8 ms·

Chinese yuan becomes Russia's main foreign currency, replacing dollar and euro

66 points by anigbrowl 2y ago

mark_l_watson 2y ago
As a US taxpayer I don’t particularly like this. We rely on being the world’s reserve currency, and many things get more expensive, e.g., serving government debt. In 2000-2001 we were able to effectively bully three countries that were talking about moving away from the US dollar, but I am not sure if that works now. I have a lot of personal theories how my country can best cope with future geopolitical adjustments. If I were in charge, the first thing I would do would be to close most foreign military bases. We can have the strongest military in the world and have them largely based in the US. I think the US Navy continues to be a good investment, but I would cut back a small amount on intel and other military branches.
- mschuster91 2y ago
  > We rely on being the world’s reserve currency And that won't change any time soon. The Euro is a decent currency but we're too disjoint to back something supposed to be a reserve currency, and China's Yuan is too much controlled by the government (and exchange limited) to be viable.
- lolinder 2y ago
  > If I were in charge, the first thing I would do would be to close most foreign military bases. We can have the strongest military in the world and have them largely based in the US. The strategy behind the foreign military bases isn't just about having the strongest military in the world. They serve two purposes: First, we want to preserve the credible threat of boots on the ground anywhere in the world within just a few hours of a conflict beginning. Think edge computing, but for military operations. Second, we want to reassure our allies that they have more than just our word for it that we'll come to their aid in a crisis. Having US soldiers in your country 24/7 functions as a guarantee that if the country falls to an invader the US will have to respond, because our soldiers were captured or killed. The concern is that without the bases, a hostile power (like, say, the one TFA is about) could invade an ally (like, say, the Baltic states) with overwhelming force and present NATO with a fait accompli before we have time to react. Pulling away from those bases would be correctly seen by many of our allied states as relaxing our commitment to them.
  - mark_l_watson 2y ago
    I don’t argue with your main points except to question if it is worth the money now. I was in the defense industry for 25 years, and my comments above are just my opinions on what is in the best interests of the US taxpayer today in 2024. I am questioning the value of having 800 military bases in foreign countries in 2024. What was once a good idea may not be worth the money and resources now. What does the US give up not protecting the rest of the world? I think these topics are worthy of serious dialogue.
    - lazide 2y ago
      What is the cost economically of not having those bases? Consider one result may be the USD not being used as a reserve currency as widely, or at all.
    - JumpCrisscross 2y ago
      > What does the US give up not protecting the rest of the world? The number of lives we’d lose in the next world war. The end of Pax Americana won’t be sweet. That said, I agree there should be more thought as to the marginal benefit of the 800th base.
      - psunavy03 2y ago
        The marginal benefit of the so-called 800th base is giving planners and operations officers options in a crisis. The more places you either have your own infrastructure or access agreements or leases with a host country, the more you can a) disperse your force and complicate targeting when on the defensive and b) have multiple avenues of approach when on the offensive. If the enemy knows all your forces have to flow into theater via airlift landing at Krablakistan Air Base in Elbonia, they're going to make war plans involving targeting your transports and pounding the living shit out of Krablakistan Air Base with air strikes and/or ballistic missiles. And beforehand, they'll do their level best to sow discord between your government and the Elbonians to the point they reconsider your access to their base in a crisis.
      - exceptione 2y ago
- JumpCrisscross 2y ago
  > We rely on being the world’s reserve currency During petrodollar era, the 1970s and 80s, the dollar was used less than it is today. (Certainly within the USSR and even the Russian SSR.) We de facto banned Russia from using the dollar in 2022 [1]. That it took Moscow over two years just get down to 50% speaks volumes to the dollar’s strength. [1] https://home.treasury.gov/news/press-releases/jy0612 https://home.treasury.gov/news/press-releases/jy0612
