"The Ruble and The Realpolitik"
by Addison Wiggin
“It's all very well for us to sit here in the west with our high incomes and cushy lives, and say it's immoral to violate the sovereignty of another state. But if the effect of that is to bring people in that country economic and political freedom, to raise their standard of living, to increase their life expectancy, then don't rule it out.”
- Niall Ferguson
"Let’s see, where were we? Of course, Yesterday, we established that the Fed is handcuffed. If they even “normalize” interest rates to 3% they could “nuke the economy.” “I cannot help but notice,” reader John L. from Australia writes in response, “the sanctions against Russia and their response of raising interest rates to 20% can only set the Russians up for a much better long term future than the West with their refusal to set a real money interest rate.”
The Central Bank of Russia did, in fact, raise its benchmark rate to 20% – the highest in almost twenty years – up from 9.5% on Monday. They are trying to accomplish the first goal of a central: defend the nation’s currency.
Until the invasion, Russian banks and economy were fully integrated into the Western system. Amid a storm of moral opprobrium and a host of international sanctions, the Russian ruble dropped to its lowest point since the financial crisis they endured in 1998. “The ruble has been reduced to ‘rubble’,” Joe Biden lauded.
Not so fast, in response the Russians said “okay, if you want our natural gas, Europe, you’re going to have to pay us in rubles.” Before you buy gas in rubles, you have to exchange your euros for them. That and the rate increase have boosted the ruble back to pre-invasion levels.
“What’s become clear is that despite an incredibly wide-ranging package of sanctions on the Russian government and its oligarchs, and an exodus of foreign businesses,” Bloomberg reports, “the actions are largely toothless if foreigners keep guzzling Russian oil and natural gas -- supporting the ruble by stocking Putin’s coffers.” Germany for example sends €2.6 billion a month to Russia for oil and gas imports. Much of those energy supplies still flow through the Ukraine. Many of the Ukrainian oligarchs still have a vested interest in letting the supplies flow.
Will the ruble rebound set Russia up for success in the “long-term,” as our Australian correspondent asks. To quote our buddy, Sean Ring, from the Rude Awakening, “that remains to be seen.” New Western Sanctions have been announced. But it’s too early to tell if Russian and Chinese efforts to bifurcate the global economy will be successful.
If all you do is gobble up the Western narrative, the Russians are isolated from the global economy and will eventually have to bend to the will of the Western mob. Of course, nothing’s that simple. What is it the mainstream press doesn’t want you to know?
That’s a provocative question; one we posed to our latest Wiggin Sessions guest: “America, the unchallenged global superpower itself, has taken the last 30 years, since the USSR dissolved, to extend its political and military empire to the four corners of the earth.” There's more from Scott Horton, here:
Scott Horton is the editorial director of Anti-war.com and founder of the Libertarian Institute. In our session Scott riffs through 30 years of foreign policy mistakes that the U.S. and much of the West has conveniently forgotten. How is it the mob has adapted such a high moral stance? What is it that Americans are missing? You may wonder the same after you take a listen by clicking on the image above. If your druthers are to read, you’ll find a link to the transcript there, too"
"Follow your bliss..."
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