Russia Doesn't Want Any More Dollars

[theVOID]

More evidence of the death of the dollar.

"As a result of its status as the world’s biggest energy exporter, the Russian state has accumulated about $300 billion worth of U.S. dollar denominated foreign exchange reserves. It doesn’t want any more. After decades of eagerly accepting dollar payments, Russia has quietly asked its trading partners to pay in rubles."

"China and Belarus have already agreed. With special pricing incentives, others, like Ukraine, will follow."

http://seekingalpha.com/article/265375-r...-investors

[Zen Badger]

The U.S dollar used to be the hardest currency in the world.

This does not bode well.

[theVOID]

Yeah, because their Keynesian economic policies are looser than a french whore nearing retirement age, Bernanke dumps hundreds of billion dollars of new money into the system every year, just by adding zeros to a spread sheet - It doesn't add wealth, it just changes the ratio of dollars:goods/services

[Anomalocaris]

Hardest currency does not equal most likely to appreciate. Ones wealth management would ideally see ones portfolio consist of a mix of assets of various yield and risk such that aggregate yield is the highest one could attain for the level of aggregate risk one in one's position and with one's investment goals can accept. That Russia should feel her portfolio is best serviced by adding assets of a different yield/risk profile then the dollar doesn't say anything in particular about the dollar.

[theVOID]

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.

[reverendjeremiah]

Yeah, because their Keynesian economic policies are looser than a french whore nearing retirement age, Bernanke dumps hundreds of billion dollars of new money into the system every year, just by adding zeros to a spread sheet - It doesn't add wealth, it just changes the ratio of dollars:goods/services

And the Austrian school would fuck our economy up even worse if we stopped everything and switched over to it. If the Libertarians had their way and got everything they wanted the unemployment rate would be damn near 25% from all the government branches they would shut down, and thats just from government work. Shutting down the department of education would slap another 7% onto the mix. Then all of the companies losing their government contracts on top of all of the work stopping because of the pulling back of stimulus dollars.

The govt is abusing the Keynesian system by using it WAY too much for small things.

The last thing our country needs to do is move to the extremes in this situation, as it would break consumer confidence with us world wide.

Our country needs more moderation when it comes to economics. We need to bump up the taxes for the rich 10 or 15 percent more instead of extending more tax breaks. We need to pull out of these middle east wars and we need to cut the millitary back by 15% and shut down some of our over seas bases.

That would be a GREAT start. Right now the rich are making sure the rich are not affected by the recession, and that is going to destroy our tax system in the long run. We need SHARED sacrifice across the board.

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

I personally avoid using the word "cool-aid" in political and economic discussions. It turns peoples attention off and offends them.

[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.

[reverendjeremiah]

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. 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.

Yeah, Im not trying to be a dick about it Void, but suggesting that since Russia, who still for some reason cant get their OWN house in order, prefers that the world deal in their money ..*GASP oh the humanity*.. that we Americans should somehow consider this a red flag and dump our economy for Libertarian economic policies is misleading in the least and devious at worst.

[ib.me.ub]

Our country needs more moderation when it comes to economics. We need to bump up the taxes for the rich 10 or 15 percent more instead of extending more tax breaks. We need to pull out of these middle east wars and we need to cut the millitary back by 15% and shut down some of our over seas bases.

That would be a GREAT start. Right now the rich are making sure the rich are not affected by the recession, and that is going to destroy our tax system in the long run. We need SHARED sacrifice across the board.

All of the above, but more from defence. I must say though, its not looking good.

[reverendjeremiah]

Our country needs more moderation when it comes to economics. We need to bump up the taxes for the rich 10 or 15 percent more instead of extending more tax breaks. We need to pull out of these middle east wars and we need to cut the millitary back by 15% and shut down some of our over seas bases.

That would be a GREAT start. Right now the rich are making sure the rich are not affected by the recession, and that is going to destroy our tax system in the long run. We need SHARED sacrifice across the board.

All of the above, but more from defence. I must say though, its not looking good.

Oh yeah. That is merely a start. We cant move to fast for fear of causing too many ripples. That would be a good start, and then shaving off 5% or so every year until we have shaved around 40% or so of our CURRENT millitary amount being spent right now would be acceptable.

The key word here is moderation. Moderation and shared sacrifice across the board. No instant changes, we need a god kick start, then a 4 to 8 year plan to slowly move everything back to pre 80's buildup for the millitary.

Frankly I am tired of my country being the police force of the world. Other countries dispise us until something bad happens, then they get pissed that we arent coming in to help them out and give them free food and services.