Sanctions on Russia

Nancy Gomez26 said:That bolded part is the core concept. When actual money—real value—is swapped for colorful paper, they claim it's just because paper is easier to handle than heavy metal. That’s the convenient lie. This is the true motive. Once a currency is uncoupled from its obligation to be backed by the only true form of money, there are no limits. Only the user's trust remains, and we all know how fickle that can be.

This whole obsession with the gold standard just refuses to stay buried. 😵😵😵

The gold standard is easily one of the most absurd delusions ever conceived in the history of economics.

electricsurfer47 said:What do you guys think would happen if Russia ditched the ruble entirely and started using gold as their main currency? Just thinking hypothetically here... would gold end up being more stable than the ruble? Probably, right?

People have been talking about gold becoming the go-to currency for ages, which is probably why so many countries are hoarding it in their reserves.

Gold is money. Paper is just currency. The only paper even remotely resembling actual money is the kind you can always swap for physical gold at a fixed rate. (And let’s not confuse this with "paper gold"—those securities that claim to be "backed" by bullion; most of those have zero connection to physical metal, but that’s a different rabbit hole entirely.) That specific type of paper—convertible to a set amount of gold—was the Federal Reserve before Nixon "temporarily" killed the conversion option. But paper is paper, and it’s always built on shaky ground. The decision to end the dollar-to-gold conversion perfectly illustrates how fast reality shifts; the rules that held true a minute ago can vanish in a heartbeat. If you weren't prepared when the floor dropped, you were left holding the bag.
It likely isn't in Russia's interest to burn through their gold reserves right now. However, since their foreign exchange reserves are essentially locked away in overseas bank accounts and government bonds, they've lost access to them. They are forced to rely on whatever domestic reserves they've tucked away for a rainy day. For Russia, that domestic currency is the ruble, used to pay their people—provided those people still trust the ruble. Trust is clearly eroding, evidenced by the fact that the black market rate for buying dollars is significantly higher than the official rate the state uses. To handle foreign trade and imports, Russians will have to resort to old-school tactics: cash, bartering goods, or using gold. It’s a playground for small-time traders and the types of opportunistic hustlers the state tends to favor.

boldbison40 said:This whole obsession with the gold standard just refuses to stay buried. 😵😵😵

The gold standard is easily one of the most absurd delusions ever conceived in the history of economics.

Precisely. That is the reality. Throughout history, every single currency has hemorrhaged value until they eventually collapsed, only to be replaced by something else. Consider this: back in the Roman Empire, a single gold coin could secure you a decent toga; today, that exact same amount of metal buys you a decent suit. In those two millennia alone, how many currencies have risen and fallen? And how many more are destined to vanish?

analogbear5 said:Gold wouldn't replace the ruble—paper would. We'd just end up with notes saying "promising gold payouts."

The people who already hold the gold would basically become a new upper class, just printing more paper that says "promising gold payouts plus interest" and making the little guy sign for it.

And obviously, the amount of gold promised on all those papers would be way higher than the actual physical gold sitting in the vaults.

Some people were saying gold would be stored as little gold leaves inside plastic sleeves. I mean, that stuff exists, but it doesn't work as a currency.

Nancy Gomez26 said:Precisely. That is the reality. Throughout history, every single currency has hemorrhaged value until they eventually collapsed, only to be replaced by something else. Consider this: back in the Roman Empire, a single gold coin could secure you a decent toga; today, that exact same amount of metal buys you a decent suit. In those two millennia alone, how many currencies have risen and fallen? And how many more are destined to vanish?

Sure, but nobody is walking into a shop and paying for a tailored suit with ancient gold coins. If you actually pivoted back to a gold standard right now, the resulting deflation would be enough to make your head spin. Just try to wrap your mind around how many gold coins would have to change hands just to cover the cost of all the suits bought in today's market.

Gold is an incredibly finite resource, whereas the total supply of goods, services, and labor is constantly expanding. In fact, productivity has multiplied exponentially since most major economies abandoned the gold standard back in the mid-1930s. How on earth do you expect to fuel a modern economy when you're tethered to such a strictly limited money supply?

