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U.S. Will Borrow the Ukraine Loan; Federal Deficit Estimate Raised by $400 Billion

Multiple descriptions, such as this one by AP of the G7’s agreement to use Russian assets’ interest flows as collateral for a $50 billion “loan” to Ukraine, agree that the United States will “guarantee” or borrow most, if not all of it with a long-term U.S. bond. The accounts are based on Italian Prime Minister Giorgia Meloni’s June 15 press conference following the G7 summit.

The Congressional Budget Office on June 18 raised its estimate of the U.S. Fiscal Year 2024 budget deficit from $1.5 trillion (its February estimate) to $1.9 trillion. Its earlier very optimistic estimate was made in anticipation of higher Federal tax revenues due to the huge net capital inflows looted into the United States by its high interest rates and the global state of war ($1.5 trillion this year). But war giveth and war taketh away; now the first cause listed by the CBO for the $400 billion increase in deficit and debt, is military spending—supplemental military budgets passed for weapons and money to Ukraine, Israel, Taiwan and U.S. weapons producers.

The $50 billion “confiscation bond” for Ukraine against frozen Russian assets would not be included in this estimate.

It seems that it essentially will be another case of American taxpayers paying for a loan to Ukraine, which in turn will be spent on contracts with U.S. arms manufacturers—who in turn are financially beholden to Wall Street.

Treasury Secretary Janet Yellen’s new “rationale” for the U.S. being able to borrow “legally” against Russia’s assets, is a whopper. Yellen claimed on June 17 that the interest earned by the Russian assets is not Russian property like the principal, but rather belongs to the custody institutions such as Euroclear, which were holding the assets when they were frozen by Treasury and EU sanctions. “The United States and our global coalition partners decided to freeze, to impound Russian sovereign assets in our jurisdiction, and … the vast majority, around $200 billion, are sitting in a Belgian financial institution where they are generating income that does not belong to Russia,” Yellen said. Try that one around the dinner table.

It would follow, according to our Secretary of Financial War, that a 20-year bond issue for Ukraine, based on that interest, can be “guaranteed” by the United States.