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jwnz

Junior Member
Registered Member
Jianguo said:
Russia saving their Rubles not as "reserves" but as account surpluses would make sense if their level of self-sufficiency were enough to make autarky economically viable. The reason this would be done is to delay inflation by deferring spending until such balance sheet surpluses are actually spent. By printing Rubles, inflation is not deferred but rather incurred everytime such printed Rubles are spent. In other words, Rubles aren't printed when those Rubles are earned from economic activity, and we all know overall inflation is the inflation of money supply.

What is puzzling is why Maxim Oreshkin is opposed to holding Yuan reserves? Russia-China trade is going absolutely bonkers and it is projected to at least double or possibly triple in the near future. Holding Yuan reserves is probably not even going to be an option but rather a necessity for this reason alone. There's also secondary considerations like creating financial conduits to avoid Western sanctions, also as a valuable tool to control the Ruble exchange rate, as well as an alternate payment currency with 3rd countries. Afterall, not all countries want Rubles, but an increasing number want Yuan. If Russia and other large trading nations agreed, they could even organize cartels along the lines of a Petro-Yuan but extend this into other essential items like Gas, Copper, Potash, Uranium...hell maybe even semiconductors someday. :cool:

Russian leadership would be well served to be highly skeptical of this kind of advice. This looks like a clear case of Western chauvinism in the same vein as Alexander Dugin who was once an anti-China zealot calling for China's disintegration at the same time as being anti-Western. It took a long time for Alexander Dugin to see the light and become pro-China. Let's hope Oreshkin sees the light someday.
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Agreed, if the aim is to control / reduce the supply of Rubles, then just buy back govt bonds and not to issue and borrow, but that's not building reserves as most would consider. Perhaps it's the translation, or there are some very advanced central banking methods that we mere peasants don't understand, then I stand corrected. ;)
 
Jianguo

Jianguo

Junior Member
Registered Member
jwnz said:
Agreed, if the aim is to control / reduce the supply of Rubles, then just buy back govt bonds and not to issue and borrow, but that's not building reserves as most would consider. Perhaps it's the translation, or there are some very advanced central banking methods that we mere peasants don't understand, then I stand corrected. ;)
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Nope, you get it. I was responding to the specific item you mentioned. When it comes to certain favored currencies, there is an implicit agreement between these countries and their less important "partners"... hahah :D ...to buy each others government bonds. This implicit agreement applies even when the effective rates are at 0% or negative interest. In some cases, there are literally no other choices but to buy stuff like US, Euro, Yen debt because there isn't enough global liquidity to absorb all the capital. Otherwise, who in their right mind would buy bonds at negative interest rates except for printing money to buy your own debt?

Take for example the zombie currencies, or as I call them, the dead man walking currencies. These dead man walking currencies issue billions/trillions of whatever denominated currency, which are soaked up at every bond auction like hot cakes as if the buyers are starving to death. Every once in a while, you hear about little activity or interest in so and so bond auction. Don't believe it, it is all a ruse. Such governments have to shore up their balance sheets, there is no choice unless they prefer a cascading global financial collapse. The large bulk of such printed currency never actually makes it into circulation for velocity to inflict inflation. The numbers are simply entered into ledgers to make sure reserve ratios are met and the banks solvent. So, in theory, trade surpluses should end up as either foreign currency reserves, balance sheet surpluses in the mother country currency or as overseas direct investment. However, because these global zombie currencies enforced their usage globally after WWII, we now have a situation where nobody can wean themselves off it without destroying themselves. A veritable shitstorm is on the horizon. The Ruble was a surprising wake-up call to the entire world that the Western financial system is fragile and VERY vulnerable. Even though Russian economic strength is great now, it will gradually weaken year after year. That's only if Russia is fighting alone. Imagine if China joined Russia with all its financial potential. I think everybody knows the answer to that question. It's all over if you ask me. The US and its vassals have lost, they just don't know it yet.
 
siegecrossbow

siegecrossbow

Field Marshall
Staff member
Super Moderator
horse said:
To be honest, I never expected that.

For the Americans to take advantage of Australia for example, after going to bat for the Americans, the people under there find out what the Chinese stopped buying from them were being purchased from Uncle Samuel, it is only Australia. They can live it down.

But to de-industrialize large swaths of Europe, that is entirely different.

In the former case, the cannibalized victim makes less money. In the latter case, the cannibalized victim will lose its livelihood and may not recover for generations, if at all.

Yet, the same victims, still are able to sing the praises for America on some days.

What should China do?

It is very unlikely China would be able to do something this harmful and damaging.

Pretend anger is probably enough.

And get the popcorn or other snacks, the most important part.

:D
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China could take over their piece of pie.

Oh wait the Europeans are being proactive and already helping.

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siegecrossbow

siegecrossbow

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Staff member
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plawolf said:
Every time China has a new leader the China haters in the west west dream he is going to be a Chinese Gorbachev so their ultimate wet dream of a destroyed and broken up China can come true. Fuck those people.
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Those people fap so furiously at the thought of China breaking up that I wonder if they have a stump for an appendage too by now.
 
C

Chilled_k6

Junior Member
Registered Member
plawolf said:
Every time China has a new leader the China haters in the west west dream he is going to be a Chinese Gorbachev so their ultimate wet dream of a destroyed and broken up China can come true. Fuck those people.
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It's usually Americans who think like this, including some at the higher levels. Their thoughts are disdainful but I wouldn't be too bothered by it to be honest. It just means they are lazy minded that think their country doesn't need to work hard to defeat their main rival, because they already feel naturally superior. But there is gnawing insecurity that is compensated behind their mockery.
 
X

xypher

Senior Member
Registered Member
Jianguo said:
Russia saving their Rubles not as "reserves" but as account surpluses would make sense if their level of self-sufficiency were enough to make autarky economically viable. The reason this would be done is to delay inflation by deferring spending until such balance sheet surpluses are actually spent. By printing Rubles, inflation is not deferred but rather incurred everytime such printed Rubles are spent. In other words, Rubles aren't printed when those Rubles are earned from economic activity, and we all know overall inflation is the inflation of money supply.
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Wait, I still don't get it. Resource exporters with huge account surpluses usually hoard them and defer their spending to control the demand for their own currency, not allowing it to strengthen too much and end up with the variation of "Dutch disease" where the non-extractive sectors become price uncompetitive. What is the reasoning behind hoarding your own currency? "Rubles aren't printed when those Rubles are earned from economic activity" does not actually explain why would you need to accumulate reserves in your own currency because even if Russia spends all of them, they were already earned from the economic activity - e.g. exchanging usd\euro for rubles like in the "gas for rubles" scheme. Plus high inflation in Russia has little to do with monetary reasons, it is a supply side issue due to extensive sanctions.
 
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