Just like that: The US froze Russian bank accounts. It broke all the rules. In return, Russia is freezing gas deliveries unless people pay in roubles. The US played a very big wildcard, and Joe Biden and the USA may lose in a big way. The World's Reserve currency is the US Dollar, and it's a powerful tool for the US. But if the dollar were weakened, by say 50 years of inflation, and the trust it is based on was blown, the bluff may be up.
One thing leads to another. Who will blink first?
Does Russia need the money more than Europe needs the gas?
Russia's insistence that its "unfriendly" nations pay in rubles for Russian natural gas risks disrupting European supplies as soon as this week as the deadline set by Putin for moving to ruble payments is drawing closer.
Europe, which depends on Russian natural gas for more than one-third of its demand—with some countries, including the biggest economy Germany, depending on Russia for half of its consumption—has rejected the gas-for-rubles idea, saying it would be a breach of contracts to switch the currency in payments.
Russia, for its part, says it demands only rubles for its gas and will not ship gas for free.
With too much debt there are no good choices left for the US Federal Reserve:
How the West Was Lost: A Faltering World Reserve Currency
As I wrote then, and will repeat now: Debt destroys nations, financial systems, markets, and currencies. …
The inflationary financial system is now failing because its debt levels have rendered it impotent to grow economically, react sensibly or sustain its chronic debt addictions naturally.
The Fed has driven itself, and hence the U.S. markets and economy, into an all-too predictable corner and historically dangerous crossroads.
If it turns to the left (i.e., more money printing/liquidity) to protect a record-breaking risk asset bubble, it faces an inflationary flood; if it turns to the right (and raises rates or tapers UST purchases), it faces a market inferno. …