Sanctions on Russia

Nathan Thomas12 said:The world needs a stable, liquid currency—if the dollar vanished tomorrow, the global economy would just flatline. I mean, what are the Chinese supposed to do? Trade in Canadian Forints or Mexican Dinars? Besides Americans, the Chinese actually rely on a rock-solid dollar just as much.
So yeah, arguing about what happens if the dollar collapses is pretty much pointless.

Having a single, universally recognized currency for global trade is certainly an advantage. The issue arises when the issuer begins to abuse that privileged position. With the dollar, the cracks appeared once it became obvious they were printing far more currency than they held in gold reserves at the agreed-upon rate. That specific agreement—the ability to swap paper for gold at a fixed price—was what provided the dollar its essential layer of universal trust. Once that trust evaporated, the old deal died, replaced by a new arrangement: the petrodollar system, designed to prop up the dollar's status as the world's primary reserve currency. A reserve currency is simply the unit in which a nation holds its assets. Given the sheer scale of current debt loads, I fail to see how this architecture can remain sustainable. A reset or a new global agreement is inevitable. It is merely a matter of timing. Either it will be a controlled transition, or it will happen chaotically. The latter would be far worse.

Anthony Hill5 said:This is nothing more than a laughable conspiracy theory. There is a very logical reason why every major economy in the world moved away from the gold standard.

Even if Gaddafi had tried, not a single nation across the African continent would have accepted his dinar, simply because it served no one's interests and offered no benefit to their own domestic economies. That is the end of the argument regarding Gaddafi being removed over some currency scheme.

There is your quote again.

The point you were responding to was this:

"The sheer volume of petrodollars circulating globally through oil trades has long since eclipsed the amount of dollars needed for any conceivable domestic transaction in the US. We're talking about a double-digit multiplier effect here. That is precisely why the US unilaterally scrapped the gold standard back in the 70s, effectively killing the Bretton Woods agreement. They simply couldn't back the massive expansion of dollar liquidity driven by the oil trade with actual gold reserves anymore..."

So, the US pulled the plug on Bretton Woods and the gold standard single-handedly. Other nations didn't really have much of a choice in the matter. They still need oil, and oil is priced in petrodollars—which, after 1971, became pure Ford money. What were those other countries supposed to do? Maintain a gold reserve just to pay off American Ford currency? It doesn't make sense.

I completely agree that maintaining currency "volatility" is far easier without a tangible anchor. That is the entire purpose of central banks and Ford money. At least they maintain the illusion of stability. Until the big American banks decide to gamble too heavily, like they did back in 2008...
And sure, it's much easier to just print more money. It's cheaper than digging tons of gold out of the ground to cover up an outright theft. 🙂

dustytiger8 said:There is your quote again.

The point you were responding to was this:

"The sheer volume of petrodollars circulating globally through oil trades has long since eclipsed the amount of dollars needed for any conceivable domestic transaction in the US. We're talking about a double-digit multiplier effect here. That is precisely why the US unilaterally scrapped the gold standard back in the 70s, effectively killing the Bretton Woods agreement. They simply couldn't back the massive expansion of dollar liquidity driven by the oil trade with actual gold reserves anymore..."

So, the US pulled the plug on Bretton Woods and the gold standard single-handedly. Other nations didn't really have much of a choice in the matter. They still need oil, and oil is priced in petrodollars—which, after 1971, became pure Ford money. What were those other countries supposed to do? Maintain a gold reserve just to pay off American Ford currency? It doesn't make sense.

I completely agree that maintaining currency "volatility" is far easier without a tangible anchor. That is the entire purpose of central banks and Ford money. At least they maintain the illusion of stability. Until the big American banks decide to gamble too heavily, like they did back in 2008...
And sure, it's much easier to just print more money. It's cheaper than digging tons of gold out of the ground to cover up an outright theft. 🙂

The conspiracy theory portion of my argument was specifically addressing the underlying motives behind why Muammar Gaddafi was overthrown; from there, I merely expanded upon my original point regarding the systemic reasons why no nation on Earth utilizes the gold standard anymore.

dustytiger8 said:Exactly.