  - airstrike 2y ago
    side note: I just wanted to commend you for your tireless responses and fact-checking on this otherwise dumpster fire of a comment section. you're doing god's work here
- nemo44x 2y ago
  Russia's GDP (nominal and especially per capita) aren't very significant. I understand your concern but Russia departed less by choice and more because they had to.
- audunw 2y ago
  Are you really worried about the dollar being threatened? What is the alternative? There isn’t any at the moment is there? Some countries may try to move away from the dollar to some degree but it’s not like the Yuan or Ruble is remotely close to replacing it. It’s not even clear that China or Russia would even want them to. China would have to give up capital control which doesn’t seem likely. They’re too afraid of capital flight. All these ideas of some kind of blockchain based common alternative is still just a pipe dream. You can’t base a real currency on crypto. If you think you can you don’t understand what currency actually is (hint: currency has never been a successor to metal/coin based transactions… it’s an abstraction over debt and debt has and will always be the main way value is exchanged. crypto cant replace debt based currency because debt is based on trust in humans, something that trust in an algorithm can’t replace)
  - mark_l_watson 2y ago
    Good question. I don’t worry so much about any other single currency taking over as the reserve currency. Rather, I think individual pair-ups of trading partners will more frequently trade with each other in their own currencies. It is the dilution of the use of dollars that concerns me. I share some of your lack of enthusiasm for crypto currencies. Rather, as individual countries trade between themselves it may often be advantageous for them to use their own currencies, especially if they don’t have to hold other countries’ currencies for long periods of time. Non-US countries pay quite a penalty for holding lots of dollars. I expect every country to do what is in their own best interests, just as I hope my country makes good long term economic and geopolitical decisions.
- astrodust 2y ago
  "We can have the strongest military in the world and have them largely based in the US." Sure, if you want a really strong Coast Guard. As soon as you venture out of that little bubble you're going to need ports, air-bases, and other facilities. China is suffering from a lack of these, they really can't operate anywhere in the world like the US can. The same goes for Russia. In effect, those two are completely boxed in. By things like US bases all over the world. You can even argue that historically Britain was disproportionately powerful because of their extensive network of bases and ports. Trade was relatively easy for them, while other European powers never had the same access. Like it or not, the ability to trade and the strength of your power projection are often deeply inter-linked.
- MangoCoffee 2y ago
  >We rely on being the world’s reserve currency, "Saudi Arabia ends 80-year petrodollar deal with US for multi-currency sales" https://www.indiatoday.in/business/story/saudi-arabia-ends-80-year-petro-dollar-oil-with-us-dollar-for-multi-currency-sales-2552844-2024-06-13 https://www.indiatoday.in/business/story/saudi-arabia-ends-8... "No empire lasts forever, no dynasty continues unbroken" edit: Since the U.S.'s war on terrorism, the U.S. has said that every trade done in dollars is de facto done on U.S. soil and thus subject to U.S. laws. I'm surprised that more countries have not tried to cut ties with the U.S. dollar.
  - JumpCrisscross 2y ago
    The petrodollar era ended between the 90s and 2000s. The Saudis switching from swapping U.S. dollars for oil to swapping yuan for dollar-pegged Saudi riyals is peak nothingburgerism. (Did you know the British have always sold oil for pounds?)
    - tim333 2y ago
      Yeah, for international trade I don't think it matters what currency you use. USD GBP Dogecoin or whatever. It's mostly for convenience people use USD. For domestic stuff the currency is important as people have their wages and bills in that.
- throwadobe 2y ago
  this has very little impact on the strength of the dollar. if anything, it's a better signal of Russia's economic weakness (in the face of sanctions) than a power shift in favor of the Yuan. forgoing foreign bases and limiting the US military presence to domestic only is such a ludicrous take that I'm willing to bet would have you laughed out of any room discussing defense.
  - mark_l_watson 2y ago
