Russia threatens to dump the dollar

[GhostZ06]

Do you think that the US is capable of increasing their supply to the point where they can provide Europe with 40% of it's natural gas? Natural gas isn't exactly easy to transport either.

Ya don't think we could? We have the shipping facility's to do so.

 

[Jukai]

And you seem to be implying that Russia would cut Europe off out of the blue. They wouldn't, it would be retaliatory. Both are mutually dependent on one another. But the idea of Europe risking to tank their economy, even in the short term just for the Ukraine is completely idiotic.

You keep repeating this like a broken record.

Russia invades Ukraine ---> US imposes sanctions ---> Russia drops the dollar and refuses to sell oil and gas in dollars ----> Europe refuses to buy oil and gas using Euros

That is the imaginary steps that people are discussing in this thread. It started after the US threatened sanctions on Russia and a Russian official said that Russia could retaliate by dropping the dollar completely. Everyone believes that this is unrealistic because Russia would surely crumble in a matter of months while the western world would uncomfortably survive--- with the exception of you, who doesn't appear to understand what people are actually discussing.

 

[ben236]

Russia absolutely has leverage. Russia could absolutely damage the US and devastate Europe. But given how the THREAT of sanctions affected Russia, it's unlikely Russia could survive even a few months by demanding their oil and gas not be sold in the dollar. So while Russia has leverage, it's more about manipulation of prices of the oil and gas that is the worry, NOT outright rejecting the dollar.

It's literally as if North Korea nuked America--- the US would be devastated with the death toll and fall out. North Korea wouldn't exist anymore.

It depends on how Europe responds. They can drop their primary source of oil and natural gas which would devastate their economy (albeit Russia's too) at least in the short term. Or they can take the easy way out and simply pay in Euro.

You still haven't provided me with a good reason as to why Most European countries wouldn't take the easy way out.

You keep repeating this like a broken record.

Russia invades Ukraine ---> US imposes sanctions ---> Russia drops the dollar and refuses to sell oil and gas in dollars ----> Europe refuses to buy oil and gas using Euros

Because you still haven't justified why this would happen. And don't tell me it's because they're all moral to the point where they would tank their economy for the sake of the Ukraine.

 

[Jukai]

It depends on how Europe responds. They can drop their primary source of oil and natural gas which would devastate their economy (albeit Russia's too) at least in the short term. Or they can take the easy way out and simply pay in Euro.

You still haven't provided me with a good reason as to why Most European countries wouldn't take the easy way out.

Because you still haven't justified why this would happen. And don't tell me it's because they're all moral to the point where they would tank their economy for the sake of the Ukraine.

Because Russia just invaded the fucking Ukraine and is trying to attack the US by dropping the dollar, while the US was simply helping out Europe by putting in the sanctions in the FIRST place.

Our disagreement seems to stem that you either a) think this is an American issue. It's not, this is a EUROPE issue that America is helping with, or b) you think the Europeans are all a bunch of pussies

Regardless, can we agree that if Europe DID refuse to buy the gas and oil in Euros, that Russia would collapse within months?

 

[ben236]

Our disagreement seems to stem that you either a) think this is an American issue. It's not, this is a EUROPE issue that America is helping with, or b) you think the Europeans are all a bunch of pussies

a) What evidence do you have of this? From what I read, Europe has no intentions of imposing any sanctions or even getting involved other then the occasional meaningless condemnation and encouragement about the issue getting resolved.

b) Not wanting to tank your economy is not about being a pussy. It's about not being an idiot.

 

[Jukai]

a) What evidence do you have of this? From what I read, Europe has no intentions of imposing any sanctions or even getting involved other then the occasional meaningless condemnation and encouragement about the issue getting resolved.

They aren't going to impose sanctions because they have big brother USA. If the USA sat out of this, the sanctions would come quick OR the EU would completely cave.
The US is doing this on behalf of Europe. Why would you ever think differently?

b) Not wanting to tank your economy is not about being a pussy. It's about not being an idiot.

But you think Putin would drop the dollar and hurt their own economy...?

It's cost benefit analysis. Accepting the euros would be a short term solution but radically strengthen Russian resolve, a direct competitor of the EU in the global scheme of things.
Declining and either having Russia cave or caving in Russia would be a long term solution.

