3 ms·

It will have next to no effect on Russia because they have their own currency and, unlike Iran, are not dependent upon imports. The fantasy of the dollar hegem

It will have next to no effect on Russia because they have their own currency and, unlike Iran, are not dependent upon imports. The fantasy of the dollar hegemony is a western myth. They are about to find out that they are completely irrelevant. If nobody is selling anything to you then you don’t need to settle in foreign currencies. However Russia could demand roubles in payment for its gas and then ban foreigners from holding them. Which would mean the EU couldn’t settle its gas bill. And we all know what happens when you fail to pay the gas bill. Always remember that a country only exports to obtain imports. If there are no imports to be had then there is no need to export anything. The gas will stay in the ground and the world will have even less supply than it does now.

Victerius 5y ago
Much of this comment is wrong. Cutting off some Russian banks from SWIFT will have significant consequences on the Russian economy. The fact that Russia prints its own currency doesn't change anything. > are not dependent upon imports. Russia imports hundreds of billions of dollars worth of goods each year. Source: https://tradingeconomics.com/russia/imports https://tradingeconomics.com/russia/imports > The fantasy of the dollar hegemony is a western myth. The hegemony of the dollar is actually very real. The dollar is the de facto global currency for cross border transactions and settlements. And it will remain so as long as the United States remains the world's dominant superpower, which is forever. https://palladiummag.com/2020/12/05/why-the-us-dollar-could-outlast-the-american-empire/ https://palladiummag.com/2020/12/05/why-the-us-dollar-could-... > However Russia could demand roubles in payments for its gas. And buyers could put their foot down and demand to pay in dollar. If Russia refuses, said buyers will simply look to other producers. > and then ban foreigners from holding them. No one outside of Russia wants to hold roubles. Everyone wants euros, dollars, or pound sterlings. The rouble is not a significant currency in the global economy. > Which would mean the EU couldn't settle its gas bill. The EU can import gas from the United States, the United Kingdom, and the Middle East. US exports of natural gas to Europe are already rapidly increasing: https://www.reuters.com/business/energy/europe-remains-top-destination-us-lng-second-month-running-2022-02-01/ https://www.reuters.com/business/energy/europe-remains-top-d.... Gas isn't the leverage you think Russia has. The rest of the world needs Russia less than Russia needs the rest of the world. For gas, or anything else.
- neilwilson 5y ago
  "Russia imports hundreds of billions of dollars worth of goods each year." They do, but do they need to do that or are they just nice to have. And what that means is that the West is down by hundreds of billions of dollars of earnings. Where else are they going to sell that output now? There isn't a magic source of demand in the rest of the world, and unlike Russia, we don't have new jobs springing up supplying a war machine. In real terms we lose, and Russia's export system frees up manpower that can be redirected to War. ""The dollar is the de facto global currency for cross border transactions and settlements. " That isn't the case. Everybody pays in the currency they have, and receives the currency they need - particularly the one they need to settle taxes. The US dollar is used only because it is convenient to do so. Once it stops being a convenient hop for getting from one currency to another, they will use some other method. "If Russia refuses, said buyers will simply look to other producers." Which other producers. Gas prices are going up. That means there is insufficient supply. "Gas isn't the leverage you think Russia has." Really. So why are gas prices going up then if there is an excess of supply? Why is the UK's gas price cap looking at going up by 50%? There is no magic porridge pot in the world. The world of excess supply ended with Covid - and the restrictions in place have crippled supply chains. It's going to take time to replace the power supplies. There is a wonderful pamphlet called "How to pay for the war" by JM Keynes. You may wish to read it. Because I can guarantee Putin has.
op00to 5y ago
Who wants Rubles now? Russia needs raw materials, but it’s very difficult to trade in dollars.
- neilwilson 5y ago
  Russia has all the raw materials in the world. The people who want rubles are those who have to pay taxes in rubles, which Putin imposes on the promise of a trip to the gulag if you don't pay them. Just because something is generally priced in dollars, doesn't mean that it is paid for in dollars. Contracts to supply anything can be in any denomination. In all international transactions people pay in the currency they have and receive the currency they require. Everything else is just protocol layers.
  - op00to 5y ago
    It’s really hard to pay in rubles internationally right now as a Russian. Like, your bank won’t let you. In addition to the fact that Russia’s biggest import is heavy machinery which makes it very difficult for them to actually access said raw materials, Russia must import many raw materials required for modern industry. Aluminum Oxide, plastics, and chemical feedstock are major imports for Russia that they no longer have access to. To say that Russia has raw materials essentially ignores anything that isn’t energy.

