Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions

Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions (ZeroHedge, March 4, 2014):

While the comments by Russian presidential advisor, Sergei Glazyev, came before Putin’s detente press conference early this morning, they did flash a red light of warning as to what Russian response may be should the west indeed proceed with “crippling” sanctions as Kerry is demanding.  As RIA reports, his advice is that “authorities should dump US government bonds in the event of Russian companies and individuals being targeted by sanctions over events in Ukraine.” Glazyev said the United States would be the first to suffer in the event of any sanctions regime. “The Americans are threatening Russia with sanctions and pulling the EU into a trade and economic war with Russia,” Glazyev said. “Most of the sanctions against Russia will bring harm to the United States itself, because as far as trade relations with the United States go, we don’t depend on them in any way.

Sergei Glazyev,

From RIA:

“We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.”…

US Secretary of State John Kerry on Saturday warned that Russian military interventions in Ukraine, which have been justified by the Kremlin as protection for residents in heavily ethnic Russian-populated regions, could result in “serious repercussions” for Moscow.

“Unless immediate and concrete steps are taken by Russia to deescalate tensions, the effect on US-Russian relations and on Russia’s international standing will be profound,” Kerry said.

Kerry mentioned economic sanctions, visa bans and asset freezes as possible measures.

Former deputy energy minister and lively government critic Vladimir Milov slammed Glazyev’s remarks, saying they would put further downward pressure on the ruble, which was pushed down Monday to a record low of 36.5 against the dollar amid fears about the possible outbreak of war.

“That idiot Glazyev will keep talking until the dollar is worth 60 [rubles],” Milov wrote on his Twitter account.

To be sure, a high-ranking Kremlin source was quick to distance his office from Glazyev’s remarks, however, insisting to RIA Novosti that they represented only his personal position. Glazyev was just expressing his views as an academic, and not as a presidential adviser, the Kremlin insider said.

That said, putting Russia’s threat in context, the Federation held $138.6 billion in US Treasurys as of December according to the latest TIC data, making it the 11th largest creditor of the US, which appears to conflict with what the Russian said, making one wonder where there is a disconnect in “data.” This would mean the Fed would need just two months of POMO to gobble up whatever bonds Russia has to sell.

The bigger question is if indeed, as some have suggested, China were to ally with Russia, and proceed to follow Russia in its reciprocal isolation of the US, by expanding trade with Russia on non-USD based terms, and also continue selling bonds as it did in December, when as we reported previously it dumped the second largest amount of US paper in history.

China TSY Holdings DEC

… especially when one considers the latest news released by the Kremlin:


4 thoughts on “Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions

  1. 200 billion isn’t enough to sink the US dollar. When they are playing with hundreds of trillions of MFG money…..$200 billion is a drop in the bucket. More sound and fury signifying nothing. Nothing will come of this, it is about rebuilding the USSR, and nobody can stop it.

  2. Putin just saying this is going to be a hit for the US. Everybody that is tired of the US’s heavy handed way of doing things can use this now and it will hurt the dollar. China did it just a week or so ago. No shots fired. Its like a rally call.

    We have no integrity, this is hurting us more than anything.

  3. Another point. Russia does not use the dollar in many of it’s international trades……..along with China, India, Japan, New Zealand, Australia, Much of South America and many African nations…….they have all abandoned the dollar in their international trading. Instead, while using an electronic currency, they use their own currencies. The electronic currency translates the value of each nation’s currency, making conversion to the dollar unnecessary and obsolete.
    A few greedy guts are holding US treasury notes……serves them right…..but they will do nothing to harm their holdings, they are too greedy.
    The US can do nothing about what Russia is doing, and would do well to start focusing on the many dire needs here at home. Otherwise, there will be nothing left here but chaos.
    Did anyone see the markets today? They soared. That ought to tell everyone yesterdays noise was just that…..sound and fury signifying nothing.
    Putin will win the game, he already has.

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