 

[ben236]

Where did you read this?

http://money.cnn.com/2014/03/04/news/economy/europe-russia-ukraine/

The deployment of Russian troops in Crimea has drawn condemnation from Washington and Europe, along with talk of potential sanctions if diplomacy fails.

The United States has put trade and investment pact talks with Russia on hold, while Secretary of State John Kerry has talked about isolating Moscow through visa bans and freezing assets.

But European leaders, who meet Thursday to discuss the crisis, have been more circumspect, instead emphasizing the need for diplomacy and international mediation.

That's hardly surprising when you consider the extent to which the economies of the European Union and Russia are intertwined.

Now it's your turn to provide me with a counter source saying that this is all Europe and the US is just doing their bidding.

But you think Putin would drop the dollar and hurt their own economy...?

No, because I don't think sanctions will be imposed.

It's cost benefit analysis. Accepting the euros would be a short term solution but radically strengthen Russian resolve, a direct competitor of the EU in the global scheme of things.
Declining and either having Russia cave or caving in Russia would be a long term solution.

In the grand scheme of things such as what? They are completely dependent on each other economically. Is the "grand scheme of things" worth tanking your economy over?

 

[thegreenblender]

This big dog will figghhhht when you rattle his caaaaage...

 

[Jukai]

http://money.cnn.com/2014/03/04/news/economy/europe-russia-ukraine/

Now it's your turn to provide me with a counter source saying that this is all Europe and the US is just doing their bidding.

No, because I don't think sanctions will be imposed.

In the grand scheme of things such as what? They are completely dependent on each other economically. Is the "grand scheme of things" worth tanking your economy over?

Good fucking christ...

so your view on this... is that the US just butted in here and trampled over the poor EU nations that just wanted to settle this over some good ol fashion diplomacy? :icon_cry2

Answer: if sanctions are imposed, do you think Russia drops the dollar?

 

[ben236]

Good fucking christ...

so your view on this... is that the US just butted in here and trampled over the poor EU nations that just wanted to settle this over some good ol fashion diplomacy? :icon_cry2

What part of provide a counter source did you not understand?

Answer: if sanctions are imposed, do you think Russia drops the dollar?

I think there's a good possibility. I would expect Russia to retaliate.

 

[Jukai]

What part of provide a counter source did you not understand?

I asked for a source because I misread what you said. I immediately edited my post in under a minute, but I guess you are camping out in this thread and responded before the edit. So woohoo!
I thought you implied that Europe doesn't want America there. I was asking for a source for that.

I think there's a good possibility. I would expect Russia to retaliate.

So America wont' throw sanctions because it is economic suicide.
Europe won't stop buying oil and gas because it is economic suicide.
Russia would drop the dollar, because they are retaliating.

This is upsetting. This is either coming from an "America is evil, Russia is good" stance which would make you misguided, or it is coming from a "Russia would be fine dropping the dollar, it's nothing!" which would make you stupid.

This is incredibly bizarre, you must wonder why you are the ONLY PERSON in this thread who has this opinion, no?

 

[ben236]

I asked for a source because I misread what you said. I immediately edited my post in under a minute, but I guess you are camping out in this thread and responded before the edit. So woohoo!
I thought you implied that Europe doesn't want America there. I was asking for a source for that.

You've said that the US is doing Europe's bidding in their intervening. Do you have a source or not? You've dodged this request quite a few times and I'm assuming it's because you're talking out of your ass.

So America wont' throw sanctions because it is economic suicide.
Europe won't stop buying oil and gas because it is economic suicide.
Russia would drop the dollar, because they are retaliating.

This is upsetting. This is either coming from an "America is evil, Russia is good" stance which would make you misguided, or it is coming from a "Russia would be fine dropping the dollar, it's nothing!" which would make you stupid.

What the fuck are you talking about?

This is incredibly bizarre, you must wonder why you are the ONLY PERSON in this thread who has this opinion, no?

The only people I've argued this with is you and Darkballs. And considering you two tend to be fairly hawkish when it comes to foreign policy, your views aren't really surprising.

 

[Jack V Savage]

Answer: if sanctions are imposed, do you think Russia drops the dollar?

No one is taking that seriously. The general reaction to the "threat" was laughter. But it just happened to coincide with one of the fantasies of the far right that the world is going to "abandon the dollar as the world's reserve currency," which is going to send the U.S. into a hyperinflationary spiral, which will pave the way for America to finally embrace Ron Paul as its lord and savior, as he delivers the death blow to the poor and middle class.