Victerius 5y ago

Much of this comment is wrong. Cutting off some Russian banks from SWIFT will have significant consequences on the Russian economy. The fact that Russia prints its own currency doesn't change anything. > are not dependent upon imports. Russia imports hundreds of billions of dollars worth of goods each year. Source: https://tradingeconomics.com/russia/imports https://tradingeconomics.com/russia/imports > The fantasy of the dollar hegemony is a western myth. The hegemony of the dollar is actually very real. The dollar is the de facto global currency for cross border transactions and settlements. And it will remain so as long as the United States remains the world's dominant superpower, which is forever. https://palladiummag.com/2020/12/05/why-the-us-dollar-could-outlast-the-american-empire/ https://palladiummag.com/2020/12/05/why-the-us-dollar-could-... > However Russia could demand roubles in payments for its gas. And buyers could put their foot down and demand to pay in dollar. If Russia refuses, said buyers will simply look to other producers. > and then ban foreigners from holding them. No one outside of Russia wants to hold roubles. Everyone wants euros, dollars, or pound sterlings. The rouble is not a significant currency in the global economy. > Which would mean the EU couldn't settle its gas bill. The EU can import gas from the United States, the United Kingdom, and the Middle East. US exports of natural gas to Europe are already rapidly increasing: https://www.reuters.com/business/energy/europe-remains-top-destination-us-lng-second-month-running-2022-02-01/ https://www.reuters.com/business/energy/europe-remains-top-d.... Gas isn't the leverage you think Russia has. The rest of the world needs Russia less than Russia needs the rest of the world. For gas, or anything else.

neilwilson 5y ago
"Russia imports hundreds of billions of dollars worth of goods each year." They do, but do they need to do that or are they just nice to have. And what that means is that the West is down by hundreds of billions of dollars of earnings. Where else are they going to sell that output now? There isn't a magic source of demand in the rest of the world, and unlike Russia, we don't have new jobs springing up supplying a war machine. In real terms we lose, and Russia's export system frees up manpower that can be redirected to War. ""The dollar is the de facto global currency for cross border transactions and settlements. " That isn't the case. Everybody pays in the currency they have, and receives the currency they need - particularly the one they need to settle taxes. The US dollar is used only because it is convenient to do so. Once it stops being a convenient hop for getting from one currency to another, they will use some other method. "If Russia refuses, said buyers will simply look to other producers." Which other producers. Gas prices are going up. That means there is insufficient supply. "Gas isn't the leverage you think Russia has." Really. So why are gas prices going up then if there is an excess of supply? Why is the UK's gas price cap looking at going up by 50%? There is no magic porridge pot in the world. The world of excess supply ended with Covid - and the restrictions in place have crippled supply chains. It's going to take time to replace the power supplies. There is a wonderful pamphlet called "How to pay for the war" by JM Keynes. You may wish to read it. Because I can guarantee Putin has.

op00to 5y ago

Who wants Rubles now? Russia needs raw materials, but it’s very difficult to trade in dollars.

neilwilson 5y ago
Russia has all the raw materials in the world. The people who want rubles are those who have to pay taxes in rubles, which Putin imposes on the promise of a trip to the gulag if you don't pay them. Just because something is generally priced in dollars, doesn't mean that it is paid for in dollars. Contracts to supply anything can be in any denomination. In all international transactions people pay in the currency they have and receive the currency they require. Everything else is just protocol layers.
- op00to 5y ago
  It’s really hard to pay in rubles internationally right now as a Russian. Like, your bank won’t let you. In addition to the fact that Russia’s biggest import is heavy machinery which makes it very difficult for them to actually access said raw materials, Russia must import many raw materials required for modern industry. Aluminum Oxide, plastics, and chemical feedstock are major imports for Russia that they no longer have access to. To say that Russia has raw materials essentially ignores anything that isn’t energy.