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While the mainstream media ignored our forecast, and President Joe Biden, as we reported extensively, told the American people and the world that the sanctions he and NATO imposed on Moscow would hurt Putin and not We the People, they are now changing their tune.
The economic sanctions that Western allies imposed on Russia after it attacked Ukraine are hurting U.S. consumers, Biden administration officials acknowledge, according to Bloomberg.
After the invasion, NATO allies stopped importing a range of Russian goods; froze about half of Russia’s foreign-exchange assets, making it hard for Russia to pay its bills; and impounded assets of several individual Russian oligarchs.
The U.S. banned imports of Russian oil, which made up about 5 percent of the U.S. supply at the time.
Russia was a key world supplier of fertilizer, wheat and other foods, as well as oil, timber, and industrial metals and minerals.
When the sanctions took effect, administration officials predicted the impact on U.S. food and fuel prices would be minimal.
However, soaring food and fuel prices have become main drivers of inflation, which ran at an annual rate of 8.6 in the U.S. in May.
With food prices skyrocketing at home and food crises looming among emerging nations, president Joe Biden is quietly nudging U.S. agricultural and transport firms to find ways to bring fertilizer out of Russia, according to Bloomberg.
Last month, the administration extended permission through September for U.S. companies to do business in Russia, as long as they do not deal with sanctioned entities, so the U.S. can receive import fees and related taxes, Bloomberg reported.
BP, McDonalds, and dozens of other international companies pulled out of Russia at the start of the war but now worry that those moves might have created unforeseen problems such as supply bottlenecks.
Some administration officials are discouraged that the sanctions have not persuaded Vladimir Putin to halt the war but instead have fueled inflation, thrown portions of the world into a food crisis, and are worsening the lives of ordinary Russians, Bloomberg noted.
TREND FORECAST: As noted, we have extensively forecast that the sanctions imposed on Russia would do deep and lasting economic damage. See: “U.S. Sanctions Hit the Russian People and ‘We the People” Hard” (8 Mar 2022); “War in Ukraine Economic Overview” (8 Mar 2022); “Spotlight on Inflation” (5 Apr 2022); and “Cutting Russian Energy Will Cost EU Over $200 Billion” (17 May 2022).
Therefore, the longer the war rages, the higher inflation will rise across a spectrum of commodities.