The sheer volume of petrodollars circulating globally through oil trades has long since eclipsed the amount of dollars needed for any conceivable domestic transaction within the US. We're talking about a double-digit multiplier effect here. That is precisely why the US unilaterally ditched the gold standard back in the 70s, effectively tearing up the Bretton Woods agreement. They simply couldn't maintain enough gold to back the massive expansion of dollar liquidity driven primarily by the oil trade.

If the petrodollar system collapses and some other currency takes its place, all those accumulated dollars have to go somewhere. They’ll come flooding back home to the US. There isn't anywhere else for them to land. That implies an era of unprecedented inflation for the American economy.

Ergo... killing the petrodollar is a fatal mistake.

Here’s how the average person views the global economy:



Muammar Gaddafi went down for entirely different reasons. Just ask Nicolas Sarkozy. France was the one pushing for the war against Gaddafi.

Russian propaganda basically works on a "throw enough garbage at the wall and see what sticks" principle. This petrodollar narrative is definitely one of those stories that's sticking.

https://vaulted.com/nuggets/gold-vs-money-supply/

Honestly, gold isn't even keeping pace with M2 money supply growth anymore. If anything, most of the gold price action looks pretty inflated right now.

Wait, what kind of moral outrage allowed Russian and Belarusian tennis players to compete again? What about other sports?

cosmicgull52 said:Wait, what kind of moral outrage allowed Russian and Belarusian tennis players to compete again? What about other sports?

I fail to see any legitimate reason why they should be barred from competing. At its core, sport is sport; after all, isn't it true that Russian soccer players have been playing for their respective clubs across Europe without any interference whatsoever?

Anthony Hill5 said:I fail to see any legitimate reason why they should be barred from competing. At its core, sport is sport; after all, isn't it true that Russian soccer players have been playing for their respective clubs across Europe without any interference whatsoever?

So what, a regular American family is fine even if sanctions mess up their lives, but a pro athlete isn't?

Nancy Gomez26 said:Having a single, universally recognized currency for global trade is certainly an advantage. The issue arises when the issuer begins to abuse that privileged position. With the dollar, the cracks appeared once it became obvious they were printing far more currency than they held in gold reserves at the agreed-upon rate. That specific agreement—the ability to swap paper for gold at a fixed price—was what provided the dollar its essential layer of universal trust. Once that trust evaporated, the old deal died, replaced by a new arrangement: the petrodollar system, designed to prop up the dollar's status as the world's primary reserve currency. A reserve currency is simply the unit in which a nation holds its assets. Given the sheer scale of current debt loads, I fail to see how this architecture can remain sustainable. A reset or a new global agreement is inevitable. It is merely a matter of timing. Either it will be a controlled transition, or it will happen chaotically. The latter would be far worse.

China is sitting on $35 trillion in debt.
The big players are too hooked on the dollar to let it tank—if the dollar collapses, the Chinese economy goes down with it.

Richard Wilson4 said:So what, a regular American family is fine even if sanctions mess up their lives, but a pro athlete isn't?

What "average family" is actually being sanctioned here? One must distinguish between the primary targets and the secondary fallout that sanctions inevitably bring. Furthermore, isn't it true that such measures often serve only to make Russians more self-sufficient? Perhaps you should consult the actual experts on this forum.

cosmicgull52 said:Wait, what kind of moral outrage allowed Russian and Belarusian tennis players to compete again? What about other sports?

The ATP just ignored the whole outcry—they never even bothered banning them.
Only Wimbledon stepped up, but that was mostly because of the British association—so they just stripped them of the ranking points instead.

Nathan Thomas12 said:China is sitting on $35 trillion in debt.
The big players are too hooked on the dollar to let it tank—if the dollar collapses, the Chinese economy goes down with it.