    Well, organizations making large profits would like to laugh me out of the room. Next to tech stocks, ‘defense’ stocks are my second largest basket of stocks. I don’t expect that these companies will stop making large profits for the near future, but I keep an eye on my investments. I find it interesting, in general, in this thread, that so many people dismiss what on the surface is a contrarian view (i.e., drastically reduce our overseas military presence), without more open debate. Maybe my idea is wrong, but I feel it is worth a conversation.
    - throwadobe 2y ago
      > drastically reduce our overseas military presence for what? a smaller deficit? it's unclear whether reducing the size of the defense industry helps the US economy, so maybe you get a smaller deficit but you also raise unemployment by a couple % and lower economic growth by a % or so over the next 25 years conversely, it's pretty clear this does hurt its current hegemonic position. that's a gamble not many are willing to take so carelessly I say this as a non-American, by the way
- hackeraccount 2y ago
  I don't know how you stop it but the reserve currency status of the dollar is doing the US no good. It encourages the worst non-productive kind of behavior and the fact of it will be it's own undoing.
lawn 2y ago
It's mentioned in the article, but the reaction to the sanctions seem fairly severe? Russian banks went down en masse, the spread of foreign currencies was larger than the official numbers, and people were queuing outside the banks to withdraw money. Of course, the Russian narrative is that this will hurt the west more than it will hurt Russia...
- SXX 2y ago
  Unfortunately nothing really happened in Russia because the only meaningful exchange rate of RUB / USD pair is not set by some central bank or exchange, but crypto market: https://www.bestchange.com/sberbank-to-tether-trc20.html https://www.bestchange.com/sberbank-to-tether-trc20.html There was drop of like 5-10%, but that's nothing special. You can still go and buy as much USDT as you want for reasonable price. And this is what majority of normal people use to move money out of country. PS: I am obviously anti-Putin dude, but at this point sanctions make very little difference short term. Giving more weapons to Ukraine is the only way to stop Russia.
  - JumpCrisscross 2y ago
    > sanctions make very little difference short term. Giving more weapons to Ukraine is the only way to stop Russia Correct. Long term, the effects of a materially-high real interest rate, capital controls and the demographic and technological degradation of sanctions and the war directly are starting to show their teeth. Sanctions won’t stop this war. But they’ll facilitate degrading Russia so it is in no position to launch the next. (Weapons will stop this war.)
    - SXX 2y ago
      Yeah. But nothing critical has happened yet due to sanctions and unlikely to happen anytime soon. At current rate Putin can fund war indefenetely just by pumping money into economy and making society pay for it. Old soviet joke: Dad: Looks like vodka will become more expensive. Son: Dad, are you going to drink less now? Dad: No, son, now you are going to eat less.
mrtksn 2y ago
How isn't "the West" shooting themselves in the feet with these sanctions when Russia is able to get the war stuff through Turkey/Kyrgyzstan etc when not able to buy and sell civilians stuff? Also, the Dollar and Euro can have effect on the Russian economy and tracked for intelligence only if they are used. I wonder if this will be considered a great blunder, looking back in few years. Forcing worlds most energy and minerals rich country doing business with most industry rich country, what could go wrong?
- JumpCrisscross 2y ago
  > How isn't "the west" shooting themselves in the feet with these sanctions Same way Britain wasn’t shooting itself in the foot blockading Nazi Germany, or the West by refusing to trade with the USSR. > Forcing worlds most energy and minerals rich country doing business with most industry rich country, what could go wrong? Post-Soviet Russia as an independent power has been an unmitigated disaster. China is America’s geopolitical rival, but at least it’s rational. Moscow as a Chinese suzerainty is likely a better configuration than it as a sovereign power. (Also, it’s clear China isn’t willing to let its financial system be sanctioned simply to trade with the likes of Russia.)
  - mrtksn 2y ago
    See, they don't actually block anybody but themselves. The Russians simply get their stuff from others.
    - JumpCrisscross 2y ago
