RTNo end seems to be in sight for the plight of the Russian ruble, which slumped to new record lows against hard currencies Tuesday. The EUR traded at 93.5 against the ruble, and the USD at 75.
The Russian stock market also went haywire, dropping more than 15 percent as of 2:30pm Moscow time, after it dropped 11 percent the day before. Sberbank, the country’s largest lender, lost 17.77 percent, and VTB, the second biggest bank, fell by 14.29 percent. State-owned oil and gas companies Gazprom, Rosneft, and Surgut also saw shares plummet.
The emergency interest rate hike to 17 percent has failed to halt the ruble’s landslide tumble against hard currencies. The rate increase only calmed the ruble temporarily.
It has accelerated its descent in November and December along with falling oil prices. Investors have been pulling capital out of Russia over geopolitics since earlier this year, and sanctions levied by the US and EU have essentially cut Russia off from Western lending.
Most analysts agree that Russia will enter recession in the first quarter of 2015, including the Economy Minister Aleksey Ulyukaev, and the Central Bank.
On Tuesday, the CBR chief Elvira Nabiullina said a higher rate should put an end to investor speculation that has been hitting the ruble.
“We must learn to live in a new reality, to focus more on our own resources to finance projects and give import substitution a chance,” the bank chief said in a televised address Tuesday.
However, neither the rate increase nor the comments have had a big impact on ruble trading as it continued to slide. Russia’s currency has lost more than 55 percent against the dollar this year, mostly to external factors such as slumping oil and sanctions against Russia.
Lemmie (let me) tell you something about “fractional reserve banking”.
If you have a reserve requirement of 10%, that means when you deposit a hundred dollars in the bank, the banker can legally lend a thousand to someone else. That’s how they get so stinking, filthy, rich.
But it also means that out of all the money in circulation, only 10% of it actually exists as real wealth. So if 90% of the country’s wealth is imaginary, and only exists as debt, what happens when the money stops circulating (or being borrowed/lent)?
I’ll tell you what happens. The whole house of cards (or house of imaginary wealth) comes tumbling down. And since we now have a “global economy”, comprised of banks all over the world practicing “fractional reserve banking”, we now have a global economic collapse.
The system is not new, and it’s been used for centuries to steal the wealth of nations by putting people in debt, and then seizing all collateral when the house of cards gets a swift kick, and that swift kick is delivered by simply contracting the money supply. IN the present case they don’t have to contract the money supply, because it’s already been spent, and all anyone owns is debt, or real property. (gold, silver, real estate, and valuable trinkets — not expensive gadgets)
So Russia’s economy will collapse, just as ours, and the Chink’s, and this will happen real soon, because our money only has value as long as someone else is willing to accept it in exchange for good and services. If a country’s debt greatly exceeds it’s ability to produce real wealth, the debt-based money is no good, for the same reason that you wouldn’t accept an I.O.U. from someone who owes you a mint, and has no job.
this is the end of the dollar
China is 5000 yrs old they didn’t get to be that old being stupid. We have been a nation formally 238 yrs and we are in debt up to our eye balls.
Fighting foreign wars through out most of the world with no way to pay for them, racking up enemies left and right, dumbing down the populace, corruption in every branch of government, our money is a dead rag walking. What miracle will save us ? Our supposed “exceptionalism” ?
Just look back to Rome in it’s final days of glory you have your answer.
There isn’t a miracle coming we will reap what we have sown.
http://www.zerohedge.com/news/2014-12-15/yes-its-possible-gold-backed-renminbi-dethrone-us-dollar
I’ll bet the low oil prices are there to give all of Rothschild’s toy soldiers (around the world) a chance to fill up their strategic war supply before the starting gun.
-flek