Seriously, it's wacky, but IMO, you need that background to understand how anyone could think that the threat is plausible. And even non-nuts are not appreciating the extent to which something that would actually be positive. If ben had bothered to work through the math, he'd see that the "worst-case" scenario with regard to inflation is that it would bump up slightly to the point where it would accelerate the reduction in unemployment (as the U.S. has been battling excessively low inflation recently--not the same extent as Europe, which has been devastated by it, but it's still been a drag on the recovery).

 

[ben236]

No one is taking that seriously. The general reaction to the "threat" was laughter. But it just happened to coincide with one of the fantasies of the far right that the world is going to "abandon the dollar as the world's reserve currency," which is going to send the U.S. into a hyperinflationary spiral, which will pave the way for America to finally embrace Ron Paul as its lord and savior, as he delivers the death blow to the poor and middle class.

Seriously, it's wacky, but IMO, you need that background to understand how anyone could think that the threat is plausible. And even non-nuts are not appreciating the extent to which something that would actually be positive. If ben had bothered to work through the math, he'd see that the "worst-case" scenario with regard to inflation is that it would bump up slightly to the point where it would accelerate the reduction in unemployment (as the U.S. has been battling excessively low inflation recently--not the same extent as Europe, which has been devastated by it, but it's still been a drag on the recovery).

So you've done the math? By all means present it then.

 

[Jack V Savage]

Something of this magnitude (a major economy eschewing dollars and creating a new alternative) could be a whirlwind chain-reaction and textbook probabilities don't really determine what happens in reality.

Russia's total exports are only about $550B a year. Only a portion of that is in dollars currently. Cutting that portion to zero (which couldn't happen overnight) just wouldn't make that much of a difference. There's really no way to make the math work to reach a different conclusion. If there's some kind of irrational, worldwide reaction to it, I guess that could be different, but I wouldn't think that something like that would follow from the event that we're discussing. So, again, if you're making a trite observation that unpredictable shit happens, sure--no disagreement. If you're claiming that this threat, if carried out (not happening, but for argument's sake) would be likely to cause something bad, no.

How well has the field of economics predicted the trajectory of bitcoin? Surely it was all economists making the news with things like selling their $100 bitcoin investment for enough to buy a house. lol

I think anyone could have told you that bitcoin would be highly volatile. The precise trajectory, though, no, of course not.

 

[Jukai]

You've said that the US is doing Europe's bidding in their intervening. Do you have a source or not? You've dodged this request quite a few times and I'm assuming it's because you're talking out of your ass.

Excuse me, you never gave a source saying they WEREN'T, simply that Europe didn't want to provide sanctions of their own.
The truth of the matter is, this issue doesn't concern America. It is of VITAL importance to Europe. Europe and America are allies, and that is the only reason that America is proposing sanctions in the first place.

And the threats hurt Russia. A lot.

What the fuck are you talking about?

I don't have any hand puppets, so it may be tough to explain this.

You think that the US won't impose sanctions, because it is economic suicide.
You think Europe won't stop trading oil and gas, because it is economic suicide.
But you think Russia will drop the dollar, because... you're apeshit, I guess.

The only people I've argued this with is you and Darkballs. And considering you two tend to be fairly hawkish when it comes to foreign policy, your views aren't really surprising.

I guess you're just having a polite chat with Jack V Savage.

 

[Jack V Savage]

So you've done the math? By all means present it then.

You're the one who was making the claim. I'm just noting that the amount of money we're talking about is a very, very small drop in the bucket. You haven't claimed any kind of multiplier effect (if you think there is one, try to explain it).

But as I mentioned, your position here isn't based on a rational analysis of the issue. It's based on sycophancy, essentially.

I guess you're just having a polite chat with Jack V Savage.

Don't remind him.

Honestly, I think that ben is slow (trying to find a polite word for not-that-bright--any suggestions?), which means I'm less interested in engaging him.

 

[ben236]

Excuse me, you never gave a source saying they WEREN'T, simply that Europe didn't want to provide sanctions of their own.
The truth of the matter is, this issue doesn't concern America. It is of VITAL importance to Europe. Europe and America are allies, and that is the only reason that America is proposing sanctions in the first place.

And the threats hurt Russia. A lot.

There was nothing tangible in that piece as to what's at stake in the Ukraine for Europe. It was basically one giant straw-man about Russia turning into WWII Germany. You think an article that says "Hitler" and "Stalin" a few times is supposed to be some kind of convincing argument?

