Yesterday, I talked about the potential dangers of enacting fiscal and monetary policies that anger creditors. The Chinese government have made it transparently clear that they are unhappy with America’s current monetary policy. Given that America’s economy is very much dependent on China’s manufacturing output, there is a potential for quite a mess.
While Russia is not a manufacturing powerhouse like China, it nonetheless has to hold dollars to access international markets, especially commodities markets such as oil, and precious metals. So it is no surprise that everyone’s favourite post-Soviet despot has made public his feelings on America’s monetary policy:
They are living beyond their means and shifting a part of the weight of their problems to the world economy. They are living like parasites off the global economy and their monopoly of the dollar. If [in America] there is a systemic malfunction, this will affect everyone. Countries like Russia and China hold a significant part of their reserves in American securities. There should be other reserve currencies.
Will Putin act on those words?
We shall see.
azizonomics 
The Russian Ruble is undervalued. Such a large population with huge untapped resources. This population will decline. Young people in Russia are just starting to flirt with consumerism, and body image. No girl will marry early.
If you look at Australia, with it’s huge housing bubble, and private debt, it’s resource based economy is underpinnings its dollar. The Australian dollar lost ground against the Swiss Franc with recent uncertainty, but I see Russia having huge appreciation of it’s Ruble in the next few years. Who else has vast natural resources, low debt and nuclear tactical weapons? To me this could easily be a reserve currency.
Putin has tackled the biggest issue in the minds of Russian lower classes (Voters). How did the Oligarchs get their first million? A populist political tactic.
I agree with you. I am bullish on Russia. Everyone forgets the R in BRICs.
Of course, the risk in the ruble is that the natural resources and tactical nuclear weapons may never be fully reflected in its price, that it may be so terribly mismanaged (QE Backyard Potato Vodka Edition) that it may take four or five more bouts of hyperinflation or even revolution for Russia to achieve its economic potential. I think such risks are overstated. Putin is nothing if not an effective bureaucrat.
Russia isn’t so good with currency stability.
Merely wanna tell that this is very helpful , Thanks for taking your time to write this. “No kind of sensation is keener and more active than that of pain its impressions are unmistakable.” by Marquis de Sade.
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Now that is some excellent literature.
Right on!
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