{"id":1497430,"date":"2024-10-20T22:40:00","date_gmt":"2024-10-21T02:40:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1497430"},"modified":"2024-10-20T22:40:00","modified_gmt":"2024-10-21T02:40:00","slug":"the-danger-to-the-dollar-isnt-the-euro-or-yuan","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/the-danger-to-the-dollar-isnt-the-euro-or-yuan\/1497430\/","title":{"rendered":"The Danger To The Dollar Isn’t The Euro Or Yuan"},"content":{"rendered":"

The Danger To The Dollar Isn’t The Euro Or Yuan<\/span><\/p>\n

\n

Authored by Mike Shedlock via MishTalk.com,<\/em><\/a><\/p>\n

Russia GDP is now estimated at +3.8 percent, topping the US, despite sanctions. What\u2019s going on?<\/p>\n

<\/a><\/p>\n

Russia\u2019s War Economy<\/strong><\/h2>\n

Eurointelligence discusses\u00a0Russia\u2019s War Economy<\/a><\/p>\n

It is worth looking at the\u00a0autumn forecast<\/a>\u00a0for Russia by the Vienna Institute for International Economic Studies, one of the best sources of economic information for central and eastern Europe. They upgraded their growth forecast for this year by 0.6pp to 3.8%.\u00a0Russia is outgrowing all western economies, including the US.\u00a0<\/em>Growth is forecast to slow down to 2.5% next year because of the impact of a 19% interest rate. It is clear that Russia\u2019s economic expansion is a classic case of a wartime Keynesian effect.<\/p>\n

It is also interesting to contrast Russia\u2019s economic development with that of Ukraine\u2019s main supporters in Europe, which have entered into synchronised austerity, first in\u00a0Germany, and now in France and the UK.<\/p>\n

Russia\u2019s fiscal stability is perhaps the biggest surprise. Defence spending is on trajectory towards 6% of GDP. And yet, the 2024 budget deficit is projected at 1.5%, falling to 1% in 2025.<\/em><\/p>\n

Vasily Astrov, the Russia expert at WIIW, concludes that Putin will have money for the foreseeable future to continue financing the war against Ukraine. A rise in income and corporate tax has meant that Russia\u2019s state finance will become less dependent on energy.<\/p>\n

Financial sanctions are ultimately not as successful as their advocates once believed because money is not a natural global monopoly. International banks are certainly susceptible to US dollar sanctions.<\/em>\u00a0But not all banks in the world operate in dollar markets. The use of secondary sanctions has become a first-order instrument in the US\u2019s diplomatic toolkit in this century. But it falls into the category of instruments which lose their value the more you use them. Even amongst US economists, we see a lot of complacency about this. It was friction combined with network effects that favoured the emergency of a single dominating currency \u2013 the pound sterling, the dollar later.\u00a0The danger to the dollar is not the euro, or renminbi. It is that micro-channels are becoming viable as technology reduces the frictions.<\/em><\/p>\n

Lessons of the Day<\/strong><\/h2>\n

The more you depend on sanctions, the less they work.<\/p>\n

That\u2019s the real risk to the dollar.<\/p>\n

Here\u2019s a Repeat Lesson on Why Sanctions Fail<\/strong><\/h2>\n

On September 26, I commented\u00a0To Those Hard of Learning, Here\u2019s a Repeat Lesson on Why Sanctions Fail<\/a><\/p>\n

In that post I refuted a claim that sanction failures are due to a lack of political will.<\/p>\n

Also see my September 19, 2023:\u00a0Lesson of the Day: Sanctions Don\u2019t Work Because They Create New Markets<\/a><\/p>\n

A person who touted a buyer\u2019s cartel sanction success, now complains the buyers cartel leaks like a sieve.<\/p>\n

Finally, please see\u00a0How China Gets Around US Sanctions on Semiconductors<\/a><\/p>\n

US sanctions backfire again. China is stronger as a result.<\/p>\n

Russia\u2019s GDP shows just how badly misguided and overused sanctions have worked.<\/strong><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSun, 10\/20\/2024 – 18:40<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/economics\/danger-dollar-isnt-euro-or-yuan<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

The Danger To The Dollar Isn’t The Euro Or Yuan Authored by Mike Shedlock via MishTalk.com, Russia GDP is now estimated at +3.8 percent, topping…<\/p>\n","protected":false},"author":0,"featured_media":1497431,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1497430","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1497430","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1497430"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1497430\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1497431"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1497430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1497430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1497430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}