Kerby Anderson

As we come to the end of the first quarter of 2022 (January to March), I think we can say we learned a few economic lessons that we should apply in the future. One lesson comes from Canada, and the other lesson comes from Russia. The controversy over the truckers in Canada revealed some economic lessons to us about Western democracies that used to be disregarded as nothing more than conspiracy theories. The response from Justin Trudeau showed that even a liberal, democratic government could seize the bank accounts and financial assets of ordinary citizens. Canada is the ninth-largest economy in the world and one of the most advanced democracies in the world. Yet, it used emergency measures to freeze accounts and seize accounts without due process. The Canadian actions are why many investors are looking for censorship-resistant assets. The second lesson came from the economic response to the Russian invasion of Ukraine. The EU and the US were able to seize Russian central bank assets. US treasuries are supposed to be the safest asset in existence. They are supposed to be a zero-risk asset. The assumption was the central banks would treat each other with sovereign immunity. Simultaneously, Visa and Mastercard stopped processing foreign purchases for millions of Russian citizens. Apple and Google shut off their smartphone-enabled payments. This unplugging of the world’s eleventh largest economy is a new chapter in the history of economic conflict. Our world relies on the financial system working efficiently but these actions are unprecedented. Sanctions have been used before against smaller countries, but this is different. We may agree with these sanctions against Russia. But this illustrates a point I have made before. If these Western governments can shut down a powerful government like Russia, imagine what they can do to you.