China has been actively dumping US securities for years now. Given the openly hostile stance US is taking towards China, I fully expect that this trend will only accelerate going forward https://www.globaltimes.cn/page/202303/1287406.shtml
And yet there is obviously still enough demand for US securities to allow the US to borrow more money every year.
oil is a small portion of Russian overall economy.
It’s like 30-40% of their federal revenue and funds the entirety of their national wealth fund… Which is what they are utilizing instead of issuing securities. I would hardly call it a small portion of their economy.
The whole point of buying securities is that you expect them to retain value, hence why it’s important for them to be backed by something tangible.
The whole point of buying securities is to have a reserve of foreign currency with high liquidity at large volumes. Gold is tangible, but it holds no inherent value, it isn’t exactly the easiest thing to move around the globe, and is a fairly easy market to disrupt if attempting to liquidate at significant volumes. There’s a reason everyone moved away from the gold standard in the first place.
That’s a process of issuing currency, you’re not borrowing anything from anybody.
Ahh, yes. Lending value and then being paid back that value with interest isn’t “borrowing”. I have some calls to make to some credit card companies…
Fluctuations in trade obviously impact domestic economy, but they can be weathered and they’re not catastrophic in the long run.
I think you’re moving the goal post here… Also, “can be weathered and they’re not catastrophic in the long run” requires supporting evidence.
That’s precisely what Russia illustrated at the start of the war when the west put the most severe sanctions it could come up with.
How? The Russian government moved to a war time economy, growth isn’t exactly a surprise in that scenario. The hard part is sticking the landing, what happens if they are succeeded or fail in Ukraine? It’s not like war actually creates material value that is tangible and lasting for the majority of citizens.
Misallocation of labour and resources as I’ve explained several different ways in this very thread.
And what causes the misallocation of labour and resources…? You are just utilizing cyclical logic.
Politics encompass more than simply allocation of resources. In this particular case, the politics were that Yeltsin decided he’d rather be the president of Russia than a deputy of USSR
So economic collapses are always caused by a misallocation of resources and productive forces… but not in the case of the USSR. Their economic collapse was solely because of Yeltsin. Got it…
economic decline was the core reason, then you wouldn’t have seen high level of public support for USSR.
We weren’t talking about the dissolution of the USSR, when I brought up them as an example I was solely talking about the economic crisis of the late 80’s and 90’s.
You’d see a situation that’s similar to what we see in US today where majority of the population no longer believes that their country is working in their interest.
You’re conflating voting to keep the USSR and “believing the country no longer working for their interest”. It’s not like 30% of the country is voting to change their nationality/economic system.
grew up in USSR, so I’m speaking from personal experience here. The kinds of horrors that are happening in US today, were completely beyond imagination.
A bit anecdotal don’t you think? I’m sure if I asked some nepo baby if America is doing well I’d get the same exact answer as someone who grew up in the projects.
The shortages started after the dissolution, and introduction of liberal reforms. One thing USSR did quite well was ensuring that everyone had a decent minimum standard of living.
Your link is from 83’, aka not the late 80s and early 90s. Here’s one from 1990
Again, we were originally talking about a specific monetary policy. You seem to be wanting to bring this all back to a gish gallop about the Soviet Union, and not even about their economic policy.
Again, that’s my original point that labor and resources aren’t being allocated in the interest of the majority which is leading to discontent and civil unrest among the public.
And how does civil unrest connect back to debt monetization? How is modern Russia allocating nearly half of their federal spending on the military and “secret” spending, serving the interest of the majority?
I’m not arguing against backing debt with securities though.
What was the whole point of the entire conversation?
What I’ve been saying is that Russia is in a good position to do so.
I don’t agree with your assessment. If they were able to sell securities they would be selling more securities, it’s kinda a no brainer. However, securities are susceptible to sanction activities. They’d rather use their gold reserves as a way to move around sanctions than to give the US another easily trackable and sanctionable resource.
The main item with high liquidity that’s not being heavily targeted by sanctions is oil and gas. But, utilizing those for securities would effect revenue already earmarked for the Fed and their national monetary fund.
I never claimed Russia is on the brink of collapse or anything. So long as oil stays above $60 a barrel, allowing them to fund their nwf and maintain wartime spending, they’ll probably be fine for a while. But that doesn’t mean they can solve indefinite deficit spending via “printing money like the US”.
And yet there is obviously still enough demand for US securities to allow the US to borrow more money every year.
The demand is very clearly declining, and the fact that US keeps printing money despite that will become a problem going forward.
It’s like 30-40% of their federal revenue and funds the entirety of their national wealth fund… Which is what they are utilizing instead of issuing securities. I would hardly call it a small portion of their economy.
