Sanctions on Russia

boldbison40 said: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.

Gold possesses worth simply because the market dictates it. If you ask the central bankers, they would argue its value is significantly lower—yet even they won't let go of their gold reserves. They cling to them tightly. Of course, there are those who play the game by selling when it’s cheap and buying when it’s expensive—the so-called Bottoms Up crowd—but that is a separate, rather curious saga entirely.
I concede that the primary role of money is enabling trade, but how can one trust the system when real interest rates on savings hover near, or even dip below, zero? It creates a perverse reality where those who practiced prudence in the past—saving to secure their future—are effectively being punished for it today. It is a distorted, twisted setup, and such systems inevitably collapse under their own weight.
As for alternative ways to preserve the fruits of one's labor, they certainly exist, though they all carry varying degrees of risk. I will simply note that governments, without exception, excel at stripping wealth from their citizens under various pretexts. The state always finds a way to lay its small hands on private property through taxation or expropriation. Naturally, the more you possess, the higher the probability they will attempt to divest you of it. Fortunately, most people own very little or nothing at all, leaving them largely untouched by these maneuvers.

George Robinson43 said: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.

And now you're overcomplicating things too...

I mean, if this is the kind of nitpicking and "classic logic" that used to keep the Russian supporters busy...😁🤣

analogbear5 said:If that fantasy of yours actually came true, you'd trade every ounce of that gold just for a slice of bread.

Look, I work the land. In a total collapse, I’m the one left hungry and "out of bread" at the end of the day. In that grim scenario, I’d likely find myself on the opposite side of whatever trade you're dreaming up. But then again, anything can happen.

George Robinson43 said: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.

I only asked that as a joke (smirk), because I already know exactly what’s happening, where, and how.

It looks like Russia is cutting off sales to the European Union, so they'll be shipping Ural over to Asia at whatever local prices they can grab there.

Noah Diaz said:I only asked that as a joke (smirk), because I already know exactly what’s happening, where, and how.

It looks like Russia is cutting off sales to the European Union, so they'll be shipping Ural over to Asia at whatever local prices they can grab there.

To whom exactly? Think of it this way: there is such a thing as the Nelson Index. Refineries that specialize in light crude distillation without the capacity to process heavy residues are going to see that index tank once Ural becomes the standard.
Furthermore, shipping from the Baltic Sea or the Black Sea all the way to China isn't exactly a cheap endeavor! It's hard to see how they can possibly substitute Arabian crude—which sells for roughly the same price but involves much shorter routes and avoids those pesky transit fees through Bab el Mandeb.

Noah Diaz said:I only asked that as a joke (smirk), because I already know exactly what’s happening, where, and how.

It looks like Russia is cutting off sales to the European Union, so they'll be shipping Ural over to Asia at whatever local prices they can grab there.

So, what exactly was stopping them from selling Ural to Asia at those better prices for the last 50 years?

Nancy Gomez26 said:Gold possesses worth simply because the market dictates it. If you ask the central bankers, they would argue its value is significantly lower—yet even they won't let go of their gold reserves. They cling to them tightly. Of course, there are those who play the game by selling when it’s cheap and buying when it’s expensive—the so-called Bottoms Up crowd—but that is a separate, rather curious saga entirely.
I concede that the primary role of money is enabling trade, but how can one trust the system when real interest rates on savings hover near, or even dip below, zero? It creates a perverse reality where those who practiced prudence in the past—saving to secure their future—are effectively being punished for it today. It is a distorted, twisted setup, and such systems inevitably collapse under their own weight.
As for alternative ways to preserve the fruits of one's labor, they certainly exist, though they all carry varying degrees of risk. I will simply note that governments, without exception, excel at stripping wealth from their citizens under various pretexts. The state always finds a way to lay its small hands on private property through taxation or expropriation. Naturally, the more you possess, the higher the probability they will attempt to divest you of it. Fortunately, most people own very little or nothing at all, leaving them largely untouched by these maneuvers.

And fiat currency only maintains its status because the market agrees it should; otherwise, nobody would be willing to trade gold, or indeed anything else, for that paper. There is an endless mountain of monetary theories regarding the ideal amount of liquidity in circulation, but I have no desire to bore everyone here with a lecture on macroeconomics.

Low interest rates generally act as fuel for economic activity, but as with just about everything in life, excess leads to ruin. It is common knowledge that governments love to plunder and squander funds. They achieve this through taxes and various levies far more aggressively than they do through a mere couple of percentage points of inflation.

Harold Nelson6 said:So, what exactly was stopping them from selling Ural to Asia at those better prices for the last 50 years?

Purely out of compassion for the impoverished citizens of the European Union, I suppose.

boldbison40 said:And fiat currency only maintains its status because the market agrees it should; otherwise, nobody would be willing to trade gold, or indeed anything else, for that paper. There is an endless mountain of monetary theories regarding the ideal amount of liquidity in circulation, but I have no desire to bore everyone here with a lecture on macroeconomics.

