Russia Doesn't Want Any More Dollars

[Anomalocaris]

Putin specifically said it was due to the dollar's "easy availability"; Translation: "there are so fucking many of them and so many more being created out of thin air every day that the risks to Russian wealth from holding dollars is far too high to continue to use them as the reserve currency"

And it's not like the US dollar just isn't appreciating, it's depreciating, Just owning dollars costs you wealth.

You need to get off Bernanke's cool-aid, Chuck.

Hmmm, interesting you would take putin's word as non cool-aid

Putin's foreign policy since 2004 has been to increase state power and influence in russian economy, make bearish moans about us hegemony, and poach at peripheral parts of western interest in the former soviet sphere.

Incidentally, most countries would prefer to conduct foreign trade in own currency if most of it's products contain little import content, as is the case with Russian oil. This mitigates all currency risk for the producers. The trouble is there often aren't enough of own currency available in the world to sustain own export, so producers accept the currency risk to trade more broadly. In the past Russian currency has by no means been a preferred trading currency widely available because hitherto no one wanted to hold Russian currency due to its recent default and volatility. Putin has has aimed at making foreign trade doable in rubles with specific countries at russian state expense. Specificalky by entering into costly currency swap deals with influential countries, particularly china. Here china deposits a large amount of yuan in Russian central bank, in return Russia deposits a comparable amount of rubles in china. Russia and china agree on a given exchange rate. The Chinese use the rubles to buy Russian oil, using Chinese currency in Russian bank as underlying exchange value.

Even though the trade appears to be conducted in rubles, the underlying trade value is in yuan, which is pegged to the dollar.

If Russian ruble collapses, as is feared by every other country that doesn't have this arrangement with Russia, china's ruble holdings is protected by the swap agreement that Russia will use the yuan it holds in it's central bank to buy back the rubles at pre agreed value.

Basically, Russia has a collateral agreement to trade in rubles.

This is hardly an expression of relative merit of the dollar. It is Russian and chinese state policy to use tax payer money to shield Russian producers from currency risk. Since Russian economy is far less robust than Chinese economy, it is much less likely that china will be called on to buy back yuan than the other way around. So it's Putin using russian tax payer's money to manage the risk the Chinese face in holding ruble to buy Russian oil, thereby making it palatable for the Chinese to trade in rubles.

While you are bemoaning us freely issuing us government bonds denominated in dollars, which shield the us from depreciation of dollar, putin has done the equivalent of issuing Russian government bonds denominated in the Chinese currency, and indirectly through yuan in us dollar, to protect Russian oil producers from currency risk.