceived advice of his National Security Advisor Zbigniew Brzezinski, weaponized grain.

In response, the Soviets looked for an escape. They found one in Argentina. Indeed, the Argentines were delighted to cut a deal with the Soviets. The Argentine farmers sold large quantities of grain, the Soviets obtained a good price, and American farmers were left out to dry. The icing on the cake (read: Bob Mundell’s Afghan Effect) was the fact that the Argentine military junta was handed an enormous benefit on a silver platter.

This brings me to today’s favorite weapon of war: financial sanctions. With each passing day, the U.S. Treasury rolls out, or threatens to roll out, more sanctions. We all know about the sanctions that cover Iran like a wet blanket. We also recently witnessed the imposition of sanctions on Turkey, where the pretense for imposing them was a U.S. pastor who was allegedly not tending his Turkish flock properly. When it comes to Russia, new U.S. sanctions are an almost daily affair.

The weight of sanctions has clearly created great difficulties for the Iranian rial, Russian ruble, and Turkish lira. Indeed, even in the best of times, these are all half-baked currencies with long troubled histories. They are all vulnerable to sanctions. Indeed, their vulnerability should be viewed as threats to national security.

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So, how can Iran, Russia, and Turkey escape the sanctions stick? They could make their currencies as good as gold. This would provide an attractive escape. Gold is already an international currency that holds its purchasing power over time. It is also a currency that is not issued by a sovereign. So, it has no political baggage to carry. In addition, gold is already widely revered and used in Iran, Russia, and Turkey.

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The Daily Coin

Rory Hall, The Daily Coin and Gospel News Network. Beginning in 1987 Rory has written over 1,400 articles and produced more than 500 videos on topics ranging from the precious metals market, economic and monetary policies, preparedness as well as geopolitical events. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver, Gold Seek, SGTReport, and a great many more. Rory was a producer and daily contributor at SGTReport between 2012 and 2014. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Dr. Warren Coates and Peter Schiff, to name but a few. Don't forget to visit The Daily Coin and Gospel News Network to enjoy some of the best economic, precious metals, geopolitical and preparedness news from around the world.