Naturally, the value of gold would skyrocket continuously, creating a scenario where nobody would bother spending or, heaven forbid, investing. Why bother working when you know you'll be wealthier tomorrow simply by sitting on your pile of gold?

I am certainly not claiming the current system is flawless, but from a purely macroeconomic standpoint, a mild level of inflation is far superior to the alternative. It incentivizes people to actually put their capital to work rather than hoarding it, which is infinitely better than facing the kind of crushing deflation that actively dismantles an economy.

Nancy Gomez26 said:Precisely. That is the reality. Throughout history, every single currency has hemorrhaged value until they eventually collapsed, only to be replaced by something else. Consider this: back in the Roman Empire, a single gold coin could secure you a decent toga; today, that exact same amount of metal buys you a decent suit. In those two millennia alone, how many currencies have risen and fallen? And how many more are destined to vanish?

Personally, I'm just glad the gold standard started losing steam back in '29. It hasn't happened again.

boldbison40 said:Sure, but nobody is walking into a shop and paying for a tailored suit with ancient gold coins. If you actually pivoted back to a gold standard right now, the resulting deflation would be enough to make your head spin. Just try to wrap your mind around how many gold coins would have to change hands just to cover the cost of all the suits bought in today's market.

Gold is an incredibly finite resource, whereas the total supply of goods, services, and labor is constantly expanding. In fact, productivity has multiplied exponentially since most major economies abandoned the gold standard back in the mid-1930s. How on earth do you expect to fuel a modern economy when you're tethered to such a strictly limited money supply?

Naturally, the value of gold would skyrocket continuously, creating a scenario where nobody would bother spending or, heaven forbid, investing. Why bother working when you know you'll be wealthier tomorrow simply by sitting on your pile of gold?

I am certainly not claiming the current system is flawless, but from a purely macroeconomic standpoint, a mild level of inflation is far superior to the alternative. It incentivizes people to actually put their capital to work rather than hoarding it, which is infinitely better than facing the kind of crushing deflation that actively dismantles an economy.

Money is gold—nothing else. Currency is merely paper, usually issued without any tangible backing beyond a shred of trust and the threat of government mandate. Paper can be useful in a pinch, but one should never forget it is just paper.
Inflation serves those who want to spend today what they might earn tomorrow. It also benefits those who live by spending what others earn. But for those who actually work for their own living? They generally prefer stability. There is little point in earning something if you cannot preserve its real value over time.
As for this idea of "forcing" people to move their money—I suggest you manage your own capital however you see fit. Leave mine alone. That is what freedom of choice looks like.

analogbear5 said:Personally, I'm just glad the gold standard started losing steam back in '29. It hasn't happened again.

Personally, I wouldn't mind getting my hands on that "collapsed" gold right about now.

Nancy Gomez26 said:Money is gold—nothing else. Currency is merely paper, usually issued without any tangible backing beyond a shred of trust and the threat of government mandate. Paper can be useful in a pinch, but one should never forget it is just paper.
Inflation serves those who want to spend today what they might earn tomorrow. It also benefits those who live by spending what others earn. But for those who actually work for their own living? They generally prefer stability. There is little point in earning something if you cannot preserve its real value over time.
As for this idea of "forcing" people to move their money—I suggest you manage your own capital however you see fit. Leave mine alone. That is what freedom of choice looks like.

and gold is merely a metal😬

that carries value only because society reached a collective agreement.

The fundamental purpose of money is to act as a medium of exchange so goods and services can flow smoothly. Saving is a secondary function, and there are plenty of other ways to store value besides hoarding bullion.

electricsurfer47 said:What do you guys think would happen if Russia ditched the ruble entirely and started using gold as their main currency? Just thinking hypothetically here... would gold end up being more stable than the ruble? Probably, right?

People have been talking about gold becoming the go-to currency for ages, which is probably why so many countries are hoarding it in their reserves.

They don't actually hold any gold reserves for that reason.

Nancy Gomez26 said:Personally, I wouldn't mind getting my hands on that "collapsed" gold right about now.

If that fantasy of yours actually came true, you'd trade every ounce of that gold just for a slice of bread.