On the flip side, the Chinese state holds roughly $1.5 trillion in U.S. Treasuries. They've also been quietly scooping up gold on the global market, significantly beefing up their national reserves over the last two decades—not to mention they are massive gold producers themselves, supplying both their own citizens and the state.
The real issue with this mountain of internal debt is the sheer incompetence of how that capital was deployed. They poured money into massive infrastructure projects—entire ghost cities that sit vacant today—effectively turning liquid assets into dead capital. It was a systemic failure.

Tennis is a joke right now. Honestly, even the corrupt mess that is American soccer has banned Russia.

Nancy Gomez26 said:On the flip side, the Chinese state holds roughly $1.5 trillion in U.S. Treasuries. They've also been quietly scooping up gold on the global market, significantly beefing up their national reserves over the last two decades—not to mention they are massive gold producers themselves, supplying both their own citizens and the state.
The real issue with this mountain of internal debt is the sheer incompetence of how that capital was deployed. They poured money into massive infrastructure projects—entire ghost cities that sit vacant today—effectively turning liquid assets into dead capital. It was a systemic failure.

That entire situation was a deliberate state policy designed to manufacture artificial economic growth during a period of global instability. Back then, self-proclaimed experts were busy marveling at the so-called "Chinese economic miracle," yet we see now that their real estate market is collapsing precisely because of those very tactics.

We saw the exact same pattern play out with the pandemic. At the time, those same "experts" lauded their ability to manage everything through rigid, top-down mandates—do you remember how they boasted about erecting hospitals in mere days? They claimed their system was inherently superior to the West, and now look at them: overwhelmed medical facilities and tens of thousands of deaths recorded daily, while here in the States, the crisis has largely faded into the background.

Cyprus and Moscow meet on the shores of the Mediterranean. It is the ultimate sanctuary where the oligarchs emerging from the collapse of the USSR stash their fortunes and wash their dirty money.

https://www.cbsnews.com/video/cyprus...023-01-15/#app

wiredseal7 said:The ATP just ignored the whole outcry—they never even bothered banning them.
Only Wimbledon stepped up, but that was mostly because of the British association—so they just stripped them of the ranking points instead.

Besides, it’s a damn shame all that Western hysteria over helping Ukraine happened when it did—if they'd just stayed out of it, this whole war would've been wrapped up ages ago. You with me on that?

Nathan Thomas12 said:Besides, it’s a damn shame all that Western hysteria over helping Ukraine happened when it did—if they'd just stayed out of it, this whole war would've been wrapped up ages ago. You with me on that?

And how exactly would it be "over"?
Without Western aid, the fighting would just keep dragging on. Kyiv wouldn't have fallen even without the help.
Sure, maybe Krematorsk and Slavyansk would have gone, and Kherson might've ended up in Russian hands,
but the war itself? It would still be going on for a long time.

wearytrucker22 said:https://vaulted.com/nuggets/gold-vs-money-supply/

Honestly, gold isn't even keeping pace with M2 money supply growth anymore. If anything, most of the gold price action looks pretty inflated right now.

Exactly.

It’s the same logical fallacy people fall for when they talk about Bitcoin's scarcity.

Look, over decades, populations grow, economies expand, productivity climbs, and the value of goods and services rises.
But apparently, we should all live in a world with an absolutely fixed amount of currency used for exchange—call it Bitcoin or the "gold standard."

In that kind of scenario, the value of money would constantly rise, meaning wages and prices would have to drop according to some incredibly complex set of rules and formulas.
What a lovely utopia—one where every single person on Earth has to be a "one-armed economist" thinking exactly the same way.

In the real world, however, the amount of money circulating is managed through interest rates and inflation. When there's too little cash, interest rates climb; when there's too much, you get inflation.
(Note to the economists reading this: I know I'm oversimplifying, but mostly because this is off-topic.)

And that alone proves that the value of a currency has zero direct connection to the strength of an economy.
The two variables are linked, sure, but that relationship isn't necessarily proportional, nor is it strictly correlated in the short or medium term.

