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 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”.