      > Russians simply get their stuff from others With less variety, slower and at higher cost [1]. And they’re not getting much of the high-tech kit [2]. (The Germans also had blockade runners. Everyone does. That doesn’t make a blockade less onerous.) Russian natural gas sales have also cratered; Beijing is leveraging its position as a monopsony to demand price concessions [3]. [1] https://www.csis.org/analysis/out-stock-assessing-impact-sanctions-russias-defense-industry https://www.csis.org/analysis/out-stock-assessing-impact-san... [2] https://www.aei.org/research-products/report/the-impact-of-semiconductor-sanctions-on-russia/#:~:text=Since%20the,chance%20that https://www.aei.org/research-products/report/the-impact-of-s... [3] https://www.reuters.com/business/energy/russia-china-gas-pipeline-deal-stalls-over-beijings-price-demands-ft-2024-06-02/ https://www.reuters.com/business/energy/russia-china-gas-pip...
wnevets 2y ago
China is gonna keep buying up Russia for pennies on the dollar. I wouldn't be shocked if we start seeing actual territory switch from Russia to China in the next few years.
- bryanlarsen 2y ago
  Vladivostok was recently required to be called 符拉迪沃斯托克 on Chinese maps. China claiming that territory back one way or another does seem to be likely.
  - eric-hu 2y ago
    Is that materially different? That’s just a Chinese phonetic representation of Vladivostok.
  - canjobear 2y ago
    That’s literally “Vladivostok” in Chinese.
  - throw-the-towel 2y ago
    You're probably thinking of 海参崴.
    - bryanlarsen 2y ago
      Thank you, I relied on Wikipedia to be accurate, and it wasn't. In September China released a new map using the old Chinese name (Sea Cucumber Bay) rather than the transliterated Vladivostok. https://www.spectator.co.uk/article/chinas-standard-map-is-a-chilling-reminder-of-its-imperial-ambitions/ https://www.spectator.co.uk/article/chinas-standard-map-is-a...
- init2null 2y ago
  It will be tough for Russian pride to see their nation sink to the level of North Korea as a dependent of China. Given the brilliance of the USSR's scientific developments, it's a long way down.
vvpan 2y ago
An FT article[1] from today claims that Chinese banks are stopping working with Russia too, to avoid the sanctions. [1] https://www.ft.com/content/50d6bcd1-f1f6-41a1-bb26-a5482654883f https://www.ft.com/content/50d6bcd1-f1f6-41a1-bb26-a54826548...
benced 2y ago
Seems kinda wild that it took 2 years post the big sanctions for this to happen?
- SXX 2y ago
  Because majority of Russian exports are gas, oil and raw materials and they sell them for USD and EUR. Also because huge percent of Russia income in 2022 and 2023 come from EU buying russian gas and raw materials. Also because Russia already had $50 billion stuck in Indian Rupee they cannot use. So they now use CNY of course, but even now a lot of exports still gonna be sold for USD.
  - inglor_cz 2y ago
    "they cannot use" They can, India will happily sell them stuff for rupees, but the problem is that Indian exports mostly don't match Russian import needs.
    - SXX 2y ago
      So for all practical reasons there is very little they can use them for. They can of course invest into India economy to get even more Rupees.
      - inglor_cz 2y ago
        Not too long ago, I pondered the question of "what would I do if I were an evil tsar sitting on a billion rupees". My best answer was to recruit Indian mercenaries for meat attacks. But it is possible that New Delhi would not like that. India doesn't suffer from a lack of young disposable men, but it also cares about its international reputation.
        JumpCrisscross 2y ago
        > recruit Indian mercenaries for meat attacks. But it is possible that New Delhi would not like that Mm hmm [1]. [1] https://www.bbc.com/news/world-asia-india-68767470 https://www.bbc.com/news/world-asia-india-68767470
mg 2y ago
Interesting, how different the monetary base over time looks like in China compared to the US and Europe when you click on "max" on these charts: https://tradingeconomics.com/china/money-supply-m0 https://tradingeconomics.com/china/money-supply-m0 USA: https://tradingeconomics.com/united-states/money-supply-m0 https://tradingeconomics.com/united-states/money-supply-m0 Europe: https://tradingeconomics.com/euro-area/money-supply-m0 https://tradingeconomics.com/euro-area/money-supply-m0
- queuebert 2y ago
  What is the purpose of the annual spikes?
  - bobbiechen 2y ago
    I suspect it's related to Chinese New Year, as the peaks in the graph change from January to February depending on which month Chinese New Year falls into. Edit: ah, M0 is cash. It is traditional to give cash in red envelopes at Chinese New Year, which could be related. I'm surprised the spikes are so large though.