Low interest rates generally act as fuel for economic activity, but as with just about everything in life, excess leads to ruin. It is common knowledge that governments love to plunder and squander funds. They achieve this through taxes and various levies far more aggressively than they do through a mere couple of percentage points of inflation.

A fiat currency is "valuable" primarily because it is backed by the state's entire apparatus of coercion. The government issues a decree stating that a specific currency is the sole legal tender—the only way to pay taxes or receive a paycheck from the state. That is the bedrock of its existence. The market acts as a secondary force, often holding an opinion on a currency's value that differs sharply from the issuing state's perspective. Wise nations listen to what the market says about their currency and adjust policy to prevent massive divergence. Less wise nations pretend their currency is worth more than the market claims, though such countries rarely see their money converted into other currencies at the "real" exchange rate they insist upon. The black market always tells the truth. Look at what is happening in Russia today. Putin's apologists cling to the exchange rate of a "strong" ruble as if it were some definitive proof of a booming economy.

Nancy Gomez26 said:A fiat currency is "valuable" primarily because it is backed by the state's entire apparatus of coercion. The government issues a decree stating that a specific currency is the sole legal tender—the only way to pay taxes or receive a paycheck from the state. That is the bedrock of its existence. The market acts as a secondary force, often holding an opinion on a currency's value that differs sharply from the issuing state's perspective. Wise nations listen to what the market says about their currency and adjust policy to prevent massive divergence. Less wise nations pretend their currency is worth more than the market claims, though such countries rarely see their money converted into other currencies at the "real" exchange rate they insist upon. The black market always tells the truth. Look at what is happening in Russia today. Putin's apologists cling to the exchange rate of a "strong" ruble as if it were some definitive proof of a booming economy.

But then why do the US Dollar, the British Pound, or the Japanese Yen have value in America even though there is no coercion involved and you can't use them to pay your taxes or your staff? Or does the market simply perceive inherent value in fiat currencies in the same way it views gold or any other asset?

I agree with the second half of the post. That said, the ruble has also strengthened organically because imports from the West have plummeted for Russians, leaving them with a massive surplus of foreign exchange they have nowhere to spend, combined with an influx of capital in the first half of the year that exceeded expectations due to rising oil and gas prices. However, a drastic collapse in imports is never a harbinger of good news for an economy; typically, such trends lead to a rather grim conclusion.

boldbison40 said:But then why do the US Dollar, the British Pound, or the Japanese Yen have value in America even though there is no coercion involved and you can't use them to pay your taxes or your staff? Or does the market simply perceive inherent value in fiat currencies in the same way it views gold or any other asset?

I agree with the second half of the post. That said, the ruble has also strengthened organically because imports from the West have plummeted for Russians, leaving them with a massive surplus of foreign exchange they have nowhere to spend, combined with an influx of capital in the first half of the year that exceeded expectations due to rising oil and gas prices. However, a drastic collapse in imports is never a harbinger of good news for an economy; typically, such trends lead to a rather grim conclusion.

Foreign currencies carry weight abroad because, at the end of the day, it’s all part of the same machine. Every central bank—whether local or national—essentially operates as a single entity under the umbrella of the Bank for International Settlements in Basel. They act as the central bank for all banks. It comes down to mutual recognition; they validate one another, which provides that necessary layer of legitimacy back home. It’s an interesting irony: humanity struggles to reach a consensus on almost everything else, yet when it comes to the money, the global elites reached their agreements long ago, quietly and efficiently. A self-made pact isn't inherently a bad thing. But given basic human nature, it will likely end badly.

Nancy Gomez26 said:Foreign currencies carry weight abroad because, at the end of the day, it’s all part of the same machine. Every central bank—whether local or national—essentially operates as a single entity under the umbrella of the Bank for International Settlements in Basel. They act as the central bank for all banks. It comes down to mutual recognition; they validate one another, which provides that necessary layer of legitimacy back home. It’s an interesting irony: humanity struggles to reach a consensus on almost everything else, yet when it comes to the money, the global elites reached their agreements long ago, quietly and efficiently. A self-made pact isn't inherently a bad thing. But given basic human nature, it will likely end badly.

You're getting your wires crossed regarding the BIS. The Federal Reserve handles the US Dollar, and the European Central Bank handles the Euro. Central banks manage the system's liquidity; the BIS doesn't have anything to do with that part.
The BIS is more like a clearinghouse for central banks—nothing more, nothing less.
Market forces dictate what a currency is worth, provided it's actually a market currency. That Ruble? It's strictly political territory, not a market currency.

Nathan Thomas12 said:You're getting your wires crossed regarding the BIS. The Federal Reserve handles the US Dollar, and the European Central Bank handles the Euro. Central banks manage the system's liquidity; the BIS doesn't have anything to do with that part.
The BIS is more like a clearinghouse for central banks—nothing more, nothing less.
Market forces dictate what a currency is worth, provided it's actually a market currency. That Ruble? It's strictly political territory, not a market currency.

