3 ms·

We'll see the dominance of the USD erode in the next three decades is my prediction. Look at how successful Putin was in demanding payment for Russian oil in R

We'll see the dominance of the USD erode in the next three decades is my prediction. Look at how successful Putin was in demanding payment for Russian oil in Rubles. It has propped up the Ruble enormously and its predicted collapse hasn't occurred. In fact it has rallied. I assure you that other nations have taken note and will take similar steps in the future. Other commodities may well be priced in local currencies of the producing nations. Think gold, diamond, gas, oil, timber, wheat.

oj2828 4y ago
Russia had to raise interest rates to 20% to achieve the recent appreciation. Russia is giving up economic growth for the foreseeable future to prop up its currency. I doubt many countries are eyeing a similar move
- somenameforme 4y ago
  They raised them to 20% for one month in the face of a nuclear economic strike. Their rates are down to 7.5% which are close to nominal for them. Remaining effects are a 3% GDP decline and a 12% inflation rate trending downward from a peak of 18% following the attack. The overall impact seems to be fading to zero relatively quickly, excepting a much stronger ruble. Future growth numbers will be interesting to follow. Much could shift radically one way or the other depending on oil prices, but the US seems to have a declining level of influence with OPEC+.
  - The_Colonel 4y ago
    > Remaining effects are a 3% GDP decline It's 3.9% (which rounds up to 4%, not to 3%) this year and 5.6% next year. This forecast is based on figures kindly provided by Russian authorities, which in times of war have strong incentives to be creative.
    - somenameforme 4y ago
      The Russian central bank expects a rate of 3-3.5%, the Ministry of Economic Development expects a decline of 2.9%. [1] Your numbers may be dated, as the expected figures keep improving. Some time back they were expecting double digit declines. [1] - https://tradingeconomics.com/russia/gdp-growth-annual https://tradingeconomics.com/russia/gdp-growth-annual
      - The_Colonel 4y ago
        The 3.9%, 5.6% decline comes from OECD's November report, so hardly outdated. I don't think there's much reason to trust Russian Central Bank which has strong incentives (read: orders) to enhance the numbers. https://www.oecd.org/economic-outlook/november-2022/ https://www.oecd.org/economic-outlook/november-2022/
nirimda 4y ago
Most countries and business want to do something with their earnings. If you get paid in rubles for your oil, then you can only buy things denominated in rubles. If your general trade is collapsing, this isn't such a bad thing - you need to make an increasing proportion of your consumption. But if you retain an economy that wants to do general trade, you will probably want something other countries accept. So although it is possible that "we'll see the dominance of the USD erode in the next three decades", it is much less likely that "commodities [in general would] be priced in local currencies of the producing nations [following the example of Putin's Russia]". The problem with your prediction though is that it's boring - it's too easy to be true as phrased. For instance, if we see a new cold war divide into a China-focused world and a US-focused world, then the growth of whatever currency the China-focused world uses will necessarily result in decreased USD dominance. Or if not China, then India. Or who knows who. Or maybe the US will descend into civil war and someone else will pick up the mantle of world hegemon. Or the US will amicably divorce, and the Floridollar will dominate international trades. So it's more likely that you'll be right for the wrong reason, than that you'll be right for the reasoning established in your post.
- UltraViolence 4y ago
  AFAIK you can still exchange Rubles for USD or EUR, so buying stuff shouldn't be too much trouble. The problem Russia has is that it can't buy anything from the West no matter how much money it's willing to pay because of trade sanctions. The sanctions will eventually be lifted since Russia will almost certainly demand this for stopping the war.
KptMarchewa 4y ago
The "prop up the ruble" effect was negative to russia. It happened because export to russia totally stalled. So, russia still exported oil and gas, but could not buy anything for earned currency. For example, in August German export to russia dropped 45.8%, while imports dropped only 6.7% - and that only due to gas price increase. Now they import 0 gas. >I assure you that other nations have taken note and will take similar steps in the future. Why would any country do that if they don't plan similar genocidal war?
- jacooper 4y ago
  > Why would any country do that if they don't plan similar genocidal war? Because not everybody likes to be controlled by the US?

oj2828 4y ago

Russia had to raise interest rates to 20% to achieve the recent appreciation. Russia is giving up economic growth for the foreseeable future to prop up its currency. I doubt many countries are eyeing a similar move

somenameforme 4y ago
They raised them to 20% for one month in the face of a nuclear economic strike. Their rates are down to 7.5% which are close to nominal for them. Remaining effects are a 3% GDP decline and a 12% inflation rate trending downward from a peak of 18% following the attack. The overall impact seems to be fading to zero relatively quickly, excepting a much stronger ruble. Future growth numbers will be interesting to follow. Much could shift radically one way or the other depending on oil prices, but the US seems to have a declining level of influence with OPEC+.
- The_Colonel 4y ago
  > Remaining effects are a 3% GDP decline It's 3.9% (which rounds up to 4%, not to 3%) this year and 5.6% next year. This forecast is based on figures kindly provided by Russian authorities, which in times of war have strong incentives to be creative.
  - somenameforme 4y ago
    The Russian central bank expects a rate of 3-3.5%, the Ministry of Economic Development expects a decline of 2.9%. [1] Your numbers may be dated, as the expected figures keep improving. Some time back they were expecting double digit declines. [1] - https://tradingeconomics.com/russia/gdp-growth-annual https://tradingeconomics.com/russia/gdp-growth-annual
    - The_Colonel 4y ago
      The 3.9%, 5.6% decline comes from OECD's November report, so hardly outdated. I don't think there's much reason to trust Russian Central Bank which has strong incentives (read: orders) to enhance the numbers. https://www.oecd.org/economic-outlook/november-2022/ https://www.oecd.org/economic-outlook/november-2022/

nirimda 4y ago

Most countries and business want to do something with their earnings. If you get paid in rubles for your oil, then you can only buy things denominated in rubles. If your general trade is collapsing, this isn't such a bad thing - you need to make an increasing proportion of your consumption. But if you retain an economy that wants to do general trade, you will probably want something other countries accept. So although it is possible that "we'll see the dominance of the USD erode in the next three decades", it is much less likely that "commodities [in general would] be priced in local currencies of the producing nations [following the example of Putin's Russia]". The problem with your prediction though is that it's boring - it's too easy to be true as phrased. For instance, if we see a new cold war divide into a China-focused world and a US-focused world, then the growth of whatever currency the China-focused world uses will necessarily result in decreased USD dominance. Or if not China, then India. Or who knows who. Or maybe the US will descend into civil war and someone else will pick up the mantle of world hegemon. Or the US will amicably divorce, and the Floridollar will dominate international trades. So it's more likely that you'll be right for the wrong reason, than that you'll be right for the reasoning established in your post.

UltraViolence 4y ago
AFAIK you can still exchange Rubles for USD or EUR, so buying stuff shouldn't be too much trouble. The problem Russia has is that it can't buy anything from the West no matter how much money it's willing to pay because of trade sanctions. The sanctions will eventually be lifted since Russia will almost certainly demand this for stopping the war.

KptMarchewa 4y ago

The "prop up the ruble" effect was negative to russia. It happened because export to russia totally stalled. So, russia still exported oil and gas, but could not buy anything for earned currency. For example, in August German export to russia dropped 45.8%, while imports dropped only 6.7% - and that only due to gas price increase. Now they import 0 gas. >I assure you that other nations have taken note and will take similar steps in the future. Why would any country do that if they don't plan similar genocidal war?

jacooper 4y ago
> Why would any country do that if they don't plan similar genocidal war? Because not everybody likes to be controlled by the US?