You’re once again conflating two separate things… In 2021 they were 6.8 percent of GDP and accounted for 35.6 percent of total budget revenues; in 2023 they were just 5.3 percent of GDP and 30.9 percent of total budget revenues. In terms of the overall economy, oil and gas are indeed a very small percentage. https://www.atlanticcouncil.org/content-series/russia-tomorrow/oil-gas-and-war/
The whole point of buying securities is to have a reserve of foreign currency with high liquidity at large volumes. Gold is tangible, but it holds no inherent value, it isn’t exactly the easiest thing to move around the globe, and is a fairly easy market to disrupt if attempting to liquidate at significant volumes. There’s a reason everyone moved away from the gold standard in the first place.
Gold has value because it’s a scarce resource, and it’s used in many industries. There will always be demand for this resource, so it’s a very safe commodity to invest in. Meanwhile, the whole idea of a currency being backed by a resource is that you don’t move the resource itself around, it’s about creating trust in the currency itself. The reason that US moved away from the gold standard was because US got in over its head in Vietnam, which forced the US to abandon it. As I’ve explained above, oil replaced gold as the guarantor of the dollar.
Ahh, yes. Lending value and then being paid back that value with interest isn’t “borrowing”. I have some calls to make to some credit card companies…
That’s a really wordy way to say you don’t understand what issuing currency actually means.
I think you’re moving the goal post here… Also, “can be weathered and they’re not catastrophic in the long run” requires supporting evidence.
I’m not moving any goal posts here. I’ve also given you a concrete example of this being the case in practice.
How? The Russian government moved to a war time economy, growth isn’t exactly a surprise in that scenario. The hard part is sticking the landing, what happens if they are succeeded or fail in Ukraine? It’s not like war actually creates material value that is tangible and lasting for the majority of citizens.
The Russian government did not move to a war time economy. Military spending in Russia is around 6% of the economy. An example of a war time economy was when the US had around 40% of the economy dedicated to military production during WW2. The fact that you think war spending is a major part of the economy in Russia shows that you’re utterly uninformed on the subject you’re attempting to debate here.
And what causes the misallocation of labour and resources…? You are just utilizing cyclical logic.
I’m doing no such thing. What causes misallocation of resources are the decisions made by people who control capital. The people who own businesses and factories are the ones who decide whom to employ, what the purpose of work is, and so on. The financial capitalists that own everything in the US have no interest in producing things people need, their primary goal is to increase their personal wealth with any social value being strictly incidental. A great write up on how this mechanic works out in practice here https://americanaffairsjournal.org/2021/08/the-value-of-nothing-capital-versus-growth/
So economic collapses are always caused by a misallocation of resources and productive forces… but not in the case of the USSR. Their economic collapse was solely because of Yeltsin. Got it…
Except what I actually said was that USSR dissolved due to political infighting, not due to an economic collapse. If you’re just going to ignore what I say and put words in my mouth, there’s no point having further discussion.
We weren’t talking about the dissolution of the USSR, when I brought up them as an example I was solely talking about the economic crisis of the late 80’s and 90’s.
You’re conflating voting to keep the USSR and “believing the country no longer working for their interest”. It’s not like 30% of the country is voting to change their nationality/economic system.
It was a vote of confidence in the existing system. Vast majority of people thought the system was generally correct.
A bit anecdotal don’t you think? I’m sure if I asked some nepo baby if America is doing well I’d get the same exact answer as someone who grew up in the projects.
USSR didn’t have the levels of inequality that US has, so your comparison is nonsensical. Furthermore, there’s recent polling showing how people feel now that they’re able to compare their lived experience under both systems:
Your link is from 83’, aka not the late 80s and early 90s. Here’s one from 1990
I encourage you to read the article from Tooze that I linked above to see what actually led to the economic disaster.
Again, we were originally talking about a specific monetary policy. You seem to be wanting to bring this all back to a gish gallop about the Soviet Union, and not even about their economic policy.
I have no idea what you’re trying to say here to be honest. My original point was that the economy in USSR was in a far better shape than it is in the US today. I’ve stated that the economy is fundamentally a measure of how labor and resources are allocated, and whether the country is able to meet the needs of its citizens. I’ve given you numerous examples of how USSR was able to meet the needs of the people better than US is able to. I’m not sure what part of that you’re struggling with.
And how does civil unrest connect back to debt monetization? How is modern Russia allocating nearly half of their federal spending on the military and “secret” spending, serving the interest of the majority?
I’ve already addressed this above. Military spending is a tiny percentage of the overall economy. The whole context of this discussion is how the economy in Russia is currently booming and living standards are rising. This isn’t happening due to military spending but because decoupling from the west created many business niches that are currently being filled domestically.
What was the whole point of the entire conversation?
You tell me. I’m frankly unable to understand what it is you’re trying to argue here as it seems to be largely incoherent to me.