66 points by anigbrowl 2y ago

As a US taxpayer I don’t particularly like this. We rely on being the world’s reserve currency, and many things get more expensive, e.g., serving government debt. In 2000-2001 we were able to effectively bully three countries that were talking about moving away from the US dollar, but I am not sure if that works now. I have a lot of personal theories how my country can best cope with future geopolitical adjustments. If I were in charge, the first thing I would do would be to close most foreign military bases. We can have the strongest military in the world and have them largely based in the US. I think the US Navy continues to be a good investment, but I would cut back a small amount on intel and other military branches.

mschuster91 2y ago
> We rely on being the world’s reserve currency And that won't change any time soon. The Euro is a decent currency but we're too disjoint to back something supposed to be a reserve currency, and China's Yuan is too much controlled by the government (and exchange limited) to be viable.
lolinder 2y ago
> If I were in charge, the first thing I would do would be to close most foreign military bases. We can have the strongest military in the world and have them largely based in the US. The strategy behind the foreign military bases isn't just about having the strongest military in the world. They serve two purposes: First, we want to preserve the credible threat of boots on the ground anywhere in the world within just a few hours of a conflict beginning. Think edge computing, but for military operations. Second, we want to reassure our allies that they have more than just our word for it that we'll come to their aid in a crisis. Having US soldiers in your country 24/7 functions as a guarantee that if the country falls to an invader the US will have to respond, because our soldiers were captured or killed. The concern is that without the bases, a hostile power (like, say, the one TFA is about) could invade an ally (like, say, the Baltic states) with overwhelming force and present NATO with a fait accompli before we have time to react. Pulling away from those bases would be correctly seen by many of our allied states as relaxing our commitment to them.
- mark_l_watson 2y ago
  I don’t argue with your main points except to question if it is worth the money now. I was in the defense industry for 25 years, and my comments above are just my opinions on what is in the best interests of the US taxpayer today in 2024. I am questioning the value of having 800 military bases in foreign countries in 2024. What was once a good idea may not be worth the money and resources now. What does the US give up not protecting the rest of the world? I think these topics are worthy of serious dialogue.
  - lazide 2y ago
    What is the cost economically of not having those bases? Consider one result may be the USD not being used as a reserve currency as widely, or at all.
  - JumpCrisscross 2y ago
    > What does the US give up not protecting the rest of the world? The number of lives we’d lose in the next world war. The end of Pax Americana won’t be sweet. That said, I agree there should be more thought as to the marginal benefit of the 800th base.
    - psunavy03 2y ago
      The marginal benefit of the so-called 800th base is giving planners and operations officers options in a crisis. The more places you either have your own infrastructure or access agreements or leases with a host country, the more you can a) disperse your force and complicate targeting when on the defensive and b) have multiple avenues of approach when on the offensive. If the enemy knows all your forces have to flow into theater via airlift landing at Krablakistan Air Base in Elbonia, they're going to make war plans involving targeting your transports and pounding the living shit out of Krablakistan Air Base with air strikes and/or ballistic missiles. And beforehand, they'll do their level best to sow discord between your government and the Elbonians to the point they reconsider your access to their base in a crisis.
    - exceptione 2y ago
JumpCrisscross 2y ago
> We rely on being the world’s reserve currency During petrodollar era, the 1970s and 80s, the dollar was used less than it is today. (Certainly within the USSR and even the Russian SSR.) We de facto banned Russia from using the dollar in 2022 [1]. That it took Moscow over two years just get down to 50% speaks volumes to the dollar’s strength. [1] https://home.treasury.gov/news/press-releases/jy0612 https://home.treasury.gov/news/press-releases/jy0612
- airstrike 2y ago
  side note: I just wanted to commend you for your tireless responses and fact-checking on this otherwise dumpster fire of a comment section. you're doing god's work here
nemo44x 2y ago
Russia's GDP (nominal and especially per capita) aren't very significant. I understand your concern but Russia departed less by choice and more because they had to.
audunw 2y ago