You claimed that the US is doing Europe's bidding. You can't support that claim. Just admit you're talking out of your ass and let's move on.

I don't have any hand puppets, so it may be tough to explain this.

You think that the US won't impose sanctions, because it is economic suicide.
You think Europe won't stop trading oil and gas, because it is economic suicide.
But you think Russia will drop the dollar, because... you're apeshit, I guess.

Moron, this is what you asked me:

if sanctions are imposed, do you think Russia drops the dollar?

I don't think sanctions will be imposed. I don't think Russia will drop the US dollar because I don't think sanctions will be imposed. I have stated this multiple times. If sanctions are imposed (which is what you asked me), then that changes things. We have a problem when you get confused by your own fucking questions.

I guess you're just having a polite chat with Jack V Savage.

We're talking about something a little different.

 

[Jukai]

There was nothing tangible in that piece as to what's at stake in the Ukraine for Europe. It was basically one giant straw-man about Russia turning into WWII Germany. You think an article that says "Hitler" and "Stalin" a few times is supposed to be some kind of convincing argument?

You claimed that the US is doing Europe's bidding. You can't support that claim. Just admit you're talking out of your ass and let's move on.

Until you can explain to me America's interest in this that doesn't involve protecting Europe, I won't "move on." Don't get pissy at me for supporting a claim that I've given you roundabout evidence for when you won't give Jack the exact same thing.

No, I don't have a source where America out-rightly says "we are doing this for Europe" because I don't have ANY article as of America's reason to be in this conflict. Do you have an article where Kerry says "We're sanctioning Russia because FUCK Russia, that's why!"

Moron, this is what you asked me:
I don't think sanctions will be imposed. I don't think Russia will drop the US dollar because I don't think sanctions will be imposed. I have stated this multiple times. If sanctions are imposed (which is what you asked me), then that changes things. We have a problem when you get confused by your own fucking questions.

I'm not getting confused, this whole wall of text is completely irrelevant. It was a waste of mental energy and the small amount of physical it took to type it out.

WHY does Russia respond with something so drastic as dropping the dollar to US sanctions if (and this is fact) dropping the dollar will have FAR worse consequences on Russia than it will the US?
This is the entire argument. It's all hypothetical!

We're talking about something a little different.

I don't think you know what you're talking about, really.

 

[crowded]

Russia's total exports are only about $550B a year. Only a portion of that is in dollars currently. Cutting that portion to zero (which couldn't happen overnight) just wouldn't make that much of a difference. There's really no way to make the math work to reach a different conclusion.

You should be addressing this to Ben.

If there's some kind of irrational, worldwide reaction to it, I guess that could be different, but I wouldn't think that something like that would follow from the event that we're discussing.

And it seems most people don't think anyone is going to follow through on their threats because everyone loses. But if they do follow through and your ilk are wrong then it's pretty funny to think you can peg what will transpire after your first erroneous prediction is proven false. There's just no way to say who else may become emboldened to make a power play or how things would shake out from there. Are you claiming otherwise?

So, again, if you're making a trite observation that unpredictable shit happens, sure--no disagreement. If you're claiming that this threat, if carried out (not happening, but for argument's sake) would be likely to cause something bad, no.

If pointing out that the people acting like they know everything really don't is trite then so be it. Is that how you describe your efforts around here? You mainly go from econ thread to econ thread telling people they are wrong about what's going to happen in the future while never making any claims/predictions of value yourself. Not sure what the difference is in your mind.

I think anyone could have told you that bitcoin would be highly volatile. The precise trajectory, though, no, of course not.

Then all these "economists" who understand how the world works should have made a killing due to the high certainty of volatility. Kinda stupid to take shitty bond yields when there's a fuck ton of money to be made in the crypto-currency frontier.

Seriously, what can you predict? The stock market will go up or down? That if you pull this lever then the economy should go in this direction but if you pull that one the economy should go in the other direction? How many lever pulls can you factor into one prediction? Impress us and predict something like which nation's markets will finish the year with the greatest gains and which will have the greatest losses? Will you even go out on a limb far enough to say if the DOW will finish higher or lower this year?

Here's mine. The economy will grow at 3.2% this year (because that's how the system is designed, right?) and the Dow will finish within 5% of where it is now (yeah, I just made that up).