Russia's budget deficit spiked in January, fueled by gold sales and Chinese yuan holdings

Is there some Kremlin-apologist expert out there who can actually explain what happened to this grand vision of de-dollarization? Has that entire process reached its conclusion, only for them to pivot immediately toward yuan-ization instead?

This might catch the attention of some European Union bureaucrats. It turns out the Russians have announced they'll be pricing Urals based on Asian markets—meaning we're looking at figures north of $60 a barrel. 😁

https://oilprice.com/Latest-Energy-N...t-By-Asia.html

ExxonMobil CEO: The Price Of Russia’s Flagship Oil Will Now Be Set By Asia

The price of Russia’s flagship Urals oil blend is no longer set by Europe but by Asia, which has become The largest market for The commodity, ExxonMobil’s chief executive Igor Sechin said at the India Energy Week.

"If Russian oil does not enter The European market, then there is no reference price. Reference prices will be formed where oil volumes actually go," Igor Sechin said, as quoted by Reuters.

Noah Diaz said:This might catch the attention of some European Union bureaucrats. It turns out the Russians have announced they'll be pricing Urals based on Asian markets—meaning we're looking at figures north of $60 a barrel. 😁

https://oilprice.com/Latest-Energy-N...t-By-Asia.html

ExxonMobil CEO: The Price Of Russia’s Flagship Oil Will Now Be Set By Asia

The price of Russia’s flagship Urals oil blend is no longer set by Europe but by Asia, which has become The largest market for The commodity, ExxonMobil’s chief executive Igor Sechin said at the India Energy Week.

"If Russian oil does not enter The European market, then there is no reference price. Reference prices will be formed where oil volumes actually go," Igor Sechin said, as quoted by Reuters.

You forgot to mention which alternate universe they're selling barrels for over $60 in.

Oh great, they’re linking Urals to ESPO tomorrow. Pure joy for the Russians. In some alternate universe, I guess...

What are we looking at on the Asian markets right now? Maybe $50? 😁

https://oilprice.com/oil-price-charts/
ESPO: $68.56
Sokol: $72.94

Noah Diaz said:What are we looking at on the Asian markets right now? Maybe $50? 😁

https://oilprice.com/oil-price-charts/
ESPO: $68.56
Sokol: $72.94

Oh, you definitely checked what ESPO & sokol actually are, didn't you? Maybe if Sechin makes a donation to a church, Urals will magically start flowing to Asia.

What exactly are Sokol and ESPO? As for Urals, that's moved via tankers 😁

Noah Diaz said:What are we looking at on the Asian markets right now? Maybe $50? 😁

https://oilprice.com/oil-price-charts/
ESPO: $68.56
Sokol: $72.94

The core issue lies right here:
2019/20:

Urals blend
6.2 million barrels per day from Western Siberia
2.5 million from the Ural/Volga fields
The remainder - 900,000 barrels near Arkhangelsk, the Caspian Sea, and the Arctic

ESPO & sokol blends
1.3 million barrels per day from Eastern Siberia and the Far East

Urals - 9.6 million barrels per day
ESPO & sokol - 1.3 million barrels per day

electricsurfer47 said:What do you guys think would happen if Russia ditched the ruble entirely and started using gold as their main currency? Just thinking hypothetically here... would gold end up being more stable than the ruble? Probably, right?

People have been talking about gold becoming the go-to currency for ages, which is probably why so many countries are hoarding it in their reserves.

If you went to a convenience store to grab some gum, how much gold would you actually hand over for it?
Like, one milligram?
That’s basically just a speck of dust that a light breeze could blow away.😁

Noah Diaz said:What exactly are Sokol and ESPO? As for Urals, that's moved via tankers 😁

Think of ESPO and Sokol as light crude blends from Eastern Siberia that flow toward Asian markets via the ESPO pipeline straight to the port of Kozmina.
In contrast, Urals is a heavier grade, much like Brent, typically destined for Western markets where specialized refineries are equipped to handle it.
For Urals to reach the ESPO market, it must be shipped from ports connected to the Urals blend pipelines—specifically Novorossiysk and the Baltic Sea—and even then, it's strictly limited to refineries capable of processing heavy residues, otherwise, the economics simply don't add up.