In a speech to the nation, President Joe Biden announced sweeping sanctions on Russia due to its "invasion" of Ukraine. The sanctions would impact VEB, a major Russian bank, its military bank, the country's sovereign debt, and three Russian individuals who are close to Putin.

It will prevent American financial institutions from processing transactions for VEB and for Russia's military bank, PSB and effectively means cutting these banks off from the U.S. financial system. Russia can no longer tap Western markets to raise money.

This move had been telegraphed in advance as necessary if Russian President Vladimir Putin chose to proceed with his plans to invade Ukraine. Once, Putin made his intentions clear that he would pursue some limited form of invasion in separatist-regions of Ukraine and received approval from the Russian Parliament, then these sanctions from the United States, United Kingdom, and European Union had to be placed as they had been threatened as a deterrence measure.

This entire confrontation has been unique in that nearly every move and statement on the Russian side has been leaked in advance by intelligence sources while the U.S. and its allies have been clear in their unity and need to push back against Russian incursions.

It also marked the first time that Biden labeled Russia's actions as an "invasion" which seems important as there has been a grey area about how to describe Russia's actions especially if it recognizes the independence of certain separatist regions of Ukraine.

President Biden also stated that U.S. troops would not be deployed and that NATO troops would be operating in a defensive capacity. Biden also increased the deployment of NATO troops to other Baltic countries like Estonia, Latvia, and Lithuania.

One negative externality of these heightened tensions is that oil prices have been soaring which is adding to inflationary pressures and erodes economic growth. It's also adding to President Biden's unpopularity due to the pain that Americans are feeling at the gas pump.

In response, Biden said, "Defending freedom will have costs for us as well, here at home. We need to be honest about that." He said that the U.S. was working with other oil-producing countries on increasing supply and lowering prices but that further Russian aggression would require heavier sanctions.