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FriedButter

FriedButter

Brigadier
Registered Member
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He added that Washington “would have kept Bagram, by the way.” Explaining the importance of the airfield, Trump said: “Bagram is one hour away from the Chinese nuclear plant where they make nuclear weapons, right? We should have never given that up.”
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IDK if it’s true but it seems interesting enough to post.
 
J

jwnz

Junior Member
Registered Member
taxiya said:
Just printing currency without consideration of your production output, raw material or manufactured goods alike, creates inflation that hurt yourself. The only exception is USD because US can export their inflation to the world because USD is a world trading currency.


If your own currency is accepted in international trade (such as energy trade between Russia and non western countries), it will serve as the same purpose as foreign reserves. Essentially Russia keeping Ruble reserve is the same as RMB reserve because the two currencies are agreed at an exchange rate and accepted in bilateral trade. This means there is no need for your bank reserve to be in a specific currency.

I think your thinking is based on the Dollar dominated world trade establishment. In that world, non-western currencies are not accepted, therefor you need reserves in western currencies. Here west = "foreign" is only because of US rule.

But in a parallel world without the west such as trade among China, Russia, India etc. there is no need for these "foreign" currencies. If it is not because of US military dominance and tie of ME oil with Dollar, there wouldn't have been a need for "foreign"(USD) currency reserve at all.
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Of course printing money without matching production capacity and economic activities can cause inflation, everybody knows that hence I didn't spell it out ;).

I believe the point I was trying to make stands though in that a sovereign country doesn't need to build reserves in its own currency. Fiat money has no intrinsic value and it is simply a claim for future goods and services. It's not wise for a govt to have a large amount of surplus in the govt book, as that usually means one thing, a combination of over taxing and under spending (including long term infrastructure investments). As such, it serves no purpose for the Russian central bank to build its reserves in Ruble.

As for foreign reserves, countries need foreign currencies for trading, what one country exports may not match what the other country wants to import. Sure for Russia, energy export is in hot demand and energy is desired universally, so countries would be OK to accept Ruble for payment for goods and services they export to Russia, so in turn they can use Ruble to buy energy from Russia. But that's not the norm, hence countries need foreign currencies in reserves for international trading, regardless of whether the "US rule" is in place of not.
 
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BoraTas

BoraTas

Major
Registered Member
Another episode of "Imagine headlines if it was China".
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J

jwnz

Junior Member
Registered Member
Just to add, the private sector does most of the exporting and importing, and companies would either have enough rubles in the bank or need to borrow from commercial banks to pay for imports if the foreign company accepts rubles, there's no need for the central bank to build a ruble reserve as it's the issuer of rubles.
 
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