Why Is the Ruble Soaring?

Two Explanations Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] Why Is the Ruble Soaring? - Rumors of the ruble’s death are premature… - “Conventional wisdom on why the ruble has rallied is simply wrong”… - “Gold exposes lies and the liars who say them”… Recommended Link [BOMBSHELL: James just stunned EVERYONE]( [Read more here...]( Available to the public for just hours... This just-released video is already causing quite a stir. That’s because James Altucher just went live on camera and dropped a BOMBSHELL on our readers that no one was expecting... If you do one thing today, take five minutes to see this. You’ll be very happy you did. [Go Here Now]( Annapolis, Maryland March 31, 2022 [Brian Maher]Dear Reader, President Joseph Biden, March 26: “As a result of our unprecedented sanctions, the ruble was almost immediately reduced to rubble.” Business Standard, March 29: The ruble has recouped most of its losses and become the top-performing currency globally… The ruble appreciated to 83 to the dollar intraday on Tuesday against a record low of 139 on March 7. Thanks to the recent rally, the ruble is only about 10% lower than what it was before the Russian invasion of Ukraine on Feb. 24. Thus all rumors of the ruble’s demise are evidently… premature. Yet we are not one whit surprised. Evidence — powerful evidence — indicates that most United States government policy is pure botchwork. If its intended effect is A, you can bet high it will yield B. If its intended effect is B, you can bet high it will yield A… Or H or O or X. Yet the question lingers: Why has the ruble regained its bounce? What Happened to the Ruble? The common account runs this way… Russian ogre Putin demands “unfriendly” nations — nations that have hurled sanctions at him — pay rubles for his natural gas stores. Several unfriendly nations in Western Europe require Russian energies. And so they are whispering uncle and accumulating rubles. Our spies in fact report that European nations are purchasing rubles under the gaming table… secretly… disguised from the public gaze. These purchases have the ruble jumping in global currency markets. These purchases would form a treason against the very sanctions Europe has stood up. Yet Mr. Putin has Europe by the ear. And so Europe must kneel before him. Thus he is a very crafty and guileful fellow, this Putin. Recommended Link [Trump’s Final Gift To America]( [Read more here...]( There’s a little-known way Trump could – one day – have his revenge. It involves a Federal Ruling he oversaw in the final year of his Presidency that could change America forever… unleash an estimated $15.1 trillion in new wealth… and create countless ways for everyday Americans to benefit. What is this little understood decision? And how will it impact you? [Click Here To Learn More]( Is the Consensus Wrong? This account appears to contain substantial juice. It would heavily explain the ruble’s resurrection. Yet old Daily Reckoning hand “Mish” Shedlock is not the least bit convinced it is true. He insists the consensus answer is moonshine: Conventional wisdom on why the ruble has rallied is simply wrong… People just don't get this. [The] ruble rally [is] totally unrelated to demand payment for oil and gas in rubles. Rather, it's other things Russia is doing to avoid sanctions and internally force demand for rubles. What precisely is Russia doing to avoid sanctions and internally force demand for rubles? Eight actions, says Mr. Shedlock. Russian action 1: Visa and Mastercard pulled the plug on Russia's credit cards. But following the 2014 war in which Visa and Mastercard did the same, Russia took measures to not let that happen again. Instead, Putin implemented a National Payment Card System — known by its Russian initials NSPK. Visa and Mastercard went along with it. In 2015 Russia then forced the use of Mir cards based on NSPK. Those cards do not use the U.S. payment system. One irony is that instead of Visa and Mastercard getting the fees, Russia's central bank collected 8.2 billion rubles in net profit, or about $94 million at current exchange rates. Russia actually profited from Visa and Mastercard sanctions. Recommended Link [The No. 1 Crypto Of 2022 Is Poised To Be Even Bigger Than NFTs, Blockchain, Or Bitcoin?]