The BIS acts as the central hub for the Federal Reserve, the European Central Bank, and everyone else. It’s a hierarchy. Whether that hierarchy is respected, or how much autonomy individual nations' central banks actually possess, is a separate debate. However, it serves everyone's interest to maintain a unified policy. The public perception of "independent leadership" making isolated decisions at each bank is largely a facade designed to appease the masses; the collective interest always outweighs any desire for autonomy. Currently, that collective interest is being forced by a situation so critical that if anyone tried to go rogue, the entire fragile system would likely collapse under its own weight. Therefore, a synchronized policy isn't just preferred—it's survival for everyone playing this game.

George Robinson43 said:To whom exactly? Think of it this way: there is such a thing as the Nelson Index. Refineries that specialize in light crude distillation without the capacity to process heavy residues are going to see that index tank once Ural becomes the standard.
Furthermore, shipping from the Baltic Sea or the Black Sea all the way to China isn't exactly a cheap endeavor! It's hard to see how they can possibly substitute Arabian crude—which sells for roughly the same price but involves much shorter routes and avoids those pesky transit fees through Bab el Mandeb.

India stepped up quite boldly recently. I assume they managed to find plenty of other buyers once they announced they’d be exporting to the Asian market at these updated prices.

Harold Nelson6 said:So, what exactly was stopping them from selling Ural to Asia at those better prices for the last 50 years?

Better rates? Before the war, the price for Ural was hovering right around there, and almost everything was headed toward Europe or countries closer than Asia.

The Economist on Russia:

Last year, their GDP shrank by a mere 2.2%, which honestly caught a lot of those economists off guard—especially after all that spring forecasting suggested we might see a massive 10% drop. It’s certainly not a comfortable situation, I suppose, but it’s nowhere near sufficient to actually derail Vladimir Putin’s military operations. Even though wages aren't what they used to be, unemployment hasn't really spiked. We aren't seeing a housing market crash either, just a plateau in prices. While consumer spending is acting as a bit of a drag on the overall economy, it isn't doing catastrophic damage. In fact, the IMF is actually predicting a 0.3% growth for Russia in 2023, which would technically outpace the United States and Germany and sit just a hair behind the Eurozone's performance.

So, looking at it this way, we saw only a 2.2% dip last year, and now it looks like their economy might actually show some growth in 2023.

That 2.2% drop for last year? Honestly, that’s just an estimate. It feels like they’re dragging their feet on releasing the actual data because, if you look at all the indicators, things started taking a massive dive back in December. I was expecting the numbers to drop just yesterday! But look, it's pretty obvious what's happening: the private sector is shrinking fast, while government spending is spiking—which is basically why the overall GDP contraction looks so minimal. If anyone actually thinks this can keep going indefinitely, well, good luck to them, I guess.

I can already see new taxes on the horizon. Once the war in Ukraine escalates any further, those reserves are going to dry up incredibly fast.
https://www.themoscowtimes.com/2023/...-report-a80172

Carl Lee27 said:That 2.2% drop for last year? Honestly, that’s just an estimate. It feels like they’re dragging their feet on releasing the actual data because, if you look at all the indicators, things started taking a massive dive back in December. I was expecting the numbers to drop just yesterday! But look, it's pretty obvious what's happening: the private sector is shrinking fast, while government spending is spiking—which is basically why the overall GDP contraction looks so minimal. If anyone actually thinks this can keep going indefinitely, well, good luck to them, I guess.

I can already see new taxes on the horizon. Once the war in Ukraine escalates any further, those reserves are going to dry up incredibly fast.
https://www.themoscowtimes.com/2023/...-report-a80172

Honestly, you really ought to subtract all those spiked military expenditures—the Wagner Group, the Chechens, all that—
which are being funded straight out of state reserves
If we don't account for that explosion in military spending, a 6-7% GDP crash is basically a given.

GDP is really just a snapshot of a specific moment in time, you know? It doesn't actually tell you anything about long-term survival or whether a country can truly sustain itself over the long haul. As long as a nation has the means to fund its essential needs, it’ll find a way to make it work—right up until the moment they simply can't anymore.
The US has liquid reserves sitting in the NWF and the Federal Reserve that equal at least 15% of our GDP. My guess? Most of that is going to be thrown straight into patching up holes in the budget. For the US, oil prices are the absolute dealbreaker here; nothing else matters as much as that. Everything else is just noise, like whether Sasha gets an extra bonus for more time on the front lines, or if some crook decides to take public subsidies meant for "building" a tire or airbag factory and instead uses it to just import those exact same things from China.

The West isn't buying much oil anymore, and whatever we dump onto China and India comes with massive discounts, which just keeps widening the budget deficit.

The Federal Reserve's reserves have officially surged past the $600 billion mark. ☕