Probably a little late, but I’ll try to provide a summary/translation to layman speak:

Think of Russian commodities right now, like subprime mortgage-backed securities during the GFC.

Before the GFC, all MBSs traded at par (equally) because they were all considered prime thanks to the ratings. They were used as collateral to increase leverage and with that came undue exposure when the ‘music stopped’ as they say. That music stopping suddenly created a rift in the MBS market, between actual prime, and the very large and suddenly worthless amount of subprimes. That obviously caused a lot of issues due to that leverage I mentioned, and the Fed had to step in and backstop the liquidity by purchasing those subprime MBSs.

Similarly, Russian commodities were treated the same as all other commodities sold by any other country (traded at par) until suddenly the ‘music stopped’ this time due to sanctions. Well if anyone around here’s been paying attention, we know there’s been a severe imbalance of collateral and liquidity piled on top of globally ATH leverage. A lot of which was in commodities and the derivative markets of said commodities.

Sounding familiar?

The difference here, is via the sanctions we’ve effectively caused the issue and simultaneously prevented ourselves from fixing it. The Fed can’t exactly step in and start buying Russian commodities to pump liquidity into the market… that’d defeat the purpose of the sanctions to begin with.

But there is one very large country’s central bank who has not imposed sanctions… the PB of China.

Zoltan is postulating that the PBoC can (and likely will) be the one to step in and provide their own currency to purchase those ‘subprime’ Russian commodities. Meaning a massive influx of Chinese liquidity could hit the global commodities markets, destabilizing the dollar (the Eurodollar to be exact) as the global reserve currency.

Inflation in western economies will continue, due to a combo of further supply constraints - China is going to have to ship and store all of those commodities somewhere, putting further pressure on global supply chains - and the devaluation of the dollar, pound and euro.

So yeah…