anvor

A Russian Perspective on the Rise of the U.S. Dollar

Countries with sufficient foreign currency reserves - like Russia and China - will weather the currency boom/bust gyrations quite well. However, to pay for our 10 trillion dollar debt (or 50+ trillion if you take the Peter Peterson Institute measure), we'll have to gradually - or by leaps and plunges - devalue our currency. Whether it will be done intentionally or for the lack of other options, is not important. In the long run the currency of a country that relyes on export of IOUs can't remain strong compared to currency of a country that relyes on actual goods bought for cash by foreigners as well as its own citizens. The short-term run up and then plunge of commodities nonwithstanding, Russia is an enviable position currency-wise.

Grigori is scared in the short term. As most Russian "analists" he's most likely got the brains of a petty speculator who is "street smart" and lives in the now, and only now. Raised in the country that went through several crises of unstable and weak governments, he is not trusting his new strong, rich and all-powerful (autocratic but deliberate) government. His reaction is justified by crises of the past, although not necessarily by the current.

Besides, what is $25K for a Russian market speculator? If he is rich, it's pocket change, a small safety margin in case the bank closes doors for "back holiday." And if he is not rich, and it is big money for him, why do you listen to a poor schmack?

Finally, don't forget the nuances that might have been lost in translation, even from his Russian English to your American English. The environment in which you function affects your understanding of information. I often speak to my friends in Russia in perfect Russian but as our actions later show we get very different ideas from the same seemingly clear conversations. The same thing happens between parents and teenagers everywhere all the time. So, perhaps Grigori - as smart as he might be - meant something different than you understood.

My two cents.