Posts by Adam Peterson

hiddeneagle98 said:Yeah, the USA basically spent a massive pile of unplanned cash during the pandemic, creating a giant deficit and fueling inflation. That money—that whole deficit—went straight to American citizens via helicopter money... and Big Pharma.

In Russia, the deficit mostly stems from the revenue side, as far as I know, and that’s not something they did voluntarily to help citizens through COVID. They chose to attack Ukraine, and this is just the price they pay on top of the actual cost of the operation. Companies have lost foreign markets, domestic firms are struggling with tech imports, exports are restricted, gas isn't going to Europe, and oil is being sold through various workarounds... all of that hits the revenue side. This isn't money that was handed out to Russian citizens or corporations; it's simply money that has vanished.

It is a given that Russia has been left short on cash, and there is really no debate there. When you eliminate trade and the flow of capital, the money disappears. While Russia did record a GDP contraction of 2%, they were actually projecting a growth rate of 5% for last year, which represents a massive blow and a significant loss. However, this isn't quite the crushing blow to Russia that the West was hoping for, mainly because the Russian economy has been underestimated when people compare it to something like Spain.
The truth is that Russia remains an export powerhouse because they supply strategically vital goods like food, fertilizers, energy, and metals.

It seems as though Russia and Europe are the only ones truly feeling the impact here, primarily because Europe lacks domestic production of those essential commodities, leaving them incredibly vulnerable. There is a very real possibility that the EU could slide into a recession this year.

It stands to reason that Europe and Russia engage in trade due to geographic proximity and competitive pricing, creating a situation that is mutually beneficial since the demand exists on both sides. So far, Europe's current behavior looks a bit like someone throwing a tantrum and accidentally cutting off their own lifeline.

Russia should be considered a country with manageable debt levels, considering their debt-to-GDP ratio was at 17% before the crisis and has actually settled down to 15% now.
For context, the USA is sitting at a debt level of 132%, while Japan is at 260% and Italy is at 130%.
Their foreign exchange reserves are nearly $600 billion.

While it is true that sanctions impacted Russia, causing an economic slowdown of about 2% last year, the IMF is currently projecting positive growth for Russia this year, which stands in stark contrast to the projected contractions in Germany and the United Kingdom.

Russia maintains a trade surplus in its international exchanges, a surplus in its balance of payments, and a relatively low fiscal deficit; from a macroeconomic standpoint, Russia remains a remarkably stable nation today.

The sanctions haven't achieved any of their intended goals, and if anything, they are driving oil-producing nations closer together, including Mexico. BRICS already has its own development bank and is actively pursuing the idea of conducting transactions outside of the Dollar and the Swift system, because after these recent sanctions, it has become clear to everyone that holding assets in dollars or via dollar-denominated accounts isn't always secure, nor is access to the Swift payment system guaranteed.

Relying on Russia's budget deficit as a point of concern won't change much, as it's not a unique issue; for instance, back in 2020, the USA saw a deficit of 14.5% of its GDP, followed by 10.8% the next year against a $24 trillion economy, and we certainly don't see them collapsing because of it.