Bringing it back to the main point, all of this shows that the Russian ruble's exchange rate has very little to do with how effective sanctions are or how successful the Russian economy actually is—especially over the last year.
The money supply, and consequently the exchange rate, is manipulated using basic monetary tools that the Russians are using quite heavily.

So, when someone—let's call them ZM—claims "sanctions aren't working, just look at the ruble," it's basically like saying, "I have no idea how economics works, even though I was a Prime Minister and now I'm the President."

Of course, playing with those monetary tools isn't free. Every move has consequences for how the economy functions, because the law of action and reaction applies to economics almost as strictly as it does to physics.

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Nancy Gomez26 said:On the flip side, the Chinese state holds roughly $1.5 trillion in U.S. Treasuries. They've also been quietly scooping up gold on the global market, significantly beefing up their national reserves over the last two decades—not to mention they are massive gold producers themselves, supplying both their own citizens and the state.
The real issue with this mountain of internal debt is the sheer incompetence of how that capital was deployed. They poured money into massive infrastructure projects—entire ghost cities that sit vacant today—effectively turning liquid assets into dead capital. It was a systemic failure.

And it doesn't stop there. Through the Belt and Road Initiative, they poured money into massive infrastructure projects across developing nations, thinking it would cement their political and economic grip on the world. Instead, those foundations are looking pretty shaky.
Now, they're stuck holding the bag—owning empty office towers in Sri Lanka and highways in Kenya that nobody actually drives on.
Word is that at least 40% of those investments are either bad debt or completely unrecoverable.

It really makes you wonder about whatever is left of the Russian war chest—specifically the portion the US couldn't freeze—that might be tucked away in China. If the Chinese economy takes a dive, that money could be in serious jeopardy.

For Russia, that would be a "perfect storm." 😁

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William Miller12 said:Exactly.

It’s the same logical fallacy people fall for when they talk about Bitcoin's scarcity.

Look, over decades, populations grow, economies expand, productivity climbs, and the value of goods and services rises.
But apparently, we should all live in a world with an absolutely fixed amount of currency used for exchange—call it Bitcoin or the "gold standard."

In that kind of scenario, the value of money would constantly rise, meaning wages and prices would have to drop according to some incredibly complex set of rules and formulas.
What a lovely utopia—one where every single person on Earth has to be a "one-armed economist" thinking exactly the same way.

In the real world, however, the amount of money circulating is managed through interest rates and inflation. When there's too little cash, interest rates climb; when there's too much, you get inflation.
(Note to the economists reading this: I know I'm oversimplifying, but mostly because this is off-topic.)

And that alone proves that the value of a currency has zero direct connection to the strength of an economy.
The two variables are linked, sure, but that relationship isn't necessarily proportional, nor is it strictly correlated in the short or medium term.

Bringing it back to the main point, all of this shows that the Russian ruble's exchange rate has very little to do with how effective sanctions are or how successful the Russian economy actually is—especially over the last year.
The money supply, and consequently the exchange rate, is manipulated using basic monetary tools that the Russians are using quite heavily.

So, when someone—let's call them ZM—claims "sanctions aren't working, just look at the ruble," it's basically like saying, "I have no idea how economics works, even though I was a Prime Minister and now I'm the President."

Of course, playing with those monetary tools isn't free. Every move has consequences for how the economy functions, because the law of action and reaction applies to economics almost as strictly as it does to physics.

___

In a market economy, currency value is primarily a psychological game played on the exchanges. Nobody is thinking about tanking the Dollar, because if they did, China wouldn't be able to export anything either. What would they even do with Canadian Forint?
Same goes for the Swiss Franc—it's a global player whose value isn't dictated by the tiny economy of Switzerland.
With the Ruble, it's a different story. The value is politically rigged; you can sell Dollars to buy Rubles at the official rate, but you can't do the reverse. In Russia, they won't let you hold onto your Euros or Dollars.