( If you act fast, you can get in before everyone else catches on. [Click Here For More Details]( Russian action 2: Russia… [forced] exporters to trade 80% of its euros and dollars into rubles at a discount. That creates a huge artificial demand for rubles. Russian action 3: Russia also restricted currency trades. People who wanted out of the ruble could not get out. In addition, Russia banned foreigners from selling Russia stocks. All Eight Actions Here Mish cites all eight Russian actions explaining the rocketing ruble: - Russia escaped Visa and Mastercard. - Russia still trades oil and gas with Europe. - Russia halted currency trades. - Russia enacted stock market restrictions. - Of Russian exporters, Russia demanded 80% of euros and dollars be traded for rubles. - Russia threatens to stop exporting key commodities including aluminum, natural gas, fertilizer, rare earth minerals, etc., driving up prices and the need to stockpile. - Sanctions cannot take away Russia's natural resources. - The Fed can print dollars, it cannot print commodities. Likewise, the ECB can print euros, it cannot print commodities. Is Mr. Shedlock correct? Is the consensus accounting correct? Is neither correct? Are both correct? We do not know. In our untutored and unprofessional opinion, each side scores its points. Yet we are fairly certain of the ruble’s future — and the dollar’s future. Both are bleak. Slow, Then Fast The president exulted that sanctions had reduced the ruble to rubble. Yet the same sanctions may likewise reduce the dollar to rubble. Blocs of nations have long been chasing dollar alternatives. These latest sanctions have merely forced the pace. The world will no longer consider the dollar a dependable monetary bedrock. If the United States can kick Russia from the international payments system, it can kick other miscreants from the international payments system. And the world is to its neck with miscreants — at least as identified by the United States government. They want something else. Russia and China are pursuing developments along these lines. Russia is evidently coaxing India to establish a payments system that skirts the dollar. All transactions will exchange rubles and rupees. Meantime, Saudi Arabia is apparently weighing — gravely — China’s offer to trade oil for yuan. We hazard additional anti-dollar proposals will come issuing in the coming months and years. All Paper Currencies Die In the longer haul, all paper currencies will likely reduce to rubble — ruble, dollar, pound, euro, yen, yuan and the rest. History itself is the rock of our claim. History informs us that all paper currencies suffer extinction. No exceptions exist. Paper currencies endure 27 years on average. Some live only months. Others, centuries. Yet 27 years is par. The dollar has lived a far more enduring existence, of course. Yet like an aging starlet in the autumn years, the dollar’s high glories are in back of it. Truth and Gold What will fill its void? We do not pretend to know. Yet we hazard the money of the ages, gold, will fill it… partially at least. Gold is a sort of monetary sodium pentothol. It tells enduring truths, truths inconvenient to the modern sensibility. Gold exposes lies and the liars who say them. “Truth, like gold, ”said Tolstoy, is obtained “by washing away from it all that is not gold.” Truth lies presentl buried beneath layers and layers of muck, the accumulation of decades. Perhaps it is time to begin washing it away — washing away all that is not gold. Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning Editor’s note: How can you protect your wealth against the ravages of inflation? Some are turning to cryptocurrencies. But history points to something far more enduring... When Rome was overrun by barbarians and the empire collapsed… [powerful families survived by storing their wealth in gold.]( [Click here for more...]( Gold is real money. It’s private, secure and remains incredibly valuable today. It is also dirt, dirt cheap… for now. When the bug really hits the windshield, gold will likely explode in value, and quickly become out of reach for most investors. Centuries ago, smart families maintained their lifestyle while the rest of Europe plunged into centuries of chaos by owning gold. [Click here to see how gold can potentially save you from chaos today.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Brian Maher][Brian Maher]( is the Daily Reckoning's Managing Editor. Before signing on to Agora Financial, he was an independent researcher and writer who covered economics, politics and international affairs. His work has appeared in the Asia Times and other news outlets around the world. He holds a Master's degree in Defense & Strategic Studies. 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