Are you really worried about the dollar being threatened? What is the alternative? There isn’t any at the moment is there? Some countries may try to move away from the dollar to some degree but it’s not like the Yuan or Ruble is remotely close to replacing it. It’s not even clear that China or Russia would even want them to. China would have to give up capital control which doesn’t seem likely. They’re too afraid of capital flight. All these ideas of some kind of blockchain based common alternative is still just a pipe dream. You can’t base a real currency on crypto. If you think you can you don’t understand what currency actually is (hint: currency has never been a successor to metal/coin based transactions… it’s an abstraction over debt and debt has and will always be the main way value is exchanged. crypto cant replace debt based currency because debt is based on trust in humans, something that trust in an algorithm can’t replace)
- mark_l_watson 2y ago
  Good question. I don’t worry so much about any other single currency taking over as the reserve currency. Rather, I think individual pair-ups of trading partners will more frequently trade with each other in their own currencies. It is the dilution of the use of dollars that concerns me. I share some of your lack of enthusiasm for crypto currencies. Rather, as individual countries trade between themselves it may often be advantageous for them to use their own currencies, especially if they don’t have to hold other countries’ currencies for long periods of time. Non-US countries pay quite a penalty for holding lots of dollars. I expect every country to do what is in their own best interests, just as I hope my country makes good long term economic and geopolitical decisions.
astrodust 2y ago
"We can have the strongest military in the world and have them largely based in the US." Sure, if you want a really strong Coast Guard. As soon as you venture out of that little bubble you're going to need ports, air-bases, and other facilities. China is suffering from a lack of these, they really can't operate anywhere in the world like the US can. The same goes for Russia. In effect, those two are completely boxed in. By things like US bases all over the world. You can even argue that historically Britain was disproportionately powerful because of their extensive network of bases and ports. Trade was relatively easy for them, while other European powers never had the same access. Like it or not, the ability to trade and the strength of your power projection are often deeply inter-linked.
MangoCoffee 2y ago
>We rely on being the world’s reserve currency, "Saudi Arabia ends 80-year petrodollar deal with US for multi-currency sales" https://www.indiatoday.in/business/story/saudi-arabia-ends-80-year-petro-dollar-oil-with-us-dollar-for-multi-currency-sales-2552844-2024-06-13 https://www.indiatoday.in/business/story/saudi-arabia-ends-8... "No empire lasts forever, no dynasty continues unbroken" edit: Since the U.S.'s war on terrorism, the U.S. has said that every trade done in dollars is de facto done on U.S. soil and thus subject to U.S. laws. I'm surprised that more countries have not tried to cut ties with the U.S. dollar.
- JumpCrisscross 2y ago
  The petrodollar era ended between the 90s and 2000s. The Saudis switching from swapping U.S. dollars for oil to swapping yuan for dollar-pegged Saudi riyals is peak nothingburgerism. (Did you know the British have always sold oil for pounds?)
  - tim333 2y ago
    Yeah, for international trade I don't think it matters what currency you use. USD GBP Dogecoin or whatever. It's mostly for convenience people use USD. For domestic stuff the currency is important as people have their wages and bills in that.
throwadobe 2y ago
this has very little impact on the strength of the dollar. if anything, it's a better signal of Russia's economic weakness (in the face of sanctions) than a power shift in favor of the Yuan. forgoing foreign bases and limiting the US military presence to domestic only is such a ludicrous take that I'm willing to bet would have you laughed out of any room discussing defense.
- mark_l_watson 2y ago
  Well, organizations making large profits would like to laugh me out of the room. Next to tech stocks, ‘defense’ stocks are my second largest basket of stocks. I don’t expect that these companies will stop making large profits for the near future, but I keep an eye on my investments. I find it interesting, in general, in this thread, that so many people dismiss what on the surface is a contrarian view (i.e., drastically reduce our overseas military presence), without more open debate. Maybe my idea is wrong, but I feel it is worth a conversation.
  - throwadobe 2y ago
    > drastically reduce our overseas military presence for what? a smaller deficit? it's unclear whether reducing the size of the defense industry helps the US economy, so maybe you get a smaller deficit but you also raise unemployment by a couple % and lower economic growth by a % or so over the next 25 years conversely, it's pretty clear this does hurt its current hegemonic position. that's a gamble not many are willing to take so carelessly I say this as a non-American, by the way
hackeraccount 2y ago
I don't know how you stop it but the reserve currency status of the dollar is doing the US no good. It encourages the worst non-productive kind of behavior and the fact of it will be it's own undoing.

