When Donald Trump was reelected in November, many investors declared the so-called Trump Trade would spur US stocks to new highs. But markets are now spooked by fears the world's largest economy is close to recession.
Because russia is not prepared at all for a recession. They have high inflation and stagnation at the moment (because of burning cash for the war, among other things), this is called “stagflation” and is just by itself a hopeless mess; if you up the steering rate to stop the stagnation and you kill the economy (the rate is already at a ridiculous 21%), lower the rate to favor economic growth and the inflation (which is according to the kremlin somewhere at 10%, but at over 70% for food according independent alalysists) will spiral out of control.
It’s already an impossible problem to solve, add a global recession and it just gets way worse.
It’s a problem you encounter because money is just an abstraction for real world conditions and resources. I think people forget that. Printing more money doesn’t make your country magically have more resources. It doesn’t manufacture tanks for you or vanquish your enemies.
I still remember the picture from the history book where in Germany between ww1 and ww2 they were burning bank notes for warmth because inflation made the currency almost completely worthless.
The russian economy is not only tied to but dependent on the wests import of natural resources.
How in the world did you figure russias economy is not tied to “our” (I’m european, but the us and eu economies are all intertwined) economy? “Famously” so too?
If USA says don’t buy russian oil or you’ll get secondary sanctions (e.g. you can’t trade with the US) then india, china will (and are) stop buying russian oil. This is what is actually happening by the way.
I didn’t mean we can’t impact their economy. I meant the US economic success is not tied to theirs. If our economy collapses, theirs will actually improve, not get worse.
The person I was replying to implied that our coming recession would also be bad for Russia. I think it’s the opposite.
If the USA goes into recession, then the world economy will slow down, this is indisputable (if there is no other really never before seen boon happening, which is extremely unlikely).
When the world economy slows down, oil and gas demands lowers, which creates less demand, making oil & gas prices go lower.
Russias economy is in dire straits today, anything could plunge it into a spiral of augmenting inflation and augmenting stagnation. These two feeds on each other.
The biggest part of russias economy is based on oil & gas revenue.
True. I guess it depends how the US starts to fail. I imagined that people stop buying our gas, we lose global influence, and the boycott on Russian oil will fail. Europe will keep it up, others won’t.
Why
Because russia is not prepared at all for a recession. They have high inflation and stagnation at the moment (because of burning cash for the war, among other things), this is called “stagflation” and is just by itself a hopeless mess; if you up the steering rate to stop the stagnation and you kill the economy (the rate is already at a ridiculous 21%), lower the rate to favor economic growth and the inflation (which is according to the kremlin somewhere at 10%, but at over 70% for food according independent alalysists) will spiral out of control.
It’s already an impossible problem to solve, add a global recession and it just gets way worse.
It’s a problem you encounter because money is just an abstraction for real world conditions and resources. I think people forget that. Printing more money doesn’t make your country magically have more resources. It doesn’t manufacture tanks for you or vanquish your enemies.
I still remember the picture from the history book where in Germany between ww1 and ww2 they were burning bank notes for warmth because inflation made the currency almost completely worthless.
Yes, they are definitely trying to have the cake and eating it at the same time.
No, I mean why would US economics affect Russia, a country that’s famously not tied to our financial system?
The russian economy is not only tied to but dependent on the wests import of natural resources.
How in the world did you figure russias economy is not tied to “our” (I’m european, but the us and eu economies are all intertwined) economy? “Famously” so too?
If USA says don’t buy russian oil or you’ll get secondary sanctions (e.g. you can’t trade with the US) then india, china will (and are) stop buying russian oil. This is what is actually happening by the way.
I didn’t mean we can’t impact their economy. I meant the US economic success is not tied to theirs. If our economy collapses, theirs will actually improve, not get worse.
The person I was replying to implied that our coming recession would also be bad for Russia. I think it’s the opposite.
It was me I guess.
If the USA goes into recession, then the world economy will slow down, this is indisputable (if there is no other really never before seen boon happening, which is extremely unlikely).
When the world economy slows down, oil and gas demands lowers, which creates less demand, making oil & gas prices go lower.
Russias economy is in dire straits today, anything could plunge it into a spiral of augmenting inflation and augmenting stagnation. These two feeds on each other.
The biggest part of russias economy is based on oil & gas revenue.
Make your conclusions!
True. I guess it depends how the US starts to fail. I imagined that people stop buying our gas, we lose global influence, and the boycott on Russian oil will fail. Europe will keep it up, others won’t.
I hate to say we’ll see, but… we’ll see!
I don’t think the USA will fall, it will just not be the only/strongest player any more.
For russia, IMO, it is another story, they collapsed in the nineties, they seem to be on a path to collapse again.
But, as you say, we’ll see!