I don’t agree with your assessment. If they were able to sell securities they would be selling more securities, it’s kinda a no brainer. However, securities are susceptible to sanction activities. They’d rather use their gold reserves as a way to move around sanctions than to give the US another easily trackable and sanctionable resource.
Securities are no more subject to sanctions activities than any trade Russia does outside the dollar. Russia is trading completely outside western financial system, and the countries it trades with are outside western control as well. As I’ve already pointed out, BRICS is already a bigger economic bloc than the G7, and the disparity continues to grow. What western sanctions regime is accomplishing in practice is to isolate the west from the rest of the world.
I never claimed Russia is on the brink of collapse or anything. So long as oil stays above $60 a barrel, allowing them to fund their nwf and maintain wartime spending, they’ll probably be fine for a while. But that doesn’t mean they can solve indefinite deficit spending via “printing money like the US”.
Oil and gas are obviously not going to fall out of demand any time soon, so Russia can continue leveraging them for federal income indefinitely. However, if for some reason the demand started dropping, then the government can just start using other commodities the same way they use oil and gas today. The fact that Russia is one of the major commodity exporters means that its currency has value because countries holding roubles can always trade them in for something tangible they need.
Lol, I’m not gonna bother breaking down your arguments again. You clearly aren’t interested in any kind of honest discourse. The constant flip flop between being purposely obtuse and then aggressively pedantic is a wild way of trying to get your point across.
It’s actually kind of impressive that you can work in a variety of different logical fallacies into so many of the responses while never addressing the original topic.
Lol, I’m not gonna bother breaking down your arguments again. You clearly aren’t interested in any kind of honest discourse. The constant flip flop between being purposely obtuse and then aggressively pedantic is a wild way of trying to get your point across.
The feeling is mutual bud. I’ve clearly and repeatedly explained to you what I mean, and you just proceed to ignore that, put words in my mouth, and make bad faith arguments. People reading this thread can make up their own minds on who’s being a troll here.
It’s actually kind of impressive that you can work in a variety of different logical fallacies into so many of the responses while never addressing the original topic.
And yet there is obviously still enough demand for US securities to allow the US to borrow more money every year.
It’s like 30-40% of their federal revenue and funds the entirety of their national wealth fund… Which is what they are utilizing instead of issuing securities. I would hardly call it a small portion of their economy.
The whole point of buying securities is to have a reserve of foreign currency with high liquidity at large volumes. Gold is tangible, but it holds no inherent value, it isn’t exactly the easiest thing to move around the globe, and is a fairly easy market to disrupt if attempting to liquidate at significant volumes. There’s a reason everyone moved away from the gold standard in the first place.
Ahh, yes. Lending value and then being paid back that value with interest isn’t “borrowing”. I have some calls to make to some credit card companies…
I think you’re moving the goal post here… Also, “can be weathered and they’re not catastrophic in the long run” requires supporting evidence.
How? The Russian government moved to a war time economy, growth isn’t exactly a surprise in that scenario. The hard part is sticking the landing, what happens if they are succeeded or fail in Ukraine? It’s not like war actually creates material value that is tangible and lasting for the majority of citizens.
And what causes the misallocation of labour and resources…? You are just utilizing cyclical logic.
So economic collapses are always caused by a misallocation of resources and productive forces… but not in the case of the USSR. Their economic collapse was solely because of Yeltsin. Got it…
We weren’t talking about the dissolution of the USSR, when I brought up them as an example I was solely talking about the economic crisis of the late 80’s and 90’s.
You’re conflating voting to keep the USSR and “believing the country no longer working for their interest”. It’s not like 30% of the country is voting to change their nationality/economic system.
A bit anecdotal don’t you think? I’m sure if I asked some nepo baby if America is doing well I’d get the same exact answer as someone who grew up in the projects.
Your link is from 83’, aka not the late 80s and early 90s. Here’s one from 1990
Again, we were originally talking about a specific monetary policy. You seem to be wanting to bring this all back to a gish gallop about the Soviet Union, and not even about their economic policy.
And how does civil unrest connect back to debt monetization? How is modern Russia allocating nearly half of their federal spending on the military and “secret” spending, serving the interest of the majority?
What was the whole point of the entire conversation?
I don’t agree with your assessment. If they were able to sell securities they would be selling more securities, it’s kinda a no brainer. However, securities are susceptible to sanction activities. They’d rather use their gold reserves as a way to move around sanctions than to give the US another easily trackable and sanctionable resource.
The main item with high liquidity that’s not being heavily targeted by sanctions is oil and gas. But, utilizing those for securities would effect revenue already earmarked for the Fed and their national monetary fund.