lawn 2y ago

It's mentioned in the article, but the reaction to the sanctions seem fairly severe? Russian banks went down en masse, the spread of foreign currencies was larger than the official numbers, and people were queuing outside the banks to withdraw money. Of course, the Russian narrative is that this will hurt the west more than it will hurt Russia...

SXX 2y ago
Unfortunately nothing really happened in Russia because the only meaningful exchange rate of RUB / USD pair is not set by some central bank or exchange, but crypto market: https://www.bestchange.com/sberbank-to-tether-trc20.html https://www.bestchange.com/sberbank-to-tether-trc20.html There was drop of like 5-10%, but that's nothing special. You can still go and buy as much USDT as you want for reasonable price. And this is what majority of normal people use to move money out of country. PS: I am obviously anti-Putin dude, but at this point sanctions make very little difference short term. Giving more weapons to Ukraine is the only way to stop Russia.
- JumpCrisscross 2y ago
  > sanctions make very little difference short term. Giving more weapons to Ukraine is the only way to stop Russia Correct. Long term, the effects of a materially-high real interest rate, capital controls and the demographic and technological degradation of sanctions and the war directly are starting to show their teeth. Sanctions won’t stop this war. But they’ll facilitate degrading Russia so it is in no position to launch the next. (Weapons will stop this war.)
  - SXX 2y ago
    Yeah. But nothing critical has happened yet due to sanctions and unlikely to happen anytime soon. At current rate Putin can fund war indefenetely just by pumping money into economy and making society pay for it. Old soviet joke: Dad: Looks like vodka will become more expensive. Son: Dad, are you going to drink less now? Dad: No, son, now you are going to eat less.

mrtksn 2y ago

How isn't "the West" shooting themselves in the feet with these sanctions when Russia is able to get the war stuff through Turkey/Kyrgyzstan etc when not able to buy and sell civilians stuff? Also, the Dollar and Euro can have effect on the Russian economy and tracked for intelligence only if they are used. I wonder if this will be considered a great blunder, looking back in few years. Forcing worlds most energy and minerals rich country doing business with most industry rich country, what could go wrong?

JumpCrisscross 2y ago
> How isn't "the west" shooting themselves in the feet with these sanctions Same way Britain wasn’t shooting itself in the foot blockading Nazi Germany, or the West by refusing to trade with the USSR. > Forcing worlds most energy and minerals rich country doing business with most industry rich country, what could go wrong? Post-Soviet Russia as an independent power has been an unmitigated disaster. China is America’s geopolitical rival, but at least it’s rational. Moscow as a Chinese suzerainty is likely a better configuration than it as a sovereign power. (Also, it’s clear China isn’t willing to let its financial system be sanctioned simply to trade with the likes of Russia.)
- mrtksn 2y ago
  See, they don't actually block anybody but themselves. The Russians simply get their stuff from others.
  - JumpCrisscross 2y ago
    > Russians simply get their stuff from others With less variety, slower and at higher cost [1]. And they’re not getting much of the high-tech kit [2]. (The Germans also had blockade runners. Everyone does. That doesn’t make a blockade less onerous.) Russian natural gas sales have also cratered; Beijing is leveraging its position as a monopsony to demand price concessions [3]. [1] https://www.csis.org/analysis/out-stock-assessing-impact-sanctions-russias-defense-industry https://www.csis.org/analysis/out-stock-assessing-impact-san... [2] https://www.aei.org/research-products/report/the-impact-of-semiconductor-sanctions-on-russia/#:~:text=Since%20the,chance%20that https://www.aei.org/research-products/report/the-impact-of-s... [3] https://www.reuters.com/business/energy/russia-china-gas-pipeline-deal-stalls-over-beijings-price-demands-ft-2024-06-02/ https://www.reuters.com/business/energy/russia-china-gas-pip...