I never claimed Russia is on the brink of collapse or anything. So long as oil stays above $60 a barrel, allowing them to fund their nwf and maintain wartime spending, they’ll probably be fine for a while. But that doesn’t mean they can solve indefinite deficit spending via “printing money like the US”.
The demand is very clearly declining, and the fact that US keeps printing money despite that will become a problem going forward.
You’re once again conflating two separate things… In 2021 they were 6.8 percent of GDP and accounted for 35.6 percent of total budget revenues; in 2023 they were just 5.3 percent of GDP and 30.9 percent of total budget revenues. In terms of the overall economy, oil and gas are indeed a very small percentage. https://www.atlanticcouncil.org/content-series/russia-tomorrow/oil-gas-and-war/
Gold has value because it’s a scarce resource, and it’s used in many industries. There will always be demand for this resource, so it’s a very safe commodity to invest in. Meanwhile, the whole idea of a currency being backed by a resource is that you don’t move the resource itself around, it’s about creating trust in the currency itself. The reason that US moved away from the gold standard was because US got in over its head in Vietnam, which forced the US to abandon it. As I’ve explained above, oil replaced gold as the guarantor of the dollar.
That’s a really wordy way to say you don’t understand what issuing currency actually means.
I’m not moving any goal posts here. I’ve also given you a concrete example of this being the case in practice.
The Russian government did not move to a war time economy. Military spending in Russia is around 6% of the economy. An example of a war time economy was when the US had around 40% of the economy dedicated to military production during WW2. The fact that you think war spending is a major part of the economy in Russia shows that you’re utterly uninformed on the subject you’re attempting to debate here.
I’m doing no such thing. What causes misallocation of resources are the decisions made by people who control capital. The people who own businesses and factories are the ones who decide whom to employ, what the purpose of work is, and so on. The financial capitalists that own everything in the US have no interest in producing things people need, their primary goal is to increase their personal wealth with any social value being strictly incidental. A great write up on how this mechanic works out in practice here https://americanaffairsjournal.org/2021/08/the-value-of-nothing-capital-versus-growth/
Except what I actually said was that USSR dissolved due to political infighting, not due to an economic collapse. If you’re just going to ignore what I say and put words in my mouth, there’s no point having further discussion.
Here’s what a US economic historian has to say about the origins of the crisis. TLDR, it was caused by liberalization and privatization https://www.noemamag.com/how-china-avoided-soviet-style-collapse/
It was a vote of confidence in the existing system. Vast majority of people thought the system was generally correct.
USSR didn’t have the levels of inequality that US has, so your comparison is nonsensical. Furthermore, there’s recent polling showing how people feel now that they’re able to compare their lived experience under both systems:
I encourage you to read the article from Tooze that I linked above to see what actually led to the economic disaster.
I have no idea what you’re trying to say here to be honest. My original point was that the economy in USSR was in a far better shape than it is in the US today. I’ve stated that the economy is fundamentally a measure of how labor and resources are allocated, and whether the country is able to meet the needs of its citizens. I’ve given you numerous examples of how USSR was able to meet the needs of the people better than US is able to. I’m not sure what part of that you’re struggling with.
I’ve already addressed this above. Military spending is a tiny percentage of the overall economy. The whole context of this discussion is how the economy in Russia is currently booming and living standards are rising. This isn’t happening due to military spending but because decoupling from the west created many business niches that are currently being filled domestically.
You tell me. I’m frankly unable to understand what it is you’re trying to argue here as it seems to be largely incoherent to me.
Securities are no more subject to sanctions activities than any trade Russia does outside the dollar. Russia is trading completely outside western financial system, and the countries it trades with are outside western control as well. As I’ve already pointed out, BRICS is already a bigger economic bloc than the G7, and the disparity continues to grow. What western sanctions regime is accomplishing in practice is to isolate the west from the rest of the world.
Oil and gas are obviously not going to fall out of demand any time soon, so Russia can continue leveraging them for federal income indefinitely. However, if for some reason the demand started dropping, then the government can just start using other commodities the same way they use oil and gas today. The fact that Russia is one of the major commodity exporters means that its currency has value because countries holding roubles can always trade them in for something tangible they need.
Lol, I’m not gonna bother breaking down your arguments again. You clearly aren’t interested in any kind of honest discourse. The constant flip flop between being purposely obtuse and then aggressively pedantic is a wild way of trying to get your point across.
It’s actually kind of impressive that you can work in a variety of different logical fallacies into so many of the responses while never addressing the original topic.
Have a great rest of your day.
The feeling is mutual bud. I’ve clearly and repeatedly explained to you what I mean, and you just proceed to ignore that, put words in my mouth, and make bad faith arguments. People reading this thread can make up their own minds on who’s being a troll here.
A self referential comment if there ever was one.
Have a great rest of your day.