wnevets 2y ago

China is gonna keep buying up Russia for pennies on the dollar. I wouldn't be shocked if we start seeing actual territory switch from Russia to China in the next few years.

bryanlarsen 2y ago
Vladivostok was recently required to be called 符拉迪沃斯托克 on Chinese maps. China claiming that territory back one way or another does seem to be likely.
- eric-hu 2y ago
  Is that materially different? That’s just a Chinese phonetic representation of Vladivostok.
- canjobear 2y ago
  That’s literally “Vladivostok” in Chinese.
- throw-the-towel 2y ago
  You're probably thinking of 海参崴.
  - bryanlarsen 2y ago
    Thank you, I relied on Wikipedia to be accurate, and it wasn't. In September China released a new map using the old Chinese name (Sea Cucumber Bay) rather than the transliterated Vladivostok. https://www.spectator.co.uk/article/chinas-standard-map-is-a-chilling-reminder-of-its-imperial-ambitions/ https://www.spectator.co.uk/article/chinas-standard-map-is-a...
init2null 2y ago
It will be tough for Russian pride to see their nation sink to the level of North Korea as a dependent of China. Given the brilliance of the USSR's scientific developments, it's a long way down.

vvpan 2y ago

An FT article[1] from today claims that Chinese banks are stopping working with Russia too, to avoid the sanctions. [1] https://www.ft.com/content/50d6bcd1-f1f6-41a1-bb26-a5482654883f https://www.ft.com/content/50d6bcd1-f1f6-41a1-bb26-a54826548...

benced 2y ago

Seems kinda wild that it took 2 years post the big sanctions for this to happen?

SXX 2y ago
Because majority of Russian exports are gas, oil and raw materials and they sell them for USD and EUR. Also because huge percent of Russia income in 2022 and 2023 come from EU buying russian gas and raw materials. Also because Russia already had $50 billion stuck in Indian Rupee they cannot use. So they now use CNY of course, but even now a lot of exports still gonna be sold for USD.
- inglor_cz 2y ago
  "they cannot use" They can, India will happily sell them stuff for rupees, but the problem is that Indian exports mostly don't match Russian import needs.
  - SXX 2y ago
    So for all practical reasons there is very little they can use them for. They can of course invest into India economy to get even more Rupees.
    - inglor_cz 2y ago
      Not too long ago, I pondered the question of "what would I do if I were an evil tsar sitting on a billion rupees". My best answer was to recruit Indian mercenaries for meat attacks. But it is possible that New Delhi would not like that. India doesn't suffer from a lack of young disposable men, but it also cares about its international reputation.
      - JumpCrisscross 2y ago
        > recruit Indian mercenaries for meat attacks. But it is possible that New Delhi would not like that Mm hmm [1]. [1] https://www.bbc.com/news/world-asia-india-68767470 https://www.bbc.com/news/world-asia-india-68767470

mg 2y ago

Interesting, how different the monetary base over time looks like in China compared to the US and Europe when you click on "max" on these charts: https://tradingeconomics.com/china/money-supply-m0 https://tradingeconomics.com/china/money-supply-m0 USA: https://tradingeconomics.com/united-states/money-supply-m0 https://tradingeconomics.com/united-states/money-supply-m0 Europe: https://tradingeconomics.com/euro-area/money-supply-m0 https://tradingeconomics.com/euro-area/money-supply-m0

queuebert 2y ago
What is the purpose of the annual spikes?
- bobbiechen 2y ago
  I suspect it's related to Chinese New Year, as the peaks in the graph change from January to February depending on which month Chinese New Year falls into. Edit: ah, M0 is cash. It is traditional to give cash in red envelopes at Chinese New Year, which could be related. I'